The move brings cheer to foreign shipping lines, such as Maersk, Orient Overseas Container Line Ltd and Hapag Lloyd Mediterranean Shipping, who were facing notices for non-payment of goods and services tax (GST) on import of services from July 2017 onwards.
The tax demand was dropped after the shipping companies gave a joint undertaking that there was no import of services in 2017-18, the people said.
However, the tax demand for subsequent years will stay, they said.
The DGGI had in October 2023 started investigation into allegations that the branch offices of foreign shipping companies and foreign airlines in India had not paid GST under the reverse charge mechanism for services such as rental, maintenance of aircraft and salary paid of crew abroad.
The agency also sought detailed clarifications from these companies, while raising tax demand for the period from July 1, 2017, to March 2024. The DGGI, in February this year, also sent out summons to all the foreign shipping lines operating in India.
After receiving summons from the DGGI Ahmedabad and DGGI Mumbai, these companies jointly approached the finance ministry. They also provided a break-up for the import of services to the DGGI.
“This exemption is only for the financial year 2017-18 and will not apply to the subsequent years for which the investigation is on,” said one of the officials, who did not wish to be identified.
The fitment committee of the GST Council will decide on the exemption for subsequent years and also whether the import of services by such companies was taxable.