2018 (6) TMI 623 - AAR - GST

Supply of goods - inter-state trade - Exemption from GST - outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships - Reverse charge - Whether appellant are exempted from tax under GST on their outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships or not? - If at all they are liable for GST on their outward supplies whether they can collect the GST from the recipient for the goods namely - (a) Ocean going merchant vessels on foreign run; (b) Indian Naval Ships; and (c) Indian Coast Guard Ships or from their authorized agents. Held that - The goods which are received by the applicant are within the Customs area as defined under Section 2 (11) of the Customs Act, 1962. Accordingly goods cleared / supplied by the applicant is to be treated as supply of goods in the course of inter-State trade. Furthermore, the goods supplied by the applicant is also not an exempt supply as per the definition under Section 2 (47) of the Central Goods and Service Tax Act, 2017 as it is neither nil rated or being exempt by any Notification - some of the supplies of applicant may fall under the definition of exports which is considered a zero rated supply. However, the same is not within the prerogative of present application. Ruling - The applicant are not exempted from tax under GST on their outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coast Guard Ships. The applicant can collect the applicable GST from their customers, in case it is not exports. However, in case of exports the option lies with the applicant based on manner of exports i.e. whether they intend to export under bond or on payment of tax.

Summary

Issues:
1. Exemption from GST on outward supplies to specific vessels
2. Liability for GST on outward supplies and collection from recipients

Analysis:

Issue 1: Exemption from GST on outward supplies to specific vessels
The applicant, holding a Special Warehouse License under the Customs Act, sought an Advance Ruling on whether they are exempt from GST on supplies to ocean-going merchant vessels, Indian Naval Ships, and Indian Coast Guard Ships. The Jurisdictional Officer confirmed no pending proceedings or final orders against the applicant. The applicant presented documentary evidence during a personal hearing, including licenses, certificates, and supply details for the vessels in question. The Authority examined relevant statutory provisions, defining customs area, export of goods, and exempt supply under GST laws. It was determined that the goods received by the applicant fall within the customs area, making the supplies inter-State transactions subject to GST. The supplies were not considered exempt as per GST definitions.

Issue 2: Liability for GST on outward supplies and collection from recipients
The Authority noted that some supplies by the applicant could potentially qualify as exports, constituting zero-rated supplies. However, the present application did not address this aspect. Referring to a Customs Circular, it was clarified that transactions involving warehoused goods between the importer and others are considered supplies taxable under the CGST Act and IGST Act. Such transactions, including sales or transfers, are subject to IGST before goods cross the Indian customs frontiers. The ruling stated that the applicant is not exempt from GST on outward supplies to the specified vessels and can collect GST from customers, depending on whether the supplies qualify as exports and the manner of export chosen.

This comprehensive analysis of the judgment from the Authority for Advance Ruling - Andhra Pradesh addresses the issues raised by the applicant regarding GST implications on their supplies to specific vessels, providing a detailed examination of relevant provisions and considerations for tax liability and collection.