Ship support services provided in relation to foreign ships sailing to other countries fall under the “export of services”: AAR
The Tamil Nadu Advance Ruling Authority (AAR) ruled that ship support services provided in relation to foreign ships sailing to other countries apart from India fall within the scope of “export of services” under Section 2(6) of the IGST Act, as the “place of supply” in such cases is entirely “outside India”.
The bench of two members of TGVenkatesh and K.Latha observed that if these vessels call at a port in India, the place of supply of this vessel is in India, in accordance with Article 13 (6) of the IGST Act 2017. and the services rendered to this vessel do not constitute an “export of services”.
The Applicant’s business is to provide ship management support services to its group company, New Shipping Kaisha Ltd., Japan (NSKJ). NSKJ is a registered company under the laws of Japan for vessels operated by NSKJ. NSKJ manages vessels flying the national flag of Panama (7 vessels) and the British Cayman Islands (3 vessels). These ships are foreign ships and on a global route. During the voyage, ships may be stationed in various ports and seas around the world and occasionally also referred to as Indian ports. In this regard, NSKI has entered into a contract with NSKJ to provide NSKJ with various support services related to these vessels, either by itself or through various external providers, whether in India or the foreign. NSKI charges a fixed management fee of USD 7,200/month per vessel for providing these support services to NSKJ. With respect to certain services provided by vendors to NSKJ, Applicant acts as an intermediary for payment to such vendors as it is received from NSKJ.
The claimant requested an advance ruling on whether the vessel support services provided by the claimant to its group company outside India qualified as an export of services under GST.
The AAR noted that where the vessel under management calls in the “taxable territory”, the place of supply of services in respect of that vessel under management is the location in the taxable territory. Services rendered in respect of this vessel are not covered by “export of services”.
The AAR considered that in cases where the vessels do not enter any of the locations within the taxable territory and all services related to the water transportation of the vessels are extended to locations outside the taxable territory, then the extended services are “service export” .