Earlier, the AAR had ruled GST would be charged on goods sold at duty-free shops on the basis of Inter-State provisions only
HYDERABAD: Andhra Pradesh's Authority of Advance Ruling (AAR) has said the goods and services tax (GST) will be levied on the goods supplied from Customs warehouse to merchant vessels on a Foreign run, triggering sharp views from experts.
The Bench said the petitioner, Fairmacs Ship Stores, holder of a special warehouse licence, was liable to pay GST on outward supply made to these vessels.
The AAR treated these as Inter-State supply. However, it also allowed the petitioner to collect GST from the clients.
Experts argue GST is a consumption-based tax and these supplies are consumed outside India. Abhishek Rastogi, partner at Khaitan & Co, says provisions on Inter-State supply have been a matter of dispute.
Earlier, the AAR had ruled GST would be charged on goods sold at duty-free shops on the basis of Inter-State provisions only.
"The constitutional validity and arbitrariness of these provisions come into play for various transactions such as duty-free shops and supplies made to the outgoing foreign vessels," Rastogi said.
The Government should consider issuing a GST exemption on these supplies to mitigate additional tax costs, said Abhishek Jain, Tax Partner with consultant EY India.