DTAA – “International traffic” under Art 8 of India-Singapore DTAA – Journey of a vessel between two Indian ports is “international traffic” if the same is part of a larger journey between two foreign ports – It is only when a ship or aircraft is operating ‘solely’ between places in a contracting state that the transport is excluded from scope of “international traffic”

The
assessee is a company and had acted as an agent of three vessels which
had transported goods from Kandla Port to Visag. The freight beneficiary
was one M/s. Jaldhi Overseas Pte Limited, who claimed benefit of DTAA
between India and Singapore. The vessels had undertaken such freight
transportation during the journey from Singapore elude to Dubai. The
Assessing Officer came to the conclusion that such transportation
between Kandla to Visag cannot be considered as international traffic as
defined in DTAA between India and Singapore. The Tribunal held in
favour of the assessee relying on the decision of the Tribunal in
similar cases.

On appeal by the Revenue, the Gujarat High Court upheld the decision of the Tribunal and held as under:

“i)
U nder Art 8 of India-Singapore DTAA , the journey of a vessel between
two Indian ports is “international traffic” if the same is part of a
larger journey between two foreign ports. It is only when a ship or
aircraft is operating ‘solely’ between places in a contracting state
that the transport is excluded from scope of “international traffic”.

ii)
It is not the case of the Revenue that the journey being undertaken by
such vessels in question were confined between the two ports in India
either routinely or even in individual isolated case.”