Several foreign shipping companies operating in India have received significant relief. The tax department has decided to withdraw a large tax demand against them. This decision means a relief of approximately ₹3000 crore for these companies.
Tax Demand Dropped for 18 Companies
According to a report by ET, the Directorate General of Goods and Services Tax Intelligence (DGGI) has decided to drop the tax demand of around ₹3000 crore against 18 foreign shipping companies operating in India. These demands were related to the financial year 2017-18. The news about this decision has been reported by sources familiar with the case.
Companies Benefiting from the Decision
If the report is accurate, several major foreign companies will benefit from this decision. This includes companies like Maersk, Orient Overseas Container Line Limited, and Hapag-Lloyd Mediterranean Shipping. These companies had received notices from the tax department for not paying GST on service imports after July 2017.
Notices for Years After 2017-18 Still Stand
The report also mentions that the companies had provided a joint undertaking stating that they did not import any services during 2017-18. As a result, the tax department decided to drop the ₹3000 crore demand. However, notices for the years following 2017-18 are still in effect.
Investigation Started Last Year
The DGGI started investigating the shipping companies in October 2023. The investigation alleged that several foreign shipping and aviation companies’ branch offices had not paid GST under the reverse charge mechanism. The case involved non-payment of GST on services like rental services, aircraft maintenance, and crew salaries.
