Supply of stores to foreign vessels in Indian territory not zero-rated under GST, remains taxable

The AAR, West Bengal ruled that supply of stores (paint, rope, spare parts, electronic equipment) to foreign going vessels anchored in Indian territory does not constitute zero-rated supply under GST. The Authority held that vessels within Indian territory are not locations outside India, therefore supplies cannot be treated as exports. The applicant remains liable for GST/IGST on such supplies. However, warehoused goods supplied to foreign vessels before clearance for home consumption are exempt under Schedule III, paragraph 8(a) of the GST Act.

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Issues:
1. Admissibility of the application
2. Interpretation of the provisions of the IGST Act and the Customs Act regarding supplies to foreign going vessels

Issue 1: Admissibility of the Application
The Applicant sought a ruling on the liability to pay tax on supplies to foreign going vessels, specifically inquiring about zero-rated supplies. The Authority found the application admissible under Section 97(2)(e) of the GST Act and admitted it as the question raised had not been previously decided by any authority.

Issue 2: Interpretation of the provisions of the IGST Act and the Customs Act regarding supplies to foreign going vessels
The Applicant argued that supplies to foreign going vessels constitute exports and zero-rated supplies under the IGST Act when read with the Customs Act. The Authority examined the definition of warehoused goods and the provisions related to export under the Customs Act. It concluded that supplies to foreign going vessels do not qualify as exports unless specifically marked for a location outside India. The Authority highlighted that the location of the supplier and recipient being in India during the supply does not meet the criteria for export. The ruling stated that such supplies are not zero-rated unless marked for a location outside India.

Amendment and Rectification:
The original ruling did not discuss the status of supplies of warehoused goods to recipients before clearance for home consumption. The Authority, under section 102 of the GST Act, rectified the order to include this aspect. It clarified that such supplies, if covered under paragraph 8(a) of Schedule III under section 7(2)(a) of the GST Act, would not be treated as supplies of goods or services, exempting them from tax liability unless specifically marked for a location outside India.

This comprehensive analysis of the judgment covers the issues of admissibility of the application and the interpretation of relevant provisions concerning supplies to foreign going vessels under the GST Act and the Customs Act.

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