Ruling: Input Tax Credit granted for maintenance services on DSVs and SPVs

The Authority ruled in favor of M/s Sikka, allowing them to avail Input Tax Credit (ITC) on services for the operation and maintenance of Diving Support Vessels (DSVs) and Security Patrol Vessels (SPVs). The services provided by various contractors for the maintenance and operation of these vessels were deemed essential for Sikka's business operations, enabling them to claim ITC on the services procured for DSVs named Relsagar and Reldarshan, as well as SPVs named Eagle, Chetak, Calypso Fortune, and ML Noorani.

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Issues Involved:
1. Entitlement to Input Tax Credit (ITC) on services for the operation and maintenance of Diving Support Vessels (DSVs).
2. Entitlement to ITC on services for hiring, and operation and maintenance of Security Patrol Vessels (SPVs).

Detailed Analysis:

1. Entitlement to ITC on Services for Operation and Maintenance of DSVs:

The applicant, M/s Sikka, operates a port and terminal handling facility at Sikka Port, Gujarat, primarily for Reliance Industries Limited (RIL). They entered into a long-term contract with RIL, obligating them to develop and maintain necessary facilities, including DSVs and SPVs, essential for their operations. The applicant sought advance ruling on the eligibility to avail ITC on services procured for the operation and maintenance of DSVs.

The applicant argued that these services are integral to their business operations and not specifically blocked under any provision of Section 17 of the CGST Act. They emphasized that DSVs are crucial for underwater work, including the connection of discharge pipes of vessels to subsea pipelines, and are manned by specialized contractors.

The Authority examined contracts with various contractors (Samson Maritime Limited, Ocean Sparkle Ltd.) and concluded that the services provided under these contracts are essential for the applicant's business operations. The Authority noted that the SAC codes mentioned in the invoices do not alter the factual scope of the services supplied. The services of operation and maintenance of DSVs were deemed necessary for the transportation of goods and integral to the applicant’s outward supply of services.

Ruling:
The Authority ruled that M/s Sikka is entitled to avail ITC on the services procured for the operation and maintenance of DSVs: Relsagar and Reldarshan.

2. Entitlement to ITC on Services for Hiring, and Operation and Maintenance of SPVs:

The applicant also sought advance ruling on the eligibility to avail ITC on services procured for hiring, and operation and maintenance of SPVs. These vessels are used for security patrolling and pollution control, ensuring the safety and compliance with environmental laws.

The Authority examined contracts with various contractors (Lilly Maritime Pvt Ltd, I Marine Infratech India Pvt Ltd, Ismail Ibrahim Hundada) and found that these services are essential for the applicant’s operations. The services provided include manning, operating, and maintaining the SPVs, which are crucial for security and pollution control at the port.

The Authority noted that the SAC codes mentioned in the invoices do not alter the factual scope of the services supplied. The services of operation and maintenance of SPVs were deemed necessary for the applicant’s outward supply of services.

Ruling:
The Authority ruled that M/s Sikka is entitled to avail ITC on the services procured for the operation and maintenance of SPVs: Eagle, Chetak, Calypso Fortune, and ML Noorani.

Conclusion:

The Authority concluded that the services related to the operation and maintenance of DSVs and SPVs are essential for the applicant’s business operations and are not blocked under Section 17(5) of the CGST Act. Therefore, M/s Sikka is entitled to avail ITC on these services.

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