GST exemption on services rendered to foreign flag vessel in Indian Port

[Pratap Kulhari]

We render inspection services to foreign companies for foreign flag vessel in Indian Port.

The Foreign Company is based in Foreign and the Place of supply of the service is on the Vessel (Foreign Entity) in Indian Port.

The invoice is raised to the foreign entity and money is received from foreign in USD.

IS this exempted from GST (services) and under which clause?

Guidance is solicited from all.

[KASTURI SETHI]

Place of Supply is in taxable territory India. Only receipt of foreign exchange will not make eligible for exemption from GST. Service provided in India. Hence taxable.

[Pratap Kulhari]

Sir,

Thank you for your reply.

However, in this case place of service is onboard the VESSEL (which is foreign territory). So should this not technicallly qualify for exemption.?

[DR.MARIAPPAN GOVINDARAJAN]

If it is in foreign territory no tax is liable to pay.

[Alkesh Jani]

Sir, may i take this opportunity to learn from the expert " (10) The place of supply of services on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, shall be the location of the first scheduled point of departure of that conveyance for the journey." means. This is for my knowledge purpose. Thanks in advance

[KASTURI SETHI]

Inspection service has been supplied in Indian territory and the same is consumed in India. Territory matters a lot.

[Alkesh Jani]

Sir, I do agree with your point of view, but I only mean to say that If proper clarification like first point of departure and services crossed the customs frontier, amount received in foreign exchange, all together can be summed up for putting up the strong case for exemption. Please correct me, if mistaken

[KASTURI SETHI]

Dear Alkesh,

Don't you find the difference between the phrases, "Inspection of vessel' and "Services on board" (service on vessel) ?

AI Summary

Place of supply rules determine GST liability on services to foreign-flag vessels; foreign exchange receipt alone does not exempt. GST liability depends on the Place of Supply and territorial consumption rather than receipt in foreign exchange; services performed and consumed in Indian territory are taxable, while services characterised as 'on board' a conveyance may instead take the place of supply as the first scheduled point of departure, affecting exemption eligibility.