Inland waterways exemption denied where cargo movement occurred on a sea route outside the statutory definition.

Transportation of goods from Magdalla Port to the General Lighterage Area was held not to qualify for the exemption for services by way of transportation of goods by inland waterways under Notification No. 12/2017-Central Tax (Rate). The route was found to lie in the Arabian Sea and not within National Waterway 100 or any other inland waterway as defined by the relevant statutes. Since the movement was neither on a declared national waterway nor on a canal, river, lake or other navigable inland water within the statutory definition, the service fell outside the exemption and remained taxable under GST.

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Issues: (i) Whether transportation of goods from Magdalla Port to the General Lighterage Area is covered by the exemption for services by way of transportation of goods by inland waterways under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate). (ii) Whether the said transportation falls within the definition of inland waterways.

Issue (i): Whether transportation of goods from Magdalla Port to the General Lighterage Area is covered by the exemption for services by way of transportation of goods by inland waterways under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate).

Analysis: The exemption applies only where the service is by way of transportation of goods through inland waterways. The expression is limited to national waterways and other waterways on inland water. The route in question was found to lie in the Arabian Sea and not within the limits of National Waterway 100 as declared under the National Waterways Act, 2016. The claimed movement was therefore not established to be a transport service by inland waterways.

Conclusion: The transportation service is not exempt under Entry No. 18 of Notification No. 12/2017-Central Tax (Rate).

Issue (ii): Whether the said transportation falls within the definition of inland waterways.

Analysis: National waterways are those declared as such under the Inland Waterways Authority of India Act, 1985 as amended, while other inland waterways cover canal, river, lake or other navigable water within a State under the Inland Vessel Act, 1917. The material placed showed that the relevant stretch was part of the Arabian Sea and not a canal, river, lake or other navigable water within the State, and it also did not fall within the declared limits of National Waterway 100. Hence it did not satisfy either limb of the definition.

Conclusion: The transportation does not fall within the definition of inland waterways.

Final Conclusion: The service of transportation in question is outside the scope of the inland waterways exemption and is taxable under GST.

Ratio Decidendi: An exemption for transportation by inland waterways is available only when the service is performed on a declared national waterway or on an inland waterway within the statutory definition, and the benefit cannot be extended to a sea route that falls outside those definitions.

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