The AAR, Gujrat in the matter of M/S Manoj Bhagwan Mansukhani (M/S. Rishi Shipping) [GUJ/GAAR/R/12/2021 dated January 27, 2021] ruled that services provided viz. stevedoring, transportation, storage, bagging, stuffing, and transportation of the goods which are temporarily imported into India before exporting shall not be considered as ‘Export of service’ upto January 31, 2019, but shall be considered as ‘Export of service’ w.e.f. February 01, 2019. Accordingly, it shall not be eligible for ‘Zero rated Supply’ under Section 16 of the Integrated Goods and Services Tax Act, 2017 (“IGST Act”) upto January 31, 2019, but shall be eligible for the same w.e.f. February 01, 2019.
M/S Manoj Bhagwan Mansukhani (M/S Rishi Shipping) (“the Applicant”) is a service provider operating in Kandla port and handling imported fertiliser from abroad on behalf of Indian fertilizer companies.
Further, the Applicant used to discharge bulk fertiliser from the vessels, packing it into bags and then make despatches by rail, road and water and store in custom bonded warehouse without payment of custom duty and GST. After packing bulk fertiliser, the Applicant stuffed the fertiliser bags into containers and despatch the same after 2/3 months (as per instructions of their clients) for export to the ultimate buyers of the clients of the Applicant.
The AAR, Gujrat in GUJ/GAAR/R/12/2021 dated January 27, 2021 held as under:
Since Condition (iii) of the Section 2(6) of the IGST Act is not fulfilled by the Applicant, the services rendered by the Applicant will not be covered under ‘export of services’.
Section 2(6) of the IGST Act
“(6) “export of services” means the supply of any service when,––
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8”
Section 2(14) of the IGST Act
“(14) “location of the recipient of services” means,––
(a) where a supply is received at a place of business for which the registration has been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business for which registration has been obtained (a fixed establishment elsewhere), the location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the place of business or fixed establishment, the location of the establishment most directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence of the recipient”
Section 13(1), (2) and (3) of the IGST Act (as amended)
“13. Place of supply of services where location of supplier or location of recipient is outside India.
(1) The provisions of this section shall apply to determine the place of supply of services where the location of the supplier of services or the location of the recipient of services is outside India.
(2) The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services:
Provided that where the location of the recipient of services is not available in the ordinary course of business, the place of supply shall be the location of the supplier of services.
(3) The place of supply of the following services shall be the location where the services are actually performed, namely:-
(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:
Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process.
(b) services supplied to an individual, represented either as the recipient of services or a person acting on behalf of the recipient, which require the physical presence of the recipient or the person acting on his behalf, with the supplier for the supply of services.”
Section 16(1) of the IGST Act
“16. Zero rated supply
(1)“zero rated supply” means any of the following supplies of goods or services or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both for authorised operations to a Special Economic Zone developer or a Special Economic Zone unit.”
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