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TMI Blog2019 (2) TMI 1741X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay tax - In the present case, the service of transport by vessel is for the goods imported by the applicant. The consideration for both goods and also for service i.e. transport of the same by vessel, is paid by the applicant. The applicant's view that they are paying only for goods and not for transport of the same is incorrect as the said consideration paid for the transaction is inclusive of freight also. Therefore, the applicant is the recipient of both goods and services. Whether the applicant is liable to pay tax on the transaction referred under reverse charge mechanism or not? - HELD THAT:- An importer is required to pay IGST on the ocean freight in terms of Notification No. 10/2017-Integrated Tax (Rate), dated 28-6-2017 read with Notification No. 8/2017-Integrated Tax (Rate), dated 28-6-2017. There is no exemption available under the GST provisions for payment of IGST on ocean freight where IGST is paid on the goods imported. - AAR 08/AP/GST/2019 - - - Dated:- 22-2-2019 - D. RAMESH, AND S. NARASIMHA REDDY, MEMBER Represented by: Shri Ram Babu Gunturi, Chief Manager ORDER (Under sub-section (4) of Section 98 of Central Goods and Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a vessel from supplier's location outside India to Indian Port. Whereas if goods are imported on cost inclusive of freight basis, the foreign supplier engages a foreign shipping company to provide the service of transportation of goods in a vessel from the supplier's country to the Indian Port. Under GST, values of subsidy is excluded from the value of taxable supply. Exclusion of subsidy from the value of taxable supply, results in accumulation of Input tax credit under GST. In addition, payment of GST under reverse charge mechanism on ocean freight is also contributing to accumulation of credit. The applicant had filed an application in form GST ARA-01, Dt:05.12.2018, by paying required amount of fee for seeking Advance Ruling. On Verification of basic information of the applicant, it is observed that the applicant falls under State jurisdiction, i.e. Assistant Commissioner, SGST Gajuwaka Circle, Visakhapatnam, A.P. Accordingly, the application has been forwarded to the jurisdictional officers and a copy marked to the central tax authorities to offer their remarks as per the Section 98(1) of CGST /APGST Act 2017. In response, the concerned jurisdictiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (g) Whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both within the meaning of that term . The clarification sought for vide query Nos. 1.1 to 1.5 are covered under clauses (b) and (e) above but the queries at 2.1 and 2.2 are not covered in any of the above clauses. The issues covered are examined as hereunder. Whether the transaction is import of service or not and it is inter-state supply or not The Section 7 of IGST Act determines whether a transaction is an Inter-state supply or an Intra-state Supply. Sub-section 4 of Section 7 of IGST Act states the supply of services imported into India shall be treated as Inter-state supply. Clause (c) of sub-section 5 of Section 7 of IGST Act states that supply of goods or services or both in the taxable territory, not being an intra-State supply and not covered elsewhere in this section shall be inter-state supply. Therefore, the said transaction qualifies as import of service and it is inter-state supply. Whether the applicant can be deemed as the recipient of the service or not As per sub-section 3 to Section 5 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. A person located in non-taxable territory Importer, as defined in clause (26) of section 2 of the Customs Act, 1962(52 of 1962), located in the taxable territory. Notification No. 8/2017-Integrated Tax (Rate), dated 28-6-2017 SI.No. Chapter, Section or Heading Description of Service Rate (percent.) Condition 9 Heading 9965 (Goods transport services) (i)*** *** *** (ii) Transport of goods in a vessel including services provided or agreed to be provided by a person located in non-taxable territory to a person located in non-taxable territory by way of transportation of goods by a vessel from a place outside India up to the customs station of clearance in India. 5 Provided that credit of input tax charged on goods (other than on ships, vesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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