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

International freight forwarding: RCM on insurance limited; transportation exemption applies only when forwarder acts as principal.
RCM on insurance premiums applies only where the supplier is an insurance agent and the recipient is in the insurance business; payment to an insurer does not automatically trigger RCM and import treatment depends on place of supply. Exemption under Notification 9/2017 for transportation (SAC 9965) applies when the freight forwarder acts as principal-issuing HBL/HAWB, assuming risk, negotiating and billing composite freight-whereas mere arrangement or documentation services fall under SAC 9967 and attract 18% GST.