Submission of Bond/ Letter of Undertaking by the Exporter in respect of Exports without payment of Integrated Tax under IGST Act.
50 T of 2017 Dated:- 7-12-2017 Maharashtra SGST
GST – States
Office of the
Commissioner of State Tax, (GST), 8th floor, CST Bhavan,
Mazgaon, Mumbai-400010,
TRADE CIRCULAR
To,
…………………………
…………………………
No. JC/HQ-1/GST/Bond-LUT/4/2017-18/ADM-08
Mumbai, Date 07/12/2017
Trade Cir. No. 50 T of 2017
Subject Submission of Bond/ Letter of Undertaking by the Exporter in respect of Exports without payment of Integrated Tax under IGST Act.
1. Background:
1.1. Your attention is invited towards the Trade Circular No. 29T of 2017 dated the 10th July 2017 cited at Ref. (6) above which explains the procedure to be adopted to accept and process the Bond or the Letter of Undertaking (hereinafter referred to as “LUT”).
1
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f 2017 dated the 10th July 2017 reproduced in Para-1.2 above stands withdrawn forthwith.
2. Option to Export Goods or Services or both under Bond/ LUT without payment of Integrated tax:
2.1. Sub-section (1) of section 16 of the IGST Act provides that following supplies shall be “Zero-rated”-
2.1.1. export of goods or services or both; or
2.1.2. supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.
2.2. Further sub-section (3) of section 16 provides that a registered person making zero rated supply is having following options, –
(a) he may supply goods or services or both, subject to such conditions, safeguards and procedure as may be prescribed, on payment of integrated tax;.
(b) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax.
2.3. It may be noted that as per the provisions of rule 96A of t
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ceived by the exporter in convertible foreign exchange.
2.5. As per the provisions of sub-rule (5) of rule 96A of MGST Rules, the State Government is empowered to issue notification and provide certain conditions and safeguards under which an exporter may furnish Letter of Undertaking in place of a bond.
2.6. In view of the difficulties being faced by the exporters in submission of bonds/ Letter of Undertaking for exporting goods or services or both, without payment of integrated tax, Notification No. 37/2017 – State tax dated 7th October, 2017 has been issued which extends the facility of LUT to all exporters, subject to certain conditions and safeguards. This notification has been issued in supersession of earlier Notification No. 16/2017 – state tax dated 7th July, 2017.
3. In the light of the new Notification No. 37/2017 State tax dated 7th October, 2017 and division of the tax payers between State Tax Authority and the Central Tax Authority, it has become imperative to issue gu
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graph 3.20 and 3.21 of the Foreign Trade Policy 2015-2020 and to persons receiving a minimum foreign inward remittance of 10% of the export turnover in the preceding financial year which was not less than Rs. one crore. These conditions are now relaxed vide notification No. 37/2017 State tax dated the 4th October 2017.
3.2. Submission of LUT/Bond:
3.2.1. The exporter shall submit the LUT or, as the case may be, Bond to the concerned Nodal Officer to whom the said tax payer is assigned.
3.2.2. The list of Nodal Officer-wise allocation of cases is made available at the www.mahavat.gov.in >what's new>. The tax payer who desires to submit the LUT or the Bond is requested to ascertain the allocation of the cases.
3.3. Validity of LUT:
3.3.1. The LUT shall be valid for the whole financial year in which it is submitted to the Nodal Officer.
3.3.2. The exporter is required to export the goods or services or both within the time limit specified in the sub-rule (1) of rule 96A of the M
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exporter in convertible foreign exchange.
3.3.4. If the registered person fails to export the goods within the time limit given in clause (a) or clause (b) shall as per provisions of sub-rule (3) liable to pay the amount mentioned in the said sub-rule, the facility of export under LUT will be deemed to have been withdrawn on till such payment is made.
3.3.5. However, if the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable integrated tax or under bond with bank guarantee.
3.4. Form for bond/LUT:
3.4.1. Till the time FORM-GST-RFD-11 is made available on the common portal, the registered person (exporters) may use the FORM-GST-RFD-11 annexed to this Trade Circular as ANNEXURE-A, or may be downloaded from the website of the MGSTD i.e. www.mahavat.go
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ecuted should suffice for the purposes of Notification No. 37/2017- State Tax dated 4th October, 2017. Verification, if required, may be done after the issuance of LUT.
3.6. Time for acceptance of LUT/Bond:
3.6.1. As LUT/Bond is a pre-requisite for export without payment of IGST, including exports to a SEZ developer or a SEZ unit, the LUT/bond should be processed on top most priority.
3.6.2. It is clarified that LUT/bond should be accepted within a period of three working days of its receipt along with the self-declaration as stated in para 3.5.2 above by the exporter. If the LUT/ bond is not accepted within a period of three working days from the date of submission, it shall deemed to be accepted.
3.7. Bank guarantee:
3.7.1. Since the facility of export under LUT has been extended to all registered persons, bond will be required to be furnished only by those persons who have been prosecuted for cases involving an amount exceeding Rupees two hundred and fifty lakhs.
3.7.2. A bond
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15-16 dated 01StJuly, 2015 (updated as on 05th November, 2015), which states that “there is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan”.
3.9.2. Accordingly, it is clarified that the acceptance of LUT for supplies of goods to Nepal or Bhutan or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in
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ed
Sr. No.
Reference no. of the bank guarantee
Date
Amount
Name of bank and branch
1
2
3
4
5
Note – Hard copy of the bank guarantee and bond shall be furnished to the jurisdictional officer.
5. Declaration –
(i) The above-mentioned bank guarantee is submitted to secure the integrated tax payable on export of goods or services.
(ii) I undertake to renew the bank guarantee well before its expiry. In case I/We fail to do so the department will be at liberty to get the payment from the bank against the bank guarantee.
(iii) The department will be at liberty to invoke the bank guarantee provided by us to cover the amount of integrated tax payable in respect of export of goods or services.
Signature of Authorized Signatory
Name
Designation / Status –
Date –
Bond for export of goods or services without payment of integrated tax
(See rule 96A)
I/We……………..of………………..,hereinafter called "obligor(s)", am/are held and firmly bound to the Pre
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s afore mentioned;
The condition of this bond is that the obligor and his representative observe all the provisions of the Act in respect of export of goods or services, and rules made thereunder;
AND if the relevant and specific goods or services are duly exported;
AND if all dues of Integrated tax and all other lawful charges, are duly paid to the Government along with interest, if any, within fifteen days of the date of demand thereof being made in writing by the said officer, this obligation shall be void;
OTHERWISE and on breach or failure in the performance of any part of this condition, the same shall be in full force and virtue:
AND the President shall, at his option, be competent to make good all the loss and damages, from the amount of bank guarantee or by endorsing his rights under the above-written bond or both;
I/We further declare that this bond is given under the orders of the Government for the performance of an act in which the public are interested;
IN THE WITN
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