Authority of Advance Ruling Orders Foreign-Bound Ships To Attract GST

Authority of Advance Ruling (AAR), Andhra Pradesh gave clear instructions mentioning that the GST will be applicable on the items supplied to merchant’s vessels from the Customs warehouse and the experts will inspect and have a close look on such supplies.

The Ruling Bench mentioned the Fairmacs Ship Stores who is the petitioner and holds a special warehouse license, was responsible to levy Goods and Services Tax on outward supplies rendered to the defined vessels. The Bench considered this move as inter-state supply. Although, it as well permitted the Fairmacs Ship Stores to get the GST payment from the clients.

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Experts infer to consider GST as a tax based on consumption, while these sorts of supplies are used and consumed outside of the country. Abhishek Rastogi, a partner at Khaitan & Co, mentions norms concerning inter-state supply have always considered under a conflict.

Previously, the AAR mentioned that GST would be applicable on items traded at duty-free shops based on appropriate inter-state norms.

Abhishek Rastogi further mentioned, “The constitutional validity and arbitrariness of these provisions come into play for various transactions such as duty-free shops and supplies made to the outgoing foreign vessels.”

The government is required to consider the applicability of a GST exemption on such supplies as they require to cut down extra tax costs, mentioned Abhishek Jain, tax partner with consultant EY India.

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