2020 (7) TMI 344 - AAR - GST

Classification of vessel - rate of IGST - Tug Jupiter, let out under a charter for 730 days (with an option to extend the contract one year more) - Whether classifiable under SAC 996602 or under SAC 997319? - HELD THAT - Hon ble Tribunal in the case of SHIPPING CORPORATION OF INDIA LTD. VERSUS COMMR. OF CUS. (IMPORT) , MUMBAI 2013 (7) TMI 881 - CESTAT MUMBAI categorically, held that they are not machinery, equipment or tools. In an appeal to High Court in the case, the court ratified the same and hence a tug is not a machinery, equipment or tools independently but considered to be a vessel. Thus, Tug Jupiter let out by the applicant to RIL on charter basis is classifiable under Sl.No.10 of Heading 9966, vide Notification No. 1/2018-IT(Rate) dated 25.01.2018 read with Notification No. 8/2017-IT(Rate) dated 28.06.2017.

Summary

Issues:
- Classification of vessel charter hire charges under GST Act

Analysis:
1. Facts of the Case:
- The applicant, a company engaged in port operations, sought an advance ruling on the rate of IGST on vessel charter hire charges.

2. Applicant's Interpretation:
- The applicant argued that the Tug Jupiter's services fall under SAC 996602 for rental services of water vessels or under SAC 997319 for leasing services of machinery.

3. Record of Personal Hearing:
- The authorized representative filed for adjournment but later reiterated the submission during the personal hearing.

4. Discussion and Findings:
- The Authority examined whether the Tug Jupiter charter falls under SAC 996602 for rental services of water vessels or SAC 997319 for leasing services of machinery.
- The Authority referred to the relevant notifications and explanatory notes under the GST Act to determine the classification.
- It was noted that tugs are not considered machinery, equipment, or tools independently but are classified as vessels.
- Based on the analysis, the Authority ruled that the Tug Jupiter charter falls under Sl.No. 10 of Heading 9966, attracting a tax rate of 5%.

5. Ruling:
- The Authority classified the vessel charter hire charges under Sl.No. 10 of Heading 9966, subject to fulfilling conditions, attracting a tax rate of 5%.

This detailed analysis of the judgment provides insights into the classification of vessel charter hire charges under the GST Act, emphasizing the specific provisions and interpretations considered by the Authority for Advance Rulings in Andhra Pradesh.