Marine Engines being used as Part of Fishing Vessels attracts 5% GST: AAR [Read Order]

The Tamil Nadu Authority of Advance Ruling ( AAR ) has held that the marine engines being used as part of fishing vessels attracts 5% GST.

The applicant, South Indian Federation of Fishermen Societies is a Charitable Society formed under the Travancore-Cochin Literacy Scientific and Charitable Societies Registration Act, 1955. They are engaged in undertaking various welfare activities for the poor fisherman in South India for the last forty years. They provide the fishermen necessary fishing requisites at concessional rate. Fishing boats and Ice boxes are manufactured by them while Marine engines for fishing vessels are imported from outside India. These items are subsequently transferred to their Branches in various places in South India for supply to the fishermen.

The applicant has submitted that Rate of tax on Marine Engines (HSN 8407) as such is taxable at the rate of 28% being an item coming within Customs Tariff Heading 8407 21 00. However, as per entry 252 of Schedule I of Notification No. 0I/2017 Central (Rate), parts of goods of headings 8901, 8902, 8904, 8905, 8906 and 8907 falling under any chapter of the Customs Tariff attracts GST at the rate of 5%, Therefore, if the marine engines are supplied for use as part of fishing vessel falling under Customs Tariff Heading 8902 will attract GST at the rate of 5% only. The applicant further submitted that CBIC in Circular no.52/26/2018-GST clarifies that the marine engine attracts 5% GST being part of fishing vessels.

The Authority observed that the rate is applicable based on the end use of these engines i.e., if they become part of fishing vessels or other vessels including warships and life boats other than rowing boats. Thus the rate of tax at 5% is based on the end use these engines are put to. Hence it becomes imperative that the end use of such engines should be established to avail the reduced rate of GST.

The Coram of Sri. T.G.Venkatesh, I.R.S., Additional Commissioner/Member, and Smt. K.Latha., M.Sc., (Agri), Joint Commissioner (ST)/ Member has held that “Therefore if the marine engines supplied for use as part of vessel falling under tariff heading 8902, which are used by the fishermen, then such engines as part of such vessels will only attract GST at the rate of 5% as per the above entry”.

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.