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🌊🗺️ Territorial Waters Under GST — Dive Deep Into the Tax Jurisdiction!

📍 What Are Territorial Waters?

🧾 As per Section 2(56) of the CGST Act,
👉 India includes:

  • All States and Union Territories

  • Territorial waters

  • Continental shelf, Exclusive Economic Zone (EEZ)

  • Seabed and sub-soil under India’s sovereignty 🛢️

📏 Territorial Waters = 12 Nautical Miles (≈ 22.2 km) from Indian coastline

🌐 Why Do Territorial Waters Matter in GST?

Territorial waters are NOT part of a specific state — they are under the Union’s jurisdiction
➡️ But for tax purposes, supplies made there must be assigned to a state/UT — why?

🎯 Because:

  • Place of supply determines whether CGST + SGST or IGST is applied

  • Every rupee of GST must be tracked to a specific state/UT account 🧾💰

⚖️ Legal Insight: Section 9 of the IGST Act ⚓

🧾 Section 9 – Where the location of the supplier or the place of supply is in territorial waters…

👉 It shall be deemed to be in the nearest coastal State or Union Territory!

📌 This ensures:

  • Clear jurisdiction

  • Accurate tax credit allocation

  • Smooth compliance

🧪 Real-Life Examples

1️⃣ Oil rig supplying goods in territorial waters 🛢️

ONGC sells drilling equipment from its base to a rig located 10 nautical miles off Mumbai coast
📍Territorial waters
➡️ Deemed POS = Maharashtra

2️⃣ Restaurant service on a cruise 🚢🍽️

Luxury cruise ship serves food while 8 nautical miles off Goa
📍POS = Territorial waters
➡️ Deemed POS = Goa

3️⃣ Supply of internet service on-board a vessel 🌐🚢

ISP provides data connectivity to vessels in Indian waters
📍POS = Territorial waters
➡️ Deemed location = nearest State coast (e.g., Tamil Nadu)
💰 Taxes depend on recipient’s location (B2B/B2C)

📌 Quick Summary Table

Scenario Actual Location 🌍             Deemed GST Location 📍
Supply in territorial waters off Kerala     6 NM from Kerala coast                     Kerala
Offshore catering 10 NM from Gujarat     Territorial waters                     Gujarat
Import via sea near Andaman     Territorial waters (UT)                     Andaman & Nicobar
Supply of fuel to ship 9 NM off Goa     Territorial waters                     Goa

⚠️ Common Confusions (Cleared!) 🚨

❓ Is territorial water treated as “India” under GST?
✅ Yes! As per Section 2(56), CGST Act

❓ Is supply from land to a ship in territorial waters taxable?
✅ Yes! Location will be deemed to the nearest state

❓ Do I need separate GSTIN for vessels or offshore rigs?
✅ Not necessarily, but correct POS must be mentioned to avoid mismatch!

🧠🎯 Why it matters?

  • Offshore oil, shipping, and telecom businesses operate heavily in territorial waters

  • Proper classification avoids litigation & ensures accurate credit flow

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