Initially, DGGI had raised concerns that these foreign shipping firms failed to comply with tax requirements under the Goods and Services Tax (GST) for services rendered in India. However, after a detailed investigation and consultations with the concerned firms, DGGI decided to withdraw the tax demand.

Foreign shipping firms had argued that they were already paying taxes in their home countries under international tax treaties, which allow them to avoid double taxation. These companies were providing critical shipping and transport services to Indian exporters and importers, essential for facilitating global trade.

The cancellation of the demand offers significant relief to the shipping companies, especially given the complexities of tax compliance across international jurisdictions. It also reflects India?s efforts to maintain a business-friendly environment while ensuring clarity on cross-border taxation rules.

Experts believe that this move will ease concerns in the shipping industry and boost foreign players' confidence in conducting business in India. The decision by DGGI is seen as a step toward smoother operations for international shipping lines working within Indian waters.