Blitz Bureau
NEW DELHI: In a major relief for foreign shipping companies operating in India, the Directorate General of Goods and Services Tax Intelligence (DGGI) has rescinded a tax demand of approximately Rs 3,000 crore for the financial year 2017-18 against 18 foreign firms, according to a report by the Economic Times.
The tax demand was withdrawn after the shipping companies collectively assured authorities that no services had been imported in 2017-18, the report said, citing sources.
The latest move by the DGGI provides relief to foreign shipping lines such as Maersk, Orient Overseas Container Line Ltd, and Hapag-Lloyd Mediterranean Shipping, which had been issued notices for the non-payment of goods and services tax (GST) on imported services starting from July 2017.
However, the tax demand for subsequent years remains in place.
The DGGI began an investigation in October 2023, probing claims that the Indian branches of foreign shipping companies and airlines had not paid GST under the reverse charge mechanism for services such as aircraft rental, maintenance, and crew salaries paid abroad.
The agency also requested detailed explanations from these companies while raising tax demands for the period from July 1, 2017, to March 2024. In February of this year, the DGGI issued summonses to all foreign shipping lines operating in the country.
Following the summonses from the DGGI offices in Ahmedabad and Mumbai, the companies jointly approached the finance ministry and submitted a detailed breakdown of the imported services to the DGGI.
The GST Council’s fitment committee will determine the exemption’s applicability for later years and whether the import of such services by these companies is subject to taxation.
