### 📈 SC Ruling: Bunker Fuel Supply Classified as Domestic Sale, Not Export

The Supreme Court of Sri Lanka has delivered a landmark judgment defining the legal boundaries of "exports" in tax statutes, dismissing eight appeals from bunkering companies. • Core Ruling: The supply of bunker fuel and lubricants to foreign vessels in Sri Lankan waters is a domestic sale. It does not qualify as an "export," affirming tax assessments for Income Tax and VAT. • The "Two-Termini Doctrine": Justice A.H.M.D. Nawaz ruled that an export requires goods to be dispatched from one country to another to be received as imports. Since bunker fuel is consumed by the ship and has no foreign destination as cargo, it fails this legal test. • Tax Implications: VAT Status: The court clarified that the VAT Act explicitly places bunkering in the exempt category rather than the zero-rated category (reserved for exports). Income Tax: Suppliers are denied concessionary rates previously sought under "re-export" claims. • Key Determinants: Consumption: Fuel is burned for engine combustion, not delivered to a foreign consignee. Documentation: Lack of a Bill of Lading or foreign customs clearance confirms it is not cargo. Responsibility: The transaction ends at the port; the vessel’s subsequent movement is independent of the sale. • Industry Impact: The ruling sets a defining precedent for the petroleum and maritime sectors. While appellants argued this may hurt Sri Lanka’s hub aspirations, the Court maintained that any shift to "zero-rated" status must come from Parliamentary legislation, not judicial interpretation. _Note: Based on Supreme Court judgment SC Appeals 39–46/2023._