GST Rate on Marine Paints Is 28 Percent Not 5 Percent
Maharashtra GST authority ruled that marine paint is a consumable product taxed at 28% GST, not a ship part taxed at 5%.
- Ruling
- Order NO.GST-ARA- 29/2017-18/B-35, Mumbai, dated 19.05.2018
- Dated
- 19 May 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
- Jotun India asked if marine paints count as parts of a ship.
- Ship parts attract a lower GST rate of 5% under tax rules.
- The Maharashtra AAR ruled that marine paints are not ship parts.
- Marine paints must be taxed at the regular 28% GST rate.
In short
A marine paint manufacturer argued that anti-fouling paint is required by law to make a ship seaworthy. Because ships cannot legally sail without it, the company believed marine paint should count as a ship part. Under GST rules, parts of ships attract a lower tax rate of 5%, whereas regular paints attract 28% GST.
What has changed
How it worked before
Before this decision in Order GST-ARA-29/2017-18/B-35, some suppliers believed coatings mandated by maritime safety laws could qualify as ship parts to claim the lower 5% GST rate.
What has changed
The Maharashtra Authority for Advance Ruling decided that paint is a consumable coating, not a structural component of a ship. Even if safety laws require anti-fouling paint, that legal requirement does not turn a liquid consumable into a physical ship part. As a result, marine paints attract 28% GST instead of the discounted 5% rate reserved for ship parts.
Who this affects
Manufacturers, dealers, and suppliers selling marine paints, protective coatings, or chemical consumables used on ships and boats.
An example
ABC Coatings Ltd makes specialized anti-rust paint used on sea vessels. They want to bill a shipyard at 5% GST, arguing that paint is an essential ship component. Following the reasoning in the Jotun India ruling, paint is a consumable surface treatment rather than a structural part of the vessel. ABC Coatings should continue charging 28% GST on their sales.
What you should do
If you sell paints or chemical coatings to shipbuilders, charge the full 28% GST rate unless you hold a separate ruling for your product. Remember that an advance ruling legally binds only the business that applied for it and their tax office. Do not automatically apply a lower tax rate meant for structural vessel parts to surface coatings without official guidance.
If you do nothing
If you mistakenly charge 5% GST instead of 28% on marine paints, tax officers can demand the unpaid 23% GST difference during an audit. You will also have to pay interest on the unpaid tax and face potential short-payment penalties.
The terms explained
- Advance Ruling
- A binding written decision given by tax authorities to a specific business about how GST rules apply to their transaction.
- Input Tax Credit
- A GST mechanism allowing businesses to reduce the tax they owe on sales by subtracting the GST they already paid on business purchases.
- Consumable
- An item or liquid that gets used up or wears away during operation, rather than remaining as a permanent structural piece of machinery.
The ruling in detail
Authority for Advance Ruling
JOTUN INDIA PRIVATE LIMITED
Order NO.GST-ARA- 29/2017-18/B-35, Mumbai, dated 19.05.2018 · Maharashtra
Questions before the authority
- Whether marine paints supplied by the applicant, would be considered to be part of ship and accordingly be then classified under Sl no 252 of Schedule 1 of Notification No 1/2017 of Central Tax (Rates) dated June 28, 2017?
Facts
The applicant manufactures and supplies specialized marine paints used on ships for corrosion prevention and anti-fouling protection. The applicant contended that since anti-fouling paint is mandatory under the Merchant Shipping Act, 1958 for a ship to be seaworthy, paint forms an essential component of a ship. Based on this, the applicant sought to classify marine paints under Entry 252 of Schedule I of Notification No. 1/2017-Central Tax (Rate) at 5% GST as 'parts of ship', instead of Chapter 3208/3209 at 28% GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification of marine paints as parts of ship under Entry 252 of Schedule I | Answered in the negative Marine paints are consumables taxable at 28% under CTH 3208/3209 |
The Maharashtra AAR held that marine paints **cannot be classified as parts of a ship**. Consequently, marine paints are not covered under Entry 252 of Schedule I of Notification No. 1/2017-Central Tax (Rate) and remain taxable at **28% GST** under Chapter Heading 3208/3209.
Reasoning
The AAR examined judicial precedents and dictionary meanings to define a 'part' as an integral structural component without which the whole article is incomplete and cannot exist. Marine paints are consumable items applied to surfaces that get consumed over time and do not form an independent or separable structural part of a vessel. The authority concluded that statutory compliance requiring anti-fouling coating under marine safety laws does not convert a consumable material into a structural part of a ship.
Provisions relied on
- Notification No. 1/2017-Central Tax (Rate) (Entry 252 of Schedule I, Entry 20 of Schedule IV)
- Customs Tariff Act, 1975 (Headings 3208, 3209, 8901 to 8907)
- Merchant Shipping Act, 1958 (Sections 356P, 356Q, 356R, 356X)
- Section 98 of CGST Act, 2017 / MGST Act, 2017
For the practitioner
This order settles that **consumables and surface coatings are not parts** of ships or machinery, even if statutorily mandated for operational use. Practitioners cannot claim concessional GST entry rates reserved for 'parts' of vessels or capital goods on raw materials, paints, or general maintenance consumables.
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/mah_aar_29_2017-18_b-35_jotun_india_pvt_ltd.pdf
Legibility of the scan, as read: high.
Prepared 18-10-2026.
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