Essential parts of the ship like AIS,NAVTEX and SART entitled to concessional rate of GST @ 5%: AAAR Maharashtra

Categories: Advance Ruling
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Fact: M/s. A S Moloobhoy (P.) Ltd. (“The Appellant’) is engaged in the business of sale and distribution of Marine Distress Signals, EPIRB and SART, SSAS, Marine Chemicals, Navigation and Communication (NAVCOM) Equipment and also providing Life Saving equipment such as Life raft, Lifeboat and Fire-fighting services, including Pyrotechnic Disposal, Electronic Services and Training Services related to the Marine Industry. The Appellant imports various goods and spares which are supplied to ships.

The present appeal has been filed under Section 100 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 (“the CGST Act and MGST Act”) by the Appellant before the Advance Ruling Authority of Maharashtra (“The Authority”) vide its Order No. GST-ARA-14/2017-18/B 71 dated July 18, 2018.

Issue Involved: Whether the supply of Imported goods or spare parts which are supplied on ship as an essential elements of the ship are classifiable as “Parts of goods of heading 8901, 8902, 8904, 8905, 8906, 8907” under entry 252 of schedule I of CGST Notification No. 01/2017 – CT(R) and liable to 5%?

Appellant’s Contention of law: The Appellant humbly submits that the specified goods such as VDR, FCV, AIS, SONAR, SART etc are also essential parts of the ship and not in the nature of additional equipment as perceived by the authority. Further these spare parts should be classified under Entry No.252 of Schedule 1 of Notification No. 1/2017 – CT(R) and taxed at a rate of 5%. Further, the Appellant has prayed to modify the impugned order passed by the Authority so as to classify specified goods under entry no. 252 of Schedule 1 of Notification No. 1/2017 – CT(R) and taxed at a rate of 5%.

Held: The Hon’ble AAAR of Maharashtra vide Order No. MAH/AAAR/SS-RJ/20/2018-19 dated February 14, 2019 has modified the ruling pronounced by the Authority and hold that “Automatic Identification System (AIS), NAVTEX and SART” are covered by entry no. 252 of Schedule 1 of Notification No. 1/2017 – CT(R) and taxed at a rate of 5%.

Further, the authority uphold the impugned order passed by the AAR that “SONAR, Fish Finder, Voyage Data Recorder (VDR) and two way RT Walkie – Talkies” would not coved under entry no. 252 of Schedule 1 of Notification No. 1/2017 – CT(R).

Citation: [2019] 103 taxmann.com 211 (AAAR-MAHARASHTRA)

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