Maritime supply transactions from bonded warehouses classified under Schedule III while non-bonded supplies don't qualify

The AAR, Maharashtra ruled on the classification of maritime supply transactions where goods are delivered to ship owners at Indian ports. For goods cleared from bonded warehouses to vessels, the supply falls under Schedule III of CGST Act (neither goods nor services supply) as these goods weren't cleared for home consumption. However, goods from non-bonded warehouses don't fall under Schedule III since import duties were already paid. The Authority declined to rule on whether such supplies constitute exports, stating this question falls outside their jurisdiction under Section 97 of CGST Act, 2017, making that portion of the application non-maintainable.

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Issues Involved:
1. Whether the delivery of goods to the owner of the ship proceeding to a foreign port at the Indian port is an "export of goods" as per Section 16 of the IGST Act, 2017Rs.
2. If the supply is considered as exports as per Section 16, will the applicant be liable to claim a refund for zero-rated supply, i.e., exportsRs.
3. If taxable, whether the tax will be levied as intra-state or interstate supplyRs.
4. Whether the supply will fall under Schedule III of the CGST ActRs.

Issue-wise Detailed Analysis:

Issue 1: Whether the delivery of goods to the owner of the ship proceeding to a foreign port at the Indian port is an "export of goods" as per Section 16 of the IGST Act, 2017Rs.

The applicant, Wilhelmsen Maritime Services Pvt Ltd (WMSPL), imports maritime products and supplies them to ships proceeding to foreign ports. The delivery is made at Indian ports, and consideration is received in foreign exchange. The applicant contends that such supplies should be considered as "export of goods" under Section 16 of the IGST Act, 2017.

The Authority analyzed the definition of "export of goods" under Section 2(5) of the IGST Act, which means taking goods out of India to a place outside India. It was noted that goods are considered exported only when they move beyond 200 nautical miles from the Indian landmass. The Authority referenced the Supreme Court judgment in Burmah Shell Oil Storage and Distributing Co. of India Ltd. vs. Commercial Tax Officer and the Bombay High Court judgment in Radhasons International, which held that goods delivered to ships at Indian ports do not qualify as exports.

The Authority concluded that the delivery of goods to ships at Indian ports, even if they are proceeding to foreign ports, does not constitute "export of goods" under the IGST Act.

Issue 2: If the supply is considered as exports as per Section 16, will the applicant be liable to claim a refund for zero-rated supply, i.e., exportsRs.

Given the conclusion on Issue 1 that the supply does not qualify as "export of goods," the Authority found that the applicant is not entitled to claim a refund for zero-rated supply under Section 16 of the IGST Act.

Issue 3: If taxable, whether the tax will be levied as intra-state or interstate supplyRs.

The Authority examined the provisions of Chapter V of the IGST Act, specifically Sections 10 and 11, which deal with the place of supply. Since the supply involves movement of goods within India, Section 10(1)(a) applies, which states that the place of supply is the location where the movement terminates for delivery to the recipient.

The Authority noted that the supply of goods to ships at Indian ports occurs within territorial waters, making it an intra-state supply. Therefore, the tax levied would be CGST and SGST, not IGST.

Issue 4: Whether the supply will fall under Schedule III of the CGST ActRs.

The Authority considered whether the supply of goods from bonded and non-bonded warehouses falls under Schedule III of the CGST Act, which lists activities not treated as supply of goods or services. Clause 8(a) of Schedule III covers "Supply of warehoused goods to any person before clearance for home consumption."

The Authority distinguished between supplies from bonded and non-bonded warehouses:
- Supply from Bonded Warehouses: The goods are not cleared for home consumption, and therefore, such supplies fall under Schedule III and are exempt from GST.
- Supply from Non-Bonded Warehouses: The goods have been cleared for home consumption, and such supplies do not fall under Schedule III, making them taxable under GST.

Order:

1. Supply from Bonded Warehouses will fall under Schedule III of the CGST Act and is exempt from GST.
2. Supply from Non-Bonded Warehouses will not fall under Schedule III of the CGST Act and is not exempt from GST.
3. The question of whether the supply will be termed as exports was not answered as it is beyond the purview of the Authority.

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