Massive Allegations of GST Evasion: Shipping Liners Accused of ₹1.2-₹1.5 Lakh Crore Tax Evasion
In a notable crackdown on GST evasion, the Directorate General of GST Intelligence (DGGI) in Ahmedabad has made staggering allegations of tax evasion amounting to ₹1.2 to ₹1.5 lakh crore against shipping liners, according to sources familiar with the matter as per a reliable news report.
The shipping liners in question have reportedly presented a detailed representation to key authorities, including the Finance Ministry and the Central Board of Indirect Taxes and Customs (CBIC). They are actively seeking a resolution to the allegations. However, DGGI asserts that these shipping liners are involved in tax evasion by operating through a branch office in India while failing to pay taxes on imported services from their head offices located abroad.
Sources indicate that these shipping liners are channeling their operational expenses, which include lease rentals, fuel charges, and crew expenses, to their overseas head offices without billing the branch office in India for these services.
Under the GST law, any business entity operating both in India and abroad is treated as separate legal entities, and any service provided by the head office to the branch office is considered a supply, even when it involves no financial transaction. According to sources, the GST law deems any import of services to be taxable, regardless of whether these imported services are provided without any consideration.
Experts in the field have commented that the recent CBIC circular issued in July 2023 may not offer relief to the shipping liners, especially in cases where exempted services have been provided by them. Furthermore, the argument of revenue neutrality may not prove sufficient in this situation, taking into account legal judgments from the service tax era. This development marks a significant and complex issue in the realm of GST compliance and tax enforcement.
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