Services on Board a conveyance :
Place of supply of services provided on board a conveyance during the course of a passenger transport operation, including services intended to be wholly or substantially consumed while on board, shall be the first scheduled point of departure of that conveyance for the journey – section 13(11) of IGST Act.
In Faaborg-Gelting Linien A/S v. Finanzamt Flensburg (2012) 36 STT 119 = 22 taxmann.com 177 (ECJ), restaurant services were provided on board ships when ship was operated between Denmark and Germany. It was held that restaurant transactions are essentially service transaction and was provided at place where supplier had establishment i.e. in Denmark [As per Place of Provision of Service Rules, in return journey, Germany will be place of provision of service].
CBE&C’s ‘Taxation of Services : An Education Guide’ published on 20-6-2012 states as follows –
Para 5.12.1 What are services provided on board conveyances? – Any service provided on board a conveyance (aircraft, vessel, rail, or roadways bus) will be covered here. Some examples are on-board service of movies/music/video/software games on demand, beauty treatment etc., albeit only when provided against a specific charge, and not supplied as part of the fare.
Para 5.12.2 What is the place of provision of services provided on board conveyances? – The place of provision of services provided on board a conveyance during the course of a passenger transport operation is the first scheduled point of departure of that conveyance for the journey.
Illustration
A video game or a movie-on-demand is provided as on-board entertainment during the Kolkata-Delhi leg of a Bangkok-Kolkata-Delhi flight. The place of provision of this service will be Bangkok (outside taxable territory, hence not liable to tax).
If the above service is provided on a Delhi-Kolkata-Bangkok-Jakarta flight during the Bangkok-Jakarta leg, then the place of provision will be Delhi (in the taxable territory, hence liable to tax).