Do services rendered on foreign goods in custom bonded warehouses attract GST?

This ruling clarifies whether services provided to foreign goods stored in custom bonded warehouses are subject to GST. The applicant, a service provider at Kandla port, handles imported fertilisers for Indian companies. Recently, foreign suppliers have been sending bulk fertiliser for value addition and storage in bonded warehouses without paying customs duty or GST. The applicant performs services like bagging and stuffing for these goods, which are then exported. The core question is whether these services, performed on foreign goods that haven't cleared customs and are destined for export, attract GST.

GUJARAT AUTHORITY FOR ADVANCE RULING,
GOODS AND SERVICES TAX,
D/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD – 380 009.

ADVANCE RULING NO. GUJ/GAAR/R/12/2021
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2019/AR/41)
Date: 27.01.2021

Name and address of the applicant : M/s. Manoj Bhagwan Mansukhani
(M/s. Rishi Shipping), Plot No.113-
116, Rishi House, Ward No.6,
Industrial area, Gandhidham, Kutch370201.

GSTIN of the applicant : 24ABCPM8333P1ZA

Date of application : 25.06.2019.

Clause(s) of Section 97(2) of CGST
/ GGST Act, 2017, under which
the question(s) raised.
: (b) Applicability of a notification
issued under the provisions of this
Act.
(d) Admissibility of input tax credit of
tax paid or deemed to have been
paid.
(e) Determination of the liability to
pay tax on any goods or services or
both.

Date of Personal Hearing : 23.12.2020

Present for the applicant : Shri Amish Khandhar C.A / Rashmin
Vaja C.A 

B R I E F FA C T S

The applicant M/s. Manoj Bhagwan Mansukhani(M/s.Rishi Shipping),Plot No.113-116, Rishi House, Ward No.6, Industrial area, Gandhidham,Kutch-370201 is service provider operating in Kandla port; that till this timethey were handling imported fertiliser in bulk of Indian fertiliser companies,importing fertiliser from abroad and on their behalf they used to discharge bulk fertiliser from the vessels, packing it into bags and then make despatches byRail, Road and water; that recently Government has allowed foreign suppliersto send bulk fertiliser for value addition and store in Custom Bondedwarehouse without payment of the custom duty and GST and after packing bulk fertiliser, they are to stuff the fertiliser in bags into containers anddespatch the same to same foreign suppliers or to his order; that since party issending bulk fertiliser for only job work in custom bonded godowns and payingthem about 9.8 USD per MT for services, they are to return the same and charge them only USD 9.8 per MT.

2. The applicant has submitted that the foreign supplier cannot afford topay GST on their service charges as their services are rendered on foreigngoods in custom bonded warehouses; that the cargo will go directly from vesselto custom bonded warehouses and these goods never cross the customs barrierand mix-up with the indigenous goods; that these goods were temporarilyimported to India for export purpose and stored in customs bondedwarehouses and exported from there to outside India. The applicant has statedthat they as the service providers do stevedoring, transportation, storage,bagging, stuffing and again transportation of the goods which are temporarily imported. The applicant has asked the following questions seeking Advance Ruling on the same:

To know more in details find the attachment file