TaxTMI 
TaxTMI 
Audit u/s.65 on international freight forwarders for period 2020-24
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....udit u/s.65 on international freight forwarders for period 2020-24<br> Query (Issue) Started By: - Raam Srinivasan Swaminathan Kalpathi Dated:- 6-12-2025 Last Reply Date:- 12-12-2025 Goods and Services Tax - GST<br>Got 6 Replies<br>GST<br>Client is an international freight forwarder. Foll audit paras have been provided raising demand, viz. 1) GST under RCM on amounts paid to insuranc....
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....e 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. Than....
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....ks Reply By Sadanand Bulbule: The Reply: Dear Sir Acknowledge the RCM liability, but immediately offset the entire amount by claiming corresponding ITC. However you may focus the disupte only on interest and penalty. As regards to classification of demand, you can counter the demand by establishiing the entire transaction as a Composite Supply with Transportation ( SAC 9965) as the principal, ....
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....exempt element. Reply By KASTURI SETHI: The Reply: Dear Sir, Your email ID is required. I intend to email comprehensive note on the issue. Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Respected Sri.Kasthuriji Profuse thanks in advance. My email id is [email protected]; [email protected]. Reply By KASTURI SETHI: The Reply: Dear Sir, ....
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....Emailed. There is ceiling of words. Otherwise I would have preferred to post my comprehensive note here. Reply By Raam Srinivasan Swaminathan Kalpathi: The Reply: Respected Sri Kasthuriji Email received and gratefully acknowledged. Reply By Ryan Vaz: The Reply: APPLICABLE LAW / NOTIFICATIONS Insurance / RCM Notification 10/2017-IGST (Rate) - RCM only on "services supplied by an insurance ag....
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....ent to any person carrying on insurance business." Sections 2(7) & 2(87) CGST Act - definition of agent/supplier. IGST Act Sections 7 & 13 - import of services, place of supply for insurance and performance-based services. Transportation Exemption Notification 9/2017-IGST (Rate), Entry 18 - exempts "services by way of transportation of goods by aircraft or by a vessel from customs station of c....
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....learance in India to a place outside India" (SAC 9965). SAC 9965 vs SAC 9967 - as per GST classification of services. CBIC Circular No. 203/15/2023-GST (27-10-2023) - freight forwarder may act as principal or agent; classification depends on this role. Circular No. 214/8/2024-GST (26-06-2024) - reiterates classification principles for logistics sector; bundled transportation remains 9965 when p....
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....rincipal delivers end-to-end carriage. SHORT PRACTICAL ANSWERS Issue 1: RCM on Insurance RCM does NOT apply merely because insurance premium is paid. RCM in Notification 10/2017 applies only when the supplier is an insurance agent and the recipient is engaged in insurance business. If client buys insurance from an insurance company (Indian or foreign), the supplier is not an "insurance agent.....
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...." If insurer is Indian ? supplier must charge GST under forward charge; no RCM. If insurer is foreign ? it becomes import of insurance service; IGST under RCM may apply only if place of supply is India per Section 13. In export cargo insurance where subject matter is goods situated outside India during risk period or where contract is performed abroad, POS may lie outside India, negating GST. ....
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....Issue 2: Exemption under Notification 9/2017 Exemption is valid if client provides transportation as principal and issues HBL/HAWB, assumes risk/liability, negotiates freight, and bills customers a composite transportation charge. If the client merely arranges transport, coordinates with shipping lines, and charges fees for documentation/handling, then service is under SAC 9967 and taxable @18%.....
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.... Audit must establish agency role; exemption denial is unsustainable where client contracts freight in its own name.<br> Discussion Forum - Knowledge Sharing ....