Vessel Support Services Provided In Relation To Foreign Vessels Sailing To Other Countries Falls Under "Export of Services": AAR

The two-member bench of T.G.Venkatesh and K.Latha has observed that if such vessels are calling at a 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 are not an "export of service".

The applicant is in the business of providing support services relating to vessel management to its group company, namely New Shipping Kaisha Ltd., Japan (NSKJ). The NSKJ is a company registered under the laws of Japan for the vessels managed by NSKJ. NSKJ manages vessels which carry the national flags of Panama (7 vessels) and the British Cayman Islands (3 ships). These ships are foreign-going vessels and on a world-wide route. During the voyage, the ships can be stationed at various ports and seas around the world, and on occasions, also called Indian ports. In this regard, NSKI has entered into a contract with NSKJ to provide 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. 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.

The applicant sought an advance ruling on the issue of whether the vessel support services provided by the applicant to its group company outside India qualify as export of services under GST.

The AAR noted that when the vessel under management calls on the "taxable territory", then the place of supply of service in respect of that vessel under management is the location in the taxable territory. The services rendered in respect of that vessel are not covered under "Export of Service".

The AAR held that in cases where the vessels do not enter any of the locations in the taxable territory and the entire services relating to water transport of the vessels are extended in locations outside the taxable territory, then the services extended are "export of services".

Applicant's Name: NSK Ship Management Private Limited

Citation: NSK Ship Management Private Limited

Dated: 30.06.2022

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