GST Rate on Fishing Boat Parts Set at 5 Percent
The Kerala advance ruling authority decided that marine boat parts attract 5% GST if supplied for fishing vessels, but 18% otherwise.
- Ruling
- ORDER No. CT/5496/18-C3 DATED 29/05/2018
- Dated
- 29 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
- Manufacturer asked about GST rates for marine propellers and boat shafts.
- Authority ruled these parts qualify for 5% GST when used in fishing boats.
- The lower tax rate depends entirely on the end-use of the component.
- Supplying the same parts for general industrial use attracts 18% GST.
In short
Saraswathi Metal Industries asked the Goods and Services Tax (GST) authority about the correct tax rate for manufacturing boat components like propellers, rudders, and shafts. The main question was whether these marine parts qualify for a lower concessional GST rate of 5% meant for fishing vessels, or if they should be charged at the standard 18% rate applicable to general metal engineering goods.
What has changed
How it worked before
Before this ruling, suppliers were confused about whether GST applied based on what an item was made of or how it was ultimately used. Many component manufacturers faced challenges from tax officers who demanded 18% GST based on general hardware codes, even when the parts were built specifically for fishing boats.
What has changed
The Kerala Authority for Advance Ruling (AAR) in order CT/5496/18-C3 ruled that marine parts like propellers, rudders, and shafts attract 5% GST under Entry 252 of Notification No. 01/2017-Central Tax (Rate), provided they are used for fishing or floating vessels. In practice, this confirms that tax classification for these parts depends on end-use. If a manufacturer sells the same part for general industrial machinery, the standard 18% GST rate applies.
Who this affects
Manufacturers, engineering workshops, and vendors across India that produce or supply propellers, rudder sets, stern tubes, and shafts for marine vessels.
An example
A foundry in Kochi manufactures stainless steel propeller shafts and sells them to two buyers. The first buyer is a shipyard building wooden fishing boats, so the foundry charges 5% GST based on the end-use rule in this ruling. The second buyer purchases the exact same shaft to use in a factory conveyor belt, so the foundry charges 18% GST. This shows how the same manufactured product carries different tax rates depending on its final application.
What you should do
Businesses selling marine parts should obtain purchase orders or declarations from buyers confirming the items are for fishing or floating vessels before charging 5% GST. Keep clear records to justify the lower rate during tax audits. Note that an advance ruling binds only the business that applied for it and its local tax office; it does not automatically act as law for other suppliers.
If you do nothing
If a business charges 5% GST on general engineering parts without proof of end-use, tax officers can demand the remaining 13% GST along with interest and penalties. The tax office may classify the items under standard 18% tariff codes unless you prove they were fitted onto eligible vessels. Unplanned tax demands can significantly hurt your business margins.
The terms explained
- Advance Ruling
- An official tax decision given by authorities to a specific business clarifying how GST law applies to their described business situation.
- Notification No. 01/2017-Central Tax (Rate)
- The primary government tax notification that sets out the specific GST rates for different goods across India.
- End-use classification
- A system where the tax rate on a product depends on how the buyer ultimately uses it, rather than just its physical material or standard product code.
The ruling in detail
Authority for Advance Ruling
Sri. Dharsak.V.P., Saraswathi Metal Industries, Alappuzha
ORDER No. CT/5496/18-C3 DATED 29/05/2018 · Keralam
Questions before the authority
- What is the rate of tax on marine propellers, rudder set for fishing boats, stern tube set for fishing boats, propeller shaft and MS shaft for couplings used in fishing / floating vessels?
Facts
The applicant is a manufacturer of marine propellers, rudder sets, stern tube sets, propeller shafts, and M.S. shafts for couplings based in Alappuzha. These manufactured commodities are primarily supplied for use in fishing and floating vessels, leading the applicant to seek clarity on whether they qualify for a concessional rate of GST.
Ruling
| Question | What the authority ruled |
|---|---|
| Marine propellers, rudder set, stern tube set, propeller shaft and M.S. shaft for couplings | Taxable @ 5% [SGST - 2.5%; CGST - 2.5%] Applicable only when used as parts of fishing / floating vessels; 18% applies if used for other purposes |
The Authority ruled that marine propellers, rudder sets, stern tube sets, propeller shafts, and M.S. shafts for couplings used as parts of fishing or floating vessels are taxable at **5% GST** under Entry 252 of Schedule 1 of Notification No. 01/2017-Central Tax (Rate). If the same commodities are used for any other purpose, the standard applicable tax rate of 18% applies.
Reasoning
The Authority noted that under standard tariff chapters, the goods fall under headings attracting an 18% GST rate. However, Entry 252 of Schedule 1 of Notification No. 01/2017-Central Tax (Rate) prescribes a 5% rate for parts of goods under headings 8901, 8902, 8904, 8905, 8906, and 8907. The Authority held that classification under Entry 252 **depends solely on the end-use** to which the commodities are put. Therefore, when supplied for use as parts of fishing or floating vessels, the lower rate of 5% is applicable.
Provisions relied on
- Entry 247 of Schedule 1 of Notification No. 01/2017-Central Tax (Rate)
- Entry 252 of Schedule 1 of Notification No. 01/2017-Central Tax (Rate)
- SRO No. 360/2017
- Section 98 of the Goods and Services Tax Act, 2017
For the practitioner
This ruling establishes that the eligibility for the 5% concessional GST rate under Entry 252 for marine vessel parts is **end-use dependent**. Practitioners representing marine component suppliers can use this precedent to claim the 5% rate, provided there is adequate proof that the components are supplied for fishing or floating vessels.
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/kerala-ct_5496-18-c3-smi.pdf
Legibility of the scan, as read: high.
Prepared 18-10-2026.
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