Audit u/s.65 on international freight forwarders for period 2020-24

[Raam Srinivasan Swaminathan Kalpathi]

Client is an international freight forwarder.  Foll audit paras have been provided raising demand, viz.

1)  GST under RCM on amounts paid to insurance underwriters like ACIS taken on goods export 

2)  Exemption availed under Not.9/2017-IGST (Rate) for transportation of goods with HSN 9965 by alleging that the client provides freight forwarding services, port and terminal handling services, documentation services falling under SAC 9967 wherein GST is chargeable @18%.

Request the experts to provide their valuable inputs.  Thanks

AI Summary

GST audit under section 65: strategy on reverse charge for export insurance and exemption under Notification 9/2017-IGST An international freight forwarding client undergoing GST audit under section 65 for 2020-24 faces two audit objections: (1) GST liability under reverse charge on payments to insurance underwriters for export goods insurance; and (2) denial of exemption claimed under Notification 9/2017-IGST (Rate) for transportation services (HSN 9965), on the ground that the services are freight forwarding, port/terminal handling, and documentation under SAC 9967 taxable at 18%. The responding expert advises accepting reverse charge liability but availing full input tax credit, disputing only interest and penalty, and contesting reclassification by treating the entire supply as a composite exempt transportation service.