GST Ruling on Marine Consultancy and Intermediary Support Services
Maharashtra GST authority ruled that marine operational support provided to foreign ship owners is an intermediary service taxable under GST.
- Ruling
- NO.GST-ARA-18/2017-18/B- 26 Mumbai, dt. 18/04/2018
- Dated
- 18 Apr 2018
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- Five Star Shipping asked if marine services form a single bundled package.
- Authority ruled operational support and consultancy are separate independent services.
- Market advice was denied classification as general business consultancy.
- Operational liaison services were classified as taxable intermediary services.
In short
Five Star Shipping provided market analysis alongside operational support like laytime calculations to foreign ship owners. The company asked whether all these activities could be combined into one GST-exempt consultancy package or if they must be split into separate services.
What has changed
How it worked before
Indian marine consultants serving foreign ship owners generally assumed their entire service bundle qualified as an export of business consultancy, exempting them from paying Goods and Services Tax (GST).
What has changed
In ruling GST-ARA- 21/2017/B- 26 Mumbai, the Maharashtra Authority for Advance Ruling (AAR) decided that optional back-office support is not naturally bundled with consultancy services under Section 2(30) of the CGST Act. The AAR also held that carrying out calculations and liaising with charterers makes the provider an intermediary service under Section 2(13) of the IGST Act, making those support fees taxable under local GST.
Who this affects
Shipping consultants, maritime service providers, and back-office operations in India that advise or assist foreign ship owners and charterers.
An example
A shipping advisory firm in Mumbai provides trade market reports to a European vessel owner while also handling voyage calculations with local charterers for separate fees. The firm wants to treat the entire contract as a tax-free export of advisory services. Based on this ruling, GST officers can treat the voyage calculation and liaison work as a separate, taxable intermediary service.
What you should do
Review your contracts to check if your support activities require interacting with third parties like charterers. Remember that an advance ruling binds only the business that asked for it and its tax office. Do not assume your exported services are GST-exempt without evaluating your specific contract terms with a tax advisor.
If you do nothing
If you treat support services as tax-free exports, a tax officer might classify you as an intermediary during an audit. This can lead to demands for unpaid GST at 18%, along with interest and heavy penalties. You could also be forced to pay back any input tax credit refunds you previously received.
The terms explained
- composite supply
- A group of goods or services naturally sold together as a single main service, where one key service determines the tax rate.
- intermediary service
- A service where a business acts as a mediator or facilitator to help two other parties do business together.
- input tax credit
- The tax you pay on business purchases that you can deduct from the tax you collect on your sales.
The ruling in detail
Authority for Advance Ruling
Five Star Shipping
NO.GST-ARA-18/2017-18/B- 26 Mumbai, dt. 18/04/2018 · Maharashtra
Questions before the authority
- Whether Marine Consultancy Service ("MCS") provided to foreign ship owners constitutes "composite supply" with the principal supply of consultancy service?
- In the alternate, where services are provided to foreign ship owners distinctively as supply of consultancy service and support service with separate and demarcated fees for their consultancy service and for support service: a. Whether consultancy service will qualify as business consultancy service in terms of the scheme of classification of services [Annexure to Notification 11/ 2017 - Central Tax (Rate), dated 28th June, 2017]?
- b. Whether support service qualifies as "intermediary service" in terms of Section 2(13) of the IGST Act?
Facts
The applicant provides Marine Consultancy Services comprising market intelligence and commodity trade analysis alongside operational support such as voyage execution monitoring, laytime calculations, and accounts reconciliation to foreign ship owners. The foreign ship owners utilize these inputs to identify charterers and manage freight operations. The applicant contended that these activities form a naturally bundled composite supply with consultancy as the principal supply.
Ruling
| Question | What the authority ruled |
|---|---|
| Marine Consultancy Service as composite supply | Answered in the negative. Services are not naturally bundled as foreign ship owners may choose to avail only specific services or perform them through in-house staff. |
| Qualification as business consultancy service | Answered in the negative. Services relate directly to marine transportation opportunities rather than general internal management strategy. |
| Support service as intermediary service | Answered in the affirmative. Operational monitoring and reconciliation require coordinating and interacting with charterers on behalf of ship owners. |
The AAR held that the services do not constitute a **composite supply** because the individual service elements can be availed or rendered in isolation. On standalone classification, the consultancy service was held not to qualify as business consultancy service under Heading 9983. Furthermore, the operational support services were held to qualify as an **intermediary service** under Section 2(13) of the IGST Act.
Reasoning
The authority observed that under the agreement, foreign ship owners retain the option to perform operational support services in-house or hire other consultants, showing the services are not **naturally bundled** under Section 2(30) of the CGST Act. Management consultancy involves guiding overall organizational strategy, whereas the applicant's advice pertains directly to transport business opportunities. Finally, carrying out laytime calculations and accounts reconciliation inherently requires interaction between the ship owner and charterers through the applicant, satisfying the definition of an **intermediary** under Section 2(13) of the IGST Act.
Provisions relied on
- Section 2(30) of the CGST Act, 2017
- Section 2(13) of the IGST Act, 2017
- Notification No. 11/2017-Central Tax (Rate)
For the practitioner
This ruling highlights that contractual flexibility allowing optional or separable performance of services prevents classification as a **composite supply**. It also establishes that post-fixture operational liaison with charterers makes a maritime service provider an **intermediary**, subjecting the fees to local GST liability.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/maharashtra_gst-ara-18_2017_dt_18.4.18_fss.pdf
Legibility of the scan, as read: high.
Prepared 17-10-2026.
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