In re NSK Ship Management Private Limited (GST AAR Tamilnadu)
Whether the vessel support services provided by the applicant to its group company outside India qualify as Export of services under GST?
The vessel support services provided in relation to foreign vessels sailing to other countries outside India, falls under “Export of Services” as per Section 2(6) of the IGST Act as the “Place of Supply” in such cases is entirely “Outside India”
2. If such vessels are calling at the Port in India, then the Place of Supply in respect of that vessel is in India as per Section 13(6) of the IGST Act 2017 and the services rendered to that vessel is not ‘Export of Service’.
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING, TAMILNADU
Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section |1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act.
NSK SHIP MANAGEMENT PRIVATE LIMITED, 447-482, Khivraj Complex-I, 3rd Floor, Anna Salai, Chennai-600035 (hereinafter called the Applicant or NSKI ) are registered under GST with GSTIN33AAHCN0274F1ZR. The applicant has sought Advance Ruling on the following question:-
Whether the vessel support services provided by the applicant to its group company outside India qualify as “Export of services” under GST?
The Applicant has submitted the copy of application in Form GST ARA – 01 and also submitted a copy of Challan evidencing payment of application fees of Rs. 5,000/-each under sub-rule (1) of Rule 104 of CGST rules 2017 and SGST Rules 2017.
2.1 The applicant has stated that they are a Private Limited Company registered in India and is engaged in providing support services relating to vessel management to its group company, namely New Shipping Kaisha Ltd, Japan (hereinafter referred to as “NSKJ”), a company registered under the laws of Japan, for the vessels managed by NSKJ. NSKJ manages vessels which are carrying the country flag of Panama (7 vessels) and the British Cayman Islands (3 ships). These ships are foreign going vessels, and on a world-wide route. During their voyage, these ships can be stationed at various ports and seas around the world, and on occasions also call Indian ports. In this regard, NSKI has entered into a contract with NSKJ for providing various support services in relation to these vessels to NSKJ, either by itself or through various outsourced vendors, whether in or outside India. NSKI charges a fixed management fee of USD 7200/- per month per vessel for providing these support services to NSKJ. Further, in respect of some services provided by vendors to NSKJ, the applicant acts as a pass through for payment to these vendors as and when received from NSKJ.
2.2 On interpretation of law, the applicant has stated that as per the provisions of Section 95 and 97 of the CGST Act, they are eligible to seek Advance Ruling on the issue raised in their application. The applicant has referred to Section 5 of IGST Act which levies IGST on all inter-state supplies of goods or services or both, except on the supply of Alcoholic liquor for human consumption on the value determined under Section 15 of the CGST Act and at such rates not exceeding 40% as may be notified by the Government on the recommendations of the council. They have also referred to definition of Zero rated supplies under Section 16(10) and Sec 16(3) for the ways to do such supply. The applicant has also referred to Clause (6), (14) and (15) of Section 2 of IGST Act which defines export of services, location of recipient of Services and location of supplier of services respectively. The applicant has also relied on Section 13, 13(2) and 13(3)(a) of IGST ACT to determine the place of supply of service where either location of supplier or recipient is outside India.
2.3 They have stated that details of nature of services, terms and conditions related to the contract including the scope of work, approvals, payment related terms etc., as agreed between NSKI and NSKJ are available in the Master Service Agreement (MSA). They have also stated that vide Section 1(a) of the MSA, NSKI has agreed to provide vessel management services to NSKJ in a manner and to the extent as specified in each statement of work (SOW). Further vide Section 1(b) and 1(c) of the MSA, NSKJ has agreed to pay NSKI the fee as set forth in each SOW and also agreed to reimburse NSKI for all reasonable out-of pocket expenses incurred in connection with provision of services, subject to approval by NSKJ. Section 8 of the MSA provides that NSKI shall render services as per the instructions of NSKJ and NSKJ shall have the right to remove/replace the staff members deployed by NSKI. Appendix A to the MSA, which stipulates the nature of services as agreed by NSKI to be provided to NSKJ which includes,-
