Ex­empt­ing ex-im trade ser­vices

In a bid to en­sure the smooth im­ple­men­ta­tion of GST, the Cen­tral Board of Ex­cise and Cus­toms (CBEC) con­sti­tuted ‘GST Work­ing Groups’ to in­ter­act with se­lect in­dus­try ex­perts to ad­dress their con­cerns.

Cargo Talk - - Report -

JM Kennedy, ADG DGR, Work­ing Group, Trans­port & Lo­gis­tic­sGST had an in­ter­ac­tive meet­ing in Chen­nai with the lo­gis­tics In­dus­try lead­ers from Fed­er­a­tion of Freight For­warders As­so­ci­a­tions in In­dia (FFFAI), Air Cargo Agents As­so­ci­a­tion of In­dia (ACAAI), As­so­ci­a­tion of Mul­ti­modal Trans­port Op­er­a­tors of In­dia (AMTOI) and Con­sol­ida­tors As­so­ci­a­tion of In­dia (CAI). The as­so­ci­a­tions main­tained that there are cer­tain pro­vi­sions in the pro­posed GST Law caus­ing con­cerns for freight for­ward­ing, cus­toms broking, lo­gis­tics ser­vices and man­u­fac­tur­ing and ex­ports in­dus­try in the coun­try. The joint del­e­ga­tion em­pha­sised on exemption from new tax bur­den to be levied by GST struc­ture on the freight for­ward­ing, cus­toms broking and lo­gis­tics in­dus­try as a whole, which hith­erto have been ex­empted to make In­dian man­u­fac­tur­ing and ex­port less ex­pen­sive and com­pet­i­tive in the in­ter­na­tional mar­ket.

The as­so­ci­a­tion lead­ers pointed out that cur­rently, there is no Ser­vice Tax, based on Rule 10 of the ‘Place of Pro­vi­sion of Ser­vice Rules 2012’, in the air and sea cargo freight for­ward­ing seg­ment. This means that in re­spect of tax­a­tion on trans­porta­tion of goods (other than mail or courier) cri­te­ria should be the ‘Place of Des­ti­na­tion of Goods’. In the freight for­ward­ing seg­ment in­clud­ing air and sea cargo per­tain­ing to ex­port of goods from In­dia, the place of des­ti­na­tion is out­side In­dia and, as a re­sult, ser­vice tax is not payable. This as­pect was also con­firmed by CBEC by a cir­cu­lar is­sued on Au­gust 12, 2016. How­ever, the pro­posed GST law plans levy of GST on in­ter­na­tional trans­porta­tion as well as freight for­ward­ing which is in vari­ance with the GST Pro­vi­sions in other coun­tries as well. In ad­di­tion, in the in­ter­na­tional air seg­ment all air­lines have regis­tra­tion in In­dia and when a freight for­warder pur­chases an air freight slot/space from the air­line, the tax would be ap­pli­ca­ble as per GST rate on ser­vices. Cur­rently, there is no tax im­posed on freight for­warders for the same.

The as­so­ci­a­tions fur­ther ob­served that GST on freight for­warders will only be passed on to ex­porters re­sult­ing in ex­ports from In­dia to be more un­com­pet­i­tive, de­feat­ing the ob­jec­tive of GST and ‘Make in In­dia’. Sim­i­larly, levy of GST on im­port cargo would also re­sult in dou­ble tax­a­tion (since on the en­tire freight, cus­toms du­ties are be­ing levied un­der Sec­tion 14 of the Cus­toms Act) af­fect­ing re-ex­port or ex-im trade.

Con­cern over Regis­tra­tion and Data/ Re­turn Fil­ing:

The GST law in­di­cates that SGST regis­tra­tion could be re­quired in ev­ery state where there is a sup­ply of goods or ser­vices or both. Cur­rently, for ser­vice providers, the law pro­vides for a cen­tralised regis­tra­tion and com­pli­ance. The rule ex­ists in view of the fact that lo­gis­tics re­lated ser­vices, es­pe­cially in ex-im trade, are dif­fer­ent from the tra­di­tional man­u­fac­tur­ing sec­tor.

It has also been noted that un­der the GST regime sup­plier will have to file data on­line on 10th and 15th of ev­ery month and a monthly re­turn on 20th apart from an an­nual re­turn. This would mean 37 fil­ings per state if state­wise regis­tra­tion is implemented. In ad­di­tion, if TDS and ISD is ap­pli­ca­ble there would be 61 fil­ings in a year per state.

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