GST at 18% on Maintenance of RO Plants Installed on Indian Navy Ships: Maharashtra AAR's Key Ruling
Background and Overview
The Maharashtra Authority for Advance Ruling (AAR) has delivered a significant ruling in the matter of In re Rochem Seperation Systems India Pvt Ltd (GST AAR Maharashtra), bearing Order No. GST-ARA-80/2022-23/B-149, dated 28 September 2026, settling an important question around the applicable GST rate on maintenance, repair and overhaul (MRO) services relating to reverse osmosis (RO) plants fitted aboard Indian Navy and Indian Coast Guard vessels.
The AAR concluded that such services are taxable at 18% GST — comprising CGST at 9% and SGST at 9% — and are not eligible for the concessional 5% GST rate available under Notification No. 02/2021-Central Tax (Rate), dated 2 June 2021. The ruling rests on the foundational determination that RO plants constitute independent water purification machinery and cannot be treated as components or parts of a ship simply by virtue of being installed on one.
Who Is the Applicant and What Services Were Involved?
Rochem Seperation Systems India Pvt Ltd was engaged in providing maintenance, repair and overhaul services for RO plants and associated water purification systems installed on warships, reconnaissance vessels and submarines belonging to the Indian Navy and the Indian Coast Guard.
The scope of work covered under these arrangements included:
- Preventive and routine maintenance of RO plant equipment
- Inspection and checking of safety controls
- Examination of operational systems and their functioning
- Supply of consumables needed during servicing
- Replacement of defective parts discovered during maintenance
- Repairs required to restore or maintain equipment functionality
The applicant had received a maintenance order dated 21 June 2022 from the Fleet Maintenance Unit, Mumbai. Notably, the Indian Navy had directed the applicant to apply GST at 5%, in line with the concessional notification. Seeking regulatory clarity and certainty on the applicable rate, the applicant filed for an advance ruling before the Maharashtra AAR.
The Applicant's Case: Why 5% GST Should Apply
Reliance on Broad Interpretation of "In Respect Of"
The applicant's primary argument centred on Entry 25(ib) of Notification No. 11/2017-Central Tax (Rate), as amended by Notification No. 02/2021-Central Tax (Rate), which prescribes a concessional 5% rate for maintenance, repair or overhaul services "in respect of ships and other vessels, their engines and other components or parts."
The assessee contended that the expression "in respect of" is wide in its connotation and should not be read restrictively to cover only services directly performed on a vessel's hull, propulsion mechanism or inseparably integrated machinery. Reliance was placed on the ruling in Union of India v. Vijay Chand Jain, wherein the expression "in respect of" was interpreted to encompass matters bearing a direct or proximate connection with the subject.
The argument was that since RO plants are installed aboard naval vessels specifically to supply purified water and support the operational requirements of both the ship and its crew, the services of maintaining those plants are operationally connected with the vessels, and should therefore qualify under the concessional entry.
Principles of Statutory Interpretation Invoked
The applicant also drew upon well-established doctrines of statutory interpretation, including:
- The doctrine of noscitur a sociis (a word is known by its associates)
- The principle of ejusdem generis (general words following specific ones take colour from those specific words)
It relied on the following judicial decisions in this regard: