5% GST On Fishing Vessel Marine Engine And Its Spare Parts: Kerala AAR

The Kerala Authority of Advance Ruling (AAR) has observed that 5% GST is applicable on fishing vessel marine engines and their spare parts.

The two-member bench of S.L. Sreeparvathy and Abraham Renn S. has observed that marine engines and their spare parts are supplied for use in vessels falling under Customs Tariff Heading 8902. If it is supplied for use other than as part of fishing vessels, GST at the applicable rate and the respective Customs Tariff Headings in which it is classified will apply.

The applicant, Kerala State Co-operative Federation for Fisheries Development Ltd. (MATSYAFED), is registered as a co-operative apex federation of primary level co-operative societies of fishermen of Kerala. It was set up by the government of Kerala to meet the credit and marketing requirements of the traditional fishing sector. It is an apex co-operative society registered on 19-03-1984 under the Kerala Co-operative Societies Act, 1969.

The applicant has sought an advance ruling on the issue in respect of the applicability of the GST rate on marine engines being part of a fishing vessel.

The applicant has been paying 28% IGST at the time of the import of marine engines and their parts. Hence, charging and collecting 28% GST on subsequent supply to the fishermen and paying the same to the government.

The AAR noted that the marine engines imported by the applicant are classified under Customs Tariff Heading 8407 21 00 ­Outboard motors–Marine Propulsion Engines–Spark-ignition reciprocating or rotary internal combustion piston engines and attract GST at the rate of 28%. Fishing vessels, factory ships, and other vessels for processing or preserving fishery products fall under Customs Tariff Heading 8902 and are liable to GST at the rate of 5% as per SI No. 247 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017.

The AAR stated that as per entry in SI No. 252 of Schedule I of Notification No. 01/2017 Central Tax (Rate) dated 28.06.2017, parts of goods of headings 8901, 8902, 8904, 8905, 8906, 8907 failing under any chapter of the Customs Tariff attract 5% GST. Therefore, if the marine engines are supplied for use as part of a fishing vessel falling under Customs Tariff Heading 8902, then the marine engine as part of a fishing vessel will only attract 5% GST.

Applicant's Name: Kerala State Co-operative Federation for Fisheries Development Limited (MATSYAFED)

Dated: 25.06.2022

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