M/S FAIRMACS SHIP STORES PRIVATE LIMITED

The Applicant is holder of Special Warehouse License for storage of duty free ship stores imported without payment of duty for supply to Indian naval / Coast Guard ships and ocean going merchant ships.

The applicant sought Advance Ruling on following issues:
a) Whether outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coat Guard Ships are exempted from tax under GST '?
b) Whether they can collect the GST from the recipient or from their authorised agents for the goods supplied'?

The goods received by the applicant are within the Customs area as defined under section 2(11) of the Customs Act, 1962. Therefore goods cleared are to be treated as supply of goods in the course of inter state trade. Further, the goods supplied is not an exempt supply as per section 2(47) of CGST Act as it is neither NIL rated or being exempt by any notification.

It is also clarified vide Circular no. 46/2017-Customs that the transaction of sale / transfer etc. of the warehoused goods between the importer and any other person may be at a price higher than the assessable value of such goods. Such a transaction squarely falls within the definition of 'supply' as per section 7 of CGST Act and shall be taxable in terms of section 9 of the CGST Act read with section 20 of IGST Act. As per sub-section (2) of section 7 of the IGST Act , any supply of imported goods which takes place before they cross the customs frontiers of India, shall be treated as an inter-State supply. Thus , such a transaction of sale /transfer will be subject to IGST.  The value of such supply shall be determined in terms of section 15 of the CGST Act read with section 20 of the IGST Act and the rules made thereunder , without prejudice to the fact that customs duty (which includes BCD and applicable IGST payable under the Customs Tariff Act) will be levied and collected at the ex-bond stage .

Crux: a) The applicant are not exempted from tax under GST on the outward supplies made to ocean going merchant vessels on foreign run, Indian Naval Ships and Indian Coat Guard Ships.
b) In case the transaction is not export, the applicant can collect the applicable GST from their customers. However, in case of export the option lies with the applicant based on manner of exports i.e. whether they intend to export under bond or on payment of tax.