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RTP GST Series May 2024 (Part-7 : Ocean Freight Service)

We have started a RTP series on GST in MCQ form where we will post MCQs along with detailed Explanations along with additional questions surrounding the concepts asked in RTP for GST CA Final issued for May 2024.


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Ocean Freight Service


Facts


Alpha Cargo Private Limited (Registered in Rajasthan) supply of goods transportation services provided to Dhoop Garments, registered in Rajasthan, for transport of goods to Japan is Rs. 18,10,000.


Question: What is the Nature of the Supply ?

Option:

a. Export of Service

b. Inter-State Supply

c. Intra-State Supply

d. Exempt Supply


Answer: Intra-State Supply (Explanation is provided in next section)


Question: What is the Nature of the Supply, if Dhoop Garments is registered out of Haryana?

Option:

a. Export of Service

b. Inter-State Supply

c. Intra-State Supply

d. Exempt Supply


Answer: Inter-State Supply


Additional Qns: If the Service is provided to M/s ABC (based out of Japan) & consideration is received in Japaneses Yen.

Option:

a. Export of Service

b. Inter-State Supply

c. Intra-State Supply

d. Exempt Supply


Answer: Export of Supply (assuming all other conditions are satisfied)


Additional Qns: What would be the Rate of GST on such service.


Answer: 5% subject to the condition that ITC is not available.


Explanation


Exemption in case of Ocean Freight


As per IGST Rate Notification No. 9/2017


" Services by way of transportation of Goods by a Vessel from Custom Station of India to a place outside India" was exempted till 30 September, 2022.


Rate of GST in case of Ocean Freight


As per Notification No. 8/2017, Rate of GST on such service is 5% with the condition that ITC would not be available on Goods other than Ships/Vessels including bulk tankers and careers.


Place of Supply in case of Ocean Freight

Before amendment in Section 12 & 13, it was Destination of Goods in case goods are transported outside India.

Now after Amendment w.e.f 31.07.2023 following will be Place of Supply:


If Recipients is Outside India: Location of such Recipient.


If Recipients is Registered in India: Location of such Registered Persons


If Recipients is Un-Registered in India: Location at which such Goods are handed over for their transportation.


Accordingly, in above cases, where Registered Person is situated in Rajasthan, it will be Intra-State Supply.

Further, in case Recipient is based out of Japan, it will be considered as Export of Service. (For reading more about Export & Import of Service linked with Place of Supply, Please read at Export & Import



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Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.







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