NSK Ship Management (P.) Ltd. {AUTHORITY FOR ADVANCE RULINGS, TAMILNADU}

NSK Ship Management (P.) Ltd. {AUTHORITY FOR ADVANCE RULINGS, TAMILNADU}:

DATE OF ORDER : 30-06-2022

simplified explanation of the ruling by the Authority for Advance Rulings (AAR), Tamil Nadu, regarding the GST implications on vessel support services provided by NSK Ship Management (P.) Ltd.:

Background:

• Applicant: NSK Ship Management (P.) Ltd. sought an advance ruling on whether their vessel support services provided to a group company, where the recipient is located outside India, qualify as export of services under GST.
• Issue: The main issue was determining the place of supply for these services and whether they meet the criteria for export of services under the Integrated Goods and Services Tax (IGST) Act, 2017.

Key Points of the Case:

1. Nature of Services:
   • The applicant provides various services to vessels, including inspection for certifications, docking, loading/unloading, repairs, as well as non-physical services like accounting, HR, and procurements.
2. Place of Supply Determination:
   • For services provided to vessels physically made available in India (e.g., docking, repairs), the place of supply is considered to be in the taxable territory (India).
   • According to Section 13 of the IGST Act, the place of supply for services related to goods, including vessels, is where the goods are physically located when the services are performed.
   • Therefore, services provided to vessels physically present in India do not qualify as export of services.

1. Export of Services Criteria:
   • To qualify as export of services under GST:
     • The supplier (NSK Ship Management) must be located in India.
     • The recipient (group company) must be located outside India.
     • Payment must be received in convertible foreign exchange.
     • The place of supply of the service must be outside India.
2. Ruling of the AAR:
   • Services like inspection, docking, and repairs performed on vessels physically present in India have their place of supply in India.
   • Such services do not qualify as export of services under GST.
   • However, services provided when vessels do not enter India and are serviced outside Indian territory would qualify as export of services, meeting all criteria including the place of supply being outside India.
3. Conclusion:
   • The AAR ruled partly in favor of the assessee (NSK Ship Management), clarifying that vessel support services provided to vessels physically present in India are not eligible for treatment as exports under GST.
   • Only services provided when vessels are outside India and not physically present in Indian territory would meet the conditions for export of services.

Implications:

• This ruling underscores the importance of determining the place of supply accurately under GST rules, especially for services related to vessels which can have varying physical locations.
• It provides clarity on when services to vessels can be considered as exports under GST, emphasizing the criteria of physical presence and place of supply.