FUEL OIL SUPPLIED TO VESSELS. SUPPLY OR SERVICE ?

[Mehul Pandya]

DEAR EXPERTS,

WE ARE INTO AGREEMENT FOR SUPPLY OF FUEL OIL TO VESSELS WHICH IS ALSO CALLED AS BUNKERING.

THEREFORE WE ARE PURCHASING FUEL OIL FROM THE MARKET. FOR SUPPLY OF THIS FUEL INTO THE VESSELS WE ARE AVAILING SOME SERVICES LIKE TRANSPORTATION, CARGO HANDLING, PORT RELATED SERVICES ETC. WE ARE PAYING DIFFERENT PORT RELATED CHARGES WHICH ALSO INCLUDES SERVICE TAX. THEREFORE WE ARE ADDING ALL THIS SERVICES AS A COST OF MATERIAL OF FUEL AND RAISING BILL TO OUR CUSTOMERS. WE ARE ALSO PAYING SALES TAX ON THE SAME. BUT DURING THE SCRUTINY DEPARTMENT HAS RAISED THE QUERY THAT WE HAVE TO ISSUE SEPARATE FOR FUEL AND SERVICES. WE CANT CLUB THE SAME.THEY ALSO TOLD TO CHARGE SERVICE TAX ON SERVICE PART. I CAN NOT UNDERSTAND THAT HOW I AM LIABLE TO PAY SERVICE TAX WHICH IS NOT PROVIDED BY ME. THEREFORE IS THERE ANY PROVISION TO CLEAR THIS ISSUE.

AI Summary

Debate Over Bunkering: Should Fuel Oil Supply to Vessels Be Classified as Supply or Service Under Tax Law? A discussion on whether the supply of fuel oil to vessels, known as bunkering, should be classified as a supply or a service. The original poster is concerned about being required to separate charges for fuel and services, as authorities have questioned their current billing practice, which includes service-related costs in the fuel price. They are uncertain why they should pay service tax on services not directly provided by them. A respondent suggests that if only fuel is supplied, VAT applies, not service tax, unless additional services are indeed provided.