2019 (7) TMI 1280 - AAR - GST

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

In Re: M/s. Wilhelmsen Maritime Services Pvt. Ltd.

The AAR, Maharashtra ruled on the classification of maritime supply transactions where goods are delivered to ship owners at Indian ports. For goods ... Classification of supply - delivery of goods to the owner of the ship proceeding to foreign port at the Indian port - export of goods or not - section 16 of IGST Act, 2017 - “Maritime Products” supplies - GST was paid under protest - refund for zero rated supply i.e.; exports or not - intra-state or interstate supply? - Whether this supply will fall under Schedule III of CGST Act? HELD THAT:- The imported procured goods are kept in Bonded/Non-Bonded Warehouses. These goods are imported and import duty is paid on them. Once the import duty is paid, it would imply that the said goods have been received & cleared by the applicant and are in taxable territory. Further, on receiving purchase orders from the owners/operators of the vessels, they clear the said goods by filing of shipping bills & deliver the goods to the vessels at an Indian port, along with delivery challan & order confirmation. These documents are handed over to the vessels which are landed at Indian port. Schedule III of CGST Act, is listing activities or transactions which shall be treated neither as a supply of goods nor supply of services. Clause 8(a) of the Schedule mentions “Supply of warehoused goods to any person before clearance for home consumption”. Clearance from Bonded Warehouses to the vessels - HELD THAT:- The goods in a Bonded Warehouse has not been cleared for home consumption. Clause 8(a) mentioned above would cover the situation mentioned at I above and therefore we are of the opinion that the present supply in such a case will fall under Schedule III of CGST Act. Clearance from Non-Bonded Warehouses to the vessels - HELD THAT:- The imported goods would have been cleared to such non-bonded warehouses on payment of appropriate IGST/Customs duty and therefore the supply in such a case as in (2) above Will not fall under Schedule III of CGST Act. Whether the supply will be termed as Exports of Goods? - If No, then what will be the supply? - whether Intra State or Inter state and which Tax will be levied CGST and SGST or IGST? - Scope of Advance Ruling - HELD THAT:- We find that their main question is whether the transaction effected in the present case can be considered as exports - this question is not covered under the purview of Section 97 of the CGST Act, 2017. Hence we hold the subject application is not maintainable in this respect and cannot be entertained and therefore no opinion is given by us since the matter is beyond the purview of this Authority. 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.