GST authorities allege evasion of Rs1.5 lakh crore by shipping companies: Sources
However, shipping liners have given detailed representation to the Finance Ministry, Central Board of Indirect Taxes and Customs (CBIC), DGGI and are seeking a resolution, but DGGI alleges that shipping liners are operating via a branch office in India and have evaded taxes on import of services from head office located abroad, sources added.
“Shipping liners get their operational cost, such as lease rental, fuel charges, crew charges etc. to the head office located abroad and don’t charge the cost of these services to their branch office,” sources said.
Under the GST law, an establishment of a company in India and outside India are treated as distinct persons and any service provided by the head office to the branch office is deemed as a supply, even when it is without any consideration. “Under GST law, any import of service is liable to tax, even if the imported services are without consideration,” sources said.
On this issue, experts said, “The recent CBIC circular of July 2023 may not come to the rescue of the shipping liners as in some cases there have been exempted services provided by the liners. Further, the argument of revenue neutrality may not suffice in the present case looking into judgments in the service tax era.”
