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India: Sales tax, place where contract for time-charter agreement entered

India: Sales tax, contract for time-charter agreement

The Supreme Court of India affirmed the imposition of sales tax on a time-charter agreement, concluding that the site of the sale (here, a transfer of a right to use a tugboat) is the place where the contract was entered into.


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The taxpayer entered into a charter agreement with a port authority to make available a tugboat (towing vessel) along with the tugboat master and other personnel for a period of six months. The tax authorities determined that the transaction was a transfer of rights and as such was subject to sales tax under a provision of state law (Karnataka). The parties disputed the sales tax levy in lower court, and eventually the case ended up before India’s highest court.

The Supreme Court held that the location of the delivery of goods (here, the transfer of a right to use the vessel) was the site of the sale, and that in turn was determined to be the place where the contract was entered into.

Read a December 2019 report [PDF 350 KB] prepared by the KPMG member firm in India

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