Place of supply of Goods supplied to vessels

Hi Jeetu! Here’s a detailed answer regarding the taxability and place of supply for goods supplied to vessels at Indian ports:

Scenario Recap:

• ABC Co. (Indian company) supplies FMCG goods (food, water, tools) to vessels of XYZ Inc (foreign company based in USA).

• Vessels are located at Indian Customs ports.

• ABC issues shipping bills and receives payment in USD.

GST Analysis:

1. Place of Supply (Goods) for Vessels under GST:

• As per Section 10(1)(c) of the IGST Act, 2017 (Place of supply of goods imported into India or exported from India):

  The place of supply of goods imported into India or exported from India shall be the place of import or export.

• Further, Section 12(4) of the IGST Act deals with goods supplied on vessels or aircraft:

  Place of supply of goods, other than goods imported into India or exported from India, supplied to a vessel or aircraft shall be the location of such vessel or aircraft at the time of supply.

• Here, goods are supplied to vessels which are in Indian Customs ports, so the place of supply will be the location of the vessel in India (i.e., the Indian port).

2. Taxability:

• Since supply is to a vessel located in India, place of supply is in India, so GST is applicable.

• Supply is domestic supply (not export), so CGST + SGST applicable (IGST not applicable as it is not export of goods from India).

• ABC Co. must charge GST on the invoice.

• The consideration received in USD is converted to INR for GST payment purposes.

Summary:

Additional Notes:

• The supply of goods to foreign vessels within Indian waters/ports is treated as domestic supply.

• Export of goods requires the goods to leave Indian Customs territory which is not the case here.