Providing major relief to the foreign shipping companies operating in the country, the Directorate General of Goods and Services Tax Intelligence (DGGI) has withdrawn a tax demand of Rs 3,000 crore for the financial year 2018 against 18 firms, as per the report by a leading media house. However, the tax demand for years apart from FY18 remains in place.
The decision to withdraw the demand comes after the collective assurance by the shipping companies that there were services imported during the year (FY17-18), the report cited sources. With this, companies such as Maersk and the Orient Overseas container line, which were issued notices by the authority regarding the non-payment of GST on the services imported from July 2017, as per the report.
In October 2023, the DGGI started investigating the matter when claims regarding the non-payment of GST under the reverse charge mechanism by the Indian branches of foreign shipping companies came to the fore. The services included aircraft rental, crew salaries paid abroad along with maintenance.
The authority asked for a detailed explanation from the Indian branches of these companies and raised tax demands for the period from 1 July 2017 to March 2024. After being issued summonses from the authorities, these companies submitted a detailed report on imported services before the DGGI, after approaching the finance ministry, as per the report.
Earlier, tax evasion amounting to Rs 1.2 trillion was detected by the DGGI, as per the media reports. On Tuesday, the finance ministry stated that the Centre has been making efforts to identify and dismantle the syndicates that are responsible for committing such fraudulent activities. During a national conference of GST enforcement heads, information came to light that the GST intelligence department has identified about 59,000 potential fraudulent firms for inquiry, as per the report.
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