Case Law Details
In re DCW Limited (GST AAR Tamilnadu)
DCW Ltd., a chemical products manufacturer in Tamil Nadu, sought an Advance Ruling regarding GST implications on export freight for their FOB (Free on Board) basis exports. The questions raised revolved around the liability to pay GST under the Reverse Charge Mechanism (RCM), the applicability of GST on FOB exports, and the determination of taxable value in cases where freight charges are unknown to the exporter.
DCW Limited, based in Tamil Nadu, manufactures chemical products like Caustic Soda and PVC resin. They sought clarification on various aspects related to GST on export freight for their FOB basis exports through an Advance Ruling application. The queries they presented included whether they were liable under the Reverse Charge Mechanism (RCM) to pay GST on export freight, the liability of the shipping line, the taxability of FOB exports, and the determination of taxable value when freight charges are unknown.
The Authority for Advance Ruling (AAR) examined the case meticulously. They noted that DCW Ltd. was not directly involved in arranging export freight for FOB shipments, as this responsibility fell to the overseas buyer. The AAR highlighted that the exporter’s involvement ceased once goods were delivered to the shipping line at the customs port. Therefore, DCW Ltd. was not liable to pay GST under RCM for export freight on FOB basis shipments.
Regarding the liability of the shipping line, the AAR determined that since the shipping line was not the applicant and did not transact directly with DCW Ltd., this query was deemed irrelevant for the Advance Ruling.
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