2024 (6) TMI 31 - AAR - GST

Liability of exporter (M/s. DCW Ltd) to pay GST - Place of supply export freight as CGST SGST or as IGST - shipping line who accepts the goods from the exporter (M/s. DCW Ltd). Whether the exporter (M/s. DCW Ltd) is liable to pay GST on the export freight as CGST SGST or as IGST? - HELD THAT - The instant case relates to chargeability and the nature of tax on outbound ocean freight in respect of the exports undertaken by the applicant on CIF basis where a shipping line/freight forwarder who has an office in Thoothukudi carries out the activities relating to transportation of goods by vessel. It may be noted that once the sunset clause on ocean/air freight provided under Notification No. 07/2021-Integrated Tax (Rate) dated 30.09.2021 was not extended beyond 30.09.2022 such activities under specific circumstances became liable to tax under GST from 1.10.2022 onwards. However the nature of tax to be charged hinged on the place of supply as the place of destination of such goods that existed under the then extant provisions viz. proviso to Section 12 (8) and Section 13 (9) of the IGST Act 2017. Accordingly taxes under IGST was liable to be charged for such transactions as the place of supply was outside India which is to be treated as services in the course of inter-state trade or commerce as laid down in Section 7 (5) of the IGST Act 2017. The instant transaction becomes a case of intra-state supply whereby taxes under CGST/SGST becomes liable to be discharged by the service provider i.e. the shipping line/freight forwarder who is reported to be having an office in Thoothukudi Tamilnadu. It is to be reiterated here that the GST liability existed prior to 1.10.2023 as well and that only the nature of supply and thereby the nature of tax to be charged has undergone a change. It is also to be reiterated that once the liability to tax under GST in the instant case vests with the shipping line/freight forwarder no further liability lies with the applicant in respect of the same service as the same is in the nature of input services received by them and as they reportedly undertake export of goods on CIF basis. Whether the shipping line who accepts the goods from the exporter (M/s. DCW Ltd) is liable to pay GST as CGST SGST or IGST? - HELD THAT - This query relating to the freight forwarder/shipping line who is not the applicant in the instant case need not be answered by the Authority for Advance Ruling.

Summary

Issues Involved:
1. Liability of the exporter to pay GST on export freight as CGST & SGST, or as IGST.
2. Liability of the shipping line to pay GST as CGST & SGST, or IGST.

Summary:

Issue 1: Liability of the exporter to pay GST on export freight as CGST & SGST, or as IGST

The applicant, M/s. DCW Ltd., sought an advance ruling on whether they are liable to pay GST on export freight as CGST & SGST, or as IGST. The ruling clarified that the place of supply plays a significant role in determining the taxability and nature of tax to be charged. Under the provisions of Sections 10 to 14 of the IGST Act, 2017, the place of supply for services where both supplier and recipient are in India is determined by Section 12, while Section 13 applies when either the supplier or recipient is outside India.

From 1.10.2022, the sunset clause on the exemption of GST on ocean freight and air freight on exports was not extended, making such services taxable. The place of supply for transportation of goods to a place outside India was determined as the destination of such goods, making it liable for IGST under Section 7 (5) of the IGST Act, 2017. However, from 1.10.2023, amendments changed the place of supply to the location of the recipient of services, making it an intra-state supply liable for CGST/SGST.

The ruling concluded that the exporter (M/s. DCW Ltd.) is not liable to pay GST on export freight, as the liability rests with the shipping line/freight forwarder.

Issue 2: Liability of the shipping line to pay GST as CGST & SGST, or IGST

The second query regarding the liability of the shipping line to pay GST was not answered by the Authority for Advance Ruling, as the shipping line is not the applicant in the instant case. The definition of 'advance ruling' u/s 95 (a) of the CGST Act, 2017, specifies that the ruling is provided to the applicant in relation to the supply of goods or services undertaken by the applicant.

Ruling:
1. The exporter (M/s. DCW Ltd.) is not liable to pay GST on export freight.
2. The query regarding the shipping line's liability was not answered, as the shipping line is not the applicant.