Exporter under FOB terms not liable for GST on reverse charge for export freight services

AAR Tamil Nadu ruled that an exporter under FOB terms is not liable to pay GST on reverse charge mechanism for export freight. The Authority held that in FOB exports, the exporter is neither involved with export freight arrangements nor is the provider or recipient of freight services, as these are handled by the overseas buyer or their agent. Questions regarding shipping line liability, inter-state supply classification, and taxable value determination were not addressed as they did not relate to the applicant who neither undertakes nor receives export freight services under FOB terms.

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Issues Involved:
1. Liability of exporter to pay GST on export freight on FOB basis under RCM.
2. Liability of shipping line to pay GST on RCM basis.
3. Liability of export freight to GST on RCM basis for goods exported on FOB basis.
4. Whether export freight constitutes an inter-state supply subject to IGST.
5. Determination of taxable value if liable to GST.

Summary:

Issue 1: Liability of exporter to pay GST on export freight on FOB basis under RCM
The Authority ruled that the exporter (M/s. DCW Ltd.) is not liable to pay GST on the export freight on the FOB basis of exports under RCM. The exporter is neither the provider nor the recipient of the export freight service, which is arranged by the overseas buyer or their agent.

Issue 2: Liability of shipping line to pay GST on RCM basis
The Authority did not answer this query as the shipping line is not the applicant and does not transact with the applicant in the case of export of goods on FOB basis.

Issue 3: Liability of export freight to GST on RCM basis for goods exported on FOB basis
The Authority did not answer this query, stating that it does not relate to the applicant. The applicant does not undertake or receive the export freight service.

Issue 4: Whether export freight constitutes an inter-state supply subject to IGST
The Authority did not answer this query, stating that it does not relate to the applicant. The applicant does not undertake or receive the export freight service.

Issue 5: Determination of taxable value if liable to GST
This query does not apply as the previous query (Issue 4) was not answered, and the issue involving export freight does not relate to the applicant.

Ruling:
1. The question of payment of GST under RCM by the applicant does not arise.
2. Not answered, as the shipping line is not the applicant.
3. Not answered, as the issue does not relate to the applicant.
4. Not answered, as the issue does not relate to the applicant.
5. Does not apply, as the query No. 4 has not been answered.

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