GST on export ocean freight

[Kaustubh Karandikar]

XYZ is in the business of ‘Logistic Support’ for Export and Import consignments. For this purpose, they hire the services of clearing and forwarding agents and agents who are supplying shipping line services. For export consignments, the amount charged by the clearing and forwarding agent towards clearing the goods are in turn recovered by XYZ from his clients with mark up and paying GST on it. However, in case of Ocean freight paid to agent who is arranging the shipping line, XYZ though recovering the ocean freight from the client with mark up, but not charging GST on it being exempted. Is XYZ right in not charging GST?

AI Summary

Logistics Firm's Ocean Freight GST Exemption Questioned; Review Needed on Supply Classification Under Notifications 12/2017 & 9/2017 XYZ, a logistics support company, recovers costs for clearing and forwarding services with GST from clients but does not charge GST on ocean freight, claiming exemption. Amit Agrawal suggests examining whether XYZ's contracts represent singular or multiple supplies, impacting GST applicability. He references exemption entries from Notifications No. 12/2017 and No. 9/2017, noting that ocean freight services from India to abroad attract 'Nil' GST under SAC Code: 9965. Agrawal emphasizes the importance of understanding trade practices and contract terms to determine if supplies are composite, mixed, or independent, affecting GST obligations.