Services received from foreign shipping line

[Kaustubh Karandikar]

XYZ(India) is a freight forwarder and receiving services of a foreign shipping line towards transportation of goods by Sea in relation to importing of goods of his client in India. ACE paying to the foreign shipping line in foreign currency. Subsequently, XYZ is recovering these charges from his client in India. Is XYZ required to pay GST under reverse charge on the amount paid in foreign currency to the foreign shipping line?

[Shilpi Jain]

Who is ACE ?

[Shilpi Jain]

Also why is there a doubt regarding the applicability of RCM in this case?

[Kaustubh Karandikar]

Sorry madam it should be XYZ

[Kaustubh Karandikar]

Respected Shilpi ji

As per the notification of RCM, in case if ocean freight, it is on importer. Therefore in my view though the shipping line had invoiced to the freight forwarder, no RCM on freight forwarder being not an importer. Your kind views please

[Shilpi Jain]

This service will not fall under entry 10 of the RCM notification 10/2017 since XYZ is also not a person outside India.

RCM would get attracted under entry 1 of the IGST RCM Notification - any service supplied by any person who is located in non taxable territory to any person other than......

In this case it is an import of service and an inter-State supply so liable under RCM.

[KASTURI SETHI]

Yes. Undoubtedly, it is import of service. RCM is applicable. No room for doubt or confusion in RCM notification (IGST).

AI Summary

Reverse charge on imported shipping services applies; recipient must pay GST under RCM for services from non taxable territory suppliers.
The freight forwarder's payment to a foreign shipping line for sea transportation constitutes an import of service from a non taxable territory supplier; as an inter state supply received in India it falls under the general reverse charge mechanism for services supplied by persons outside India, making the Indian recipient liable to pay GST under RCM rather than under the importer specific ocean freight entry.