Foreign shipping lines under DGGI scanner

According to sources, “DGGI has summoned Indian offices of Maersk, Orient Overseas Container Line Ltd, Hapag Lloyd, MSC – Mediterranean Shipping Company, CMA CGM SA, One Ocean Network Express, Pacific International Line, Regional Container Lines, Samudera Shipping Line Ltd, Korea Marine Transport Co Ltd, Milaha Integrated Maritime & Logistics, Wan Hi Lines Ltd, TS Lines Co Ltd, Sinokor India Pvt Ltd, Xpress Feeders, Yang Ming India Pvt LTD, Zim Container Lines etc.”

“All of these foreign shipping lines have been alleged by DGGI for not paying legitimate taxes due, and evasion has been detected on account of import of services from head office by Indian branch offices,” sources said.

Currently detailed clarifications have been sought by DGGI and the officers are in talks with all these foreign shipping lines, sources added.

Furthermore, the sources said, DGGI – the investigative arm under GST regime – alleges that foreign shipping lines ‘headquartered abroad have a branch offices in India which has been billing services including rental, maintenance of aircrafts, crew salary etc abroad. Thus, these services coming from abroad were liable to GST under reverse charge mechanism, which these shipping lines have not paid.”

The investigations have been carried out by DGGI Ahmedabad and Mumbai zones, sources said.

All these shipping lines have been under scanner since October 2023.

“The method employed by the DGGI, notably the issuance of summons in these scenarios, brings up concerns regarding its alignment with recognized protocols and legal standards. Typically, the adjudication process entails the dispatch of formal notifications, followed by comprehensive information collection and examination, culminating in a justified decision that reflects the unique aspects and strengths of each case. Despite numerous precedents and guidelines on this topic, the DGGI continues to send notices to multinational companies. The guidance provided by the Central Board of Indirect Taxes and Customs has not significantly assisted the industry, leading to the belief that only a verdict from the highest court could resolve this issue definitively.”