No Service Tax on Inward Transport of Transshipment
of Goods
[Service
Tax Circular No. 204 dated 16th February 2017]
Sub:- Applicability of service tax on the services by way of
transportation of goods by a vessel from a place outside India to the customs
station in India w.r.t. goods intended for transhipment to any country outside
India.
Representations
seeking clarification on levy of service tax on the services by way of
transportation of goods by a vessel from a place outside India to the customs
station in India with respect to goods intended for transshipment
to any country outside India.
2.
In this regard, it is mentioned that the goods landing at Indian ports which
are destined for any other country are allowed to be transshipped
through Indian territory without payment of Customs
duty in India. This is subject to the condition that such goods imported into a
customs station are mentioned in the import manifest or the import report, as
the case may be, as for transhipment to any place outside India. [Section 54(2)
of the Customs Act, 1962]. Further, Goods Imported (Conditions of Transhipment)
Regulations, 1995 have been prescribed for the procedure to be followed for
transhipment of such goods.
3.
It is pertinent to mention that as per the charging Section 66B of the Finance
Act, 1994, service tax is leviable on services
provided or agreed to be provided in the taxable territory. Whether a service
is provided or agreed to be provided in the taxable territory or not, is
determined as per Section 66C of the Finance Act, 1994 and the Place of
Provision of Services Rules, 2012 made thereunder. In terms of the applicable
rule 10 of the Place of Provision of Services Rules, 2012, the place of
provision of services of transportation of goods by air/sea, other than by mail
or courier, is the destination of the goods.
4.
Thus, with respect to goods imported into a customs station in India intended
for transhipment to any country outside India, the destination of goods is not
a place in taxable territory in India but a country other than India if the
same is mentioned in the import manifest or the import report as the case may
be and the goods are transhipped in accordance with the provisions of the
Customs Act, 1962 and rules made there under. Hence, with respect to such
goods, services by way of transportation of goods by a vessel from a place
outside India to the customs station in India are not taxable in India as the
destination of such goods is a country other than India.
5.
All concerned are requested to acknowledge the receipt of this circular.
7.
Trade Notice/Public Notice to be issued. Difficulty if any, in the
implementation of the circular should be brought to the notice of the Board.
F.No.354/42/2016-TRU