2018 (9) TMI 1342 – AUTHORITY FOR ADVANCE RULING GOODS AND SERVICE TAX, WEST BENGAL – 2018 (17) G. S. T. L. 486 (A. A. R. – GST) – Input tax credit – railway freight for transportation of the goods from the its Haldia Refinery to the its export warehouse at Raxaul – export or not – distinct persons.
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Whether or not the products transported and supplied by the Applicant are “non- GST products”, “non-taxable supplies” “exempt supplies” or “zero rated supply of goods”?
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Whether the transportation to Raxaul warehouse is to be considered to be for export of supply to Nepal or transfer of goods to Indian Oil Corporation’s Bihar Unit for ultimate export to Nepal?
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Held that:- The exporter, registered as export warehouse, can store goods that may be diverted for home consumption. As the nature of clearance, whether for home consumption or export, is finally determined only at the time of removal from the export warehouse, the Excise Authority shifts the incidence of duty to the
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e transit point, but the point of storing and final clearance. The final clearance being made from the export warehouse at Raxaul, it is the Bihar Unit that is responsible for export or payment of duty if diverted to home consumption – Clearly, the transportation from Haldia to the export warehouse at Raxaul is no measure of actual export.
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Input tax credit – export or not – distinct persons – Held that:- Transfer of ATF and other non-taxable supplies from Haldia Refinery to Raxaul Depot are not, therefore, export of goods in terms of section 2(5) of the IGST Act, but exempted supplies from the West Bengal Unit to the Bihar Unit of the Applicant, who are distinct persons in terms of section 25(4) of the GST Act – Sections 16(1)(a) and 16(2) of the IGST Act are, therefore, not applicable. The Applicant cannot claim credit of the GST paid on the input services like railway freight on ATF and other non-taxable supplies from West Bengal to his Bihar Unit.
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Ruling:- ATF and other
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2017, (hereinafter collectively referred to as the GST Act ) is seeking a ruling on whether or not GST paid on the railway freight for transportation of the above goods from the its Haldia Refinery to the its export warehouse at Raxaul can be availed as Input Tax Credit under the GST Act. Advance Ruling is admissible on this question under Section 97(2)(d) of the GST Act. Indian Oil Corporation Ltd further submits that the question raised in the Application is neither decided by nor pending for decision before any authority under any provisions of the GST Act. The officer concerned has not objected to admission of the Application. The Application is, therefore, admitted. 2. Indian Oil Corporation has its Registered Office in Mumbai, and is operating through its various offices, including its depots, terminals, LPG bottling plants, spread across India and are registered under the Goods and Services Tax, 2017, in all the States/Union Territories of India, except in the Union Territory o
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laid down in Circular No. 581/18/2001-CX dated 29/06/2001 issued by CBEC. The receiving location at Raxaul provides Haldia Refinery CT-2 for a lump sum quantity. Haldia Refinery prepares ARE-3 on the basis of such CT-2 and sends it along with Original Invoice and Railway Receipt as per Central Excise Rules. On receipt of the goods Raxaul Depot returns the ARE-3 duly signed by the Excise Authorities mentioning details of the quantity actually received. The Applicant states that the said ARE-3 is submitted to Haldia Range Excise Authority as proof of export. In its monthly returns in ER-1 the Haldia Refinery reports them as removal without payment of excise duty (under bond) to export warehouse. Similarly, the export warehouse (Raxaul Depot) submits ER-1 along with account/statement of export in Form Annexure-19. The bond register is maintained at the export warehouse. b. The goods so transported to Raxaul Depot are excluded from turnover under the Central Sales Tax Act, 1956 (hereinaft
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umption. It is export within the meaning of Section 5 of the CST Act. Supply to the Bihar unit of Indian Oil Corporation by the Applicant is, therefore, zero rated supply within the meaning of section 16(1)(a) of the IGST Act, and input tax credit is admissible under section 16(2) of the IGST Act notwithstanding that such supply may be an exempt supply. 5. The officer concerned opposes the argument of the Applicant on the grounds that the goods have been transferred to a warehouse in Bihar and subsequently exported from the said warehouse. This is essentially a case of stock transfer of non-taxable goods of Indian Oil Corporation from its West Bengal Unit to its Bihar Unit, (these two units are registered as distinct persons under the GST Act), and as GST is not levied on the goods so transferred to Bihar, the supply to the Indian Oil Corporation s Bihar Unit is exempt supply for the Applicant and no input tax credit is available thereon. This is in accordance to Section 17(2) of the G
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and other non-taxable goods from Haldia Refinery to Raxaul Depot is not supply from the Applicant s Unit to the Bihar Unit of the same Company. Movement of goods for export commences from West Bengal and ends after reaching Nepal. The export warehouse at Raxaul is merely a transit point, where goods are re-warehoused to comply with the procedure prescribed under the Excise Law. The entire movement of goods is for export from India. There is no independent movement from West Bengal to Bihar and the latter, i.e. Indian Oil Corporation s Bihar Unit, has no control over the goods and there is no possibility of diversion for any other purpose. The Applicant states that the detailed procedure under the Central Excise law, as explained in the Application and subsequent submissions, clearly demonstrates that the sole objective of the movement from Haldia Refinery is export to Nepal and there is unbroken inextricable link of such movement to export warehouse for ultimate export to Nepal. Moveme
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for export of supply to Nepal or transfer of goods to Indian Oil Corporation s Bihar Unit for ultimate export to Nepal. 9. Art 366 of the Constitution has been amended by the 101st Amendment of the Constitution and clause 12A inserted, which defines GST as tax on supply of goods and services or both except taxes on supply of alcoholic liquor for human consumption. It does not exclude petroleum products, namely petroleum crude, HSD, ATF, petrol and natural gas, from the ambit of GST. However, under clause 5 of Art 279A of the Constitution these goods shall not be subject to the levy of GST till a date notified on recommendation of the GST Council. Provisions of section 9 (2) of the GST Act gives expression to this arrangement. This leads to introduction of the concept of non-taxable supplies under section 2(78) of the GST Act. It means supplies on which GST is not leviable. Exempt supplies, as defined under section 2(47) of the GST Act, includes non-taxable supplies. Under section 2(11
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not be treated as zero rated supply, and credit of GST paid on input services is not admissible. In the present context, therefore, discussion on export as defined under section 5 of the CST Act is relevant only so far as it helps in understanding export under the legal framework of GST. 11. Section 5(1) of the CST Act, 1956 states that a sale or purchase of goods shall be deemed to take place in course of export of the goods out of the territory of India only if the sale or purchase either occasions such export or is effected by a transfer of documents of tile to the goods after the goods have crossed the customs frontier of India. Notwithstanding anything contained in section 5(1), the scope of export is further widened in section 5(3) to include the last sale or purchase of any goods preceding the sale or purchase occasioning the export of those goods out of the territory of India, if such last sale or purchase took place after, and was for the purpose of complying with, the agreeme
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it will be an inter-state supply to a distinct person as defined under section 25(4) of the GST Act, and the place of supply shall be determined under section 10(1)(a) of the IGST Act. If, however, Raxaul Depot is a mere transit point for trans-shipment of goods being moved from Haldia Refinery under specific export order, it will be export of goods from the West Bengal Unit to the recipient outside India (in the present context NOC). 13. The Agreement with NOC is no export order. It is, according to clause 3(a), an umbrella agreement between the parties for a period of five years with effect from 01/04/2017. According to the Agreement, NOC will raise specific Product Delivery Orders (hereinafter the PDO), which are the actual export orders or indents placed on a supply point for loading on any day by and large in line with the projected agreed allocation from that supply point. A supply point shall mean the location within India, closest to Nepal border, mentioned in the annexure to
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ith the agreed allocation and communication from NOC. Raxaul Depot places order on Haldia Refinery to keep the supply at the optimum level. 15. The Applicant s submission that re-warehousing at Raxaul Depot is sufficient evidence of export is also far from true. It is also incorrect to submit that the goods re-warehoused at the export warehouse cannot be diverted for home consumption. A brief examination of the procedure followed for duty free removal from Haldia Refinery to Raxaul Depot and related issues may help clarifying this aspect. 16. Raxaul Depot of Indian Oil Corporation Ltd is registered with the Excise Authority as an export warehouse and is the exporter in terms of clause 4.1 of Circular No. 581/18/2001- CX dated 29/06/2001of CBEC. It has executed B-3 Bonds before the Assistant Commissioner of Central Excise, Muzaffarpur Division, Bihar, for export of goods from the warehouse in terms of clause 4.2 of the above Circular. The Applicant can remove goods from Haldia Refinery
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Running Bond Account will be credited by an amount equivalent to the duty for the goods mentioned in ARE-1. If the goods are cleared for home consumption, the exporter pays the duty with interest from the date of clearance from the factory and credits the Running Bond Account to that extent. 17. It is clear from the above discussion that the exporter, registered as export warehouse, can store goods that may be diverted for home consumption. As the nature of clearance, whether for home consumption or export, is finally determined only at the time of removal from the export warehouse, the Excise Authority shifts the incidence of duty to the time of clearance from the export warehouse. Duty free removal from the factory is, therefore, allowed under prescribed procedure for goods being moved to the export warehouse. It is, therefore, not correct that submission of endorsed copies of ARE-3 to the concerned Excise Authority at Haldia, where the Applicant s factory is located, is evidence of
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serial no. 9B of Notification No. 30/2017 – CT (Rate) dated 29/09/2017 for services associated with transit cargo to Nepal, but has actually been charged and paid GST on the railway freight. Nowhere in the Application does he argue that such GST is not chargeable. 18. The above discussion makes it amply clear that the goods re-warehoused at Raxaul Depot are not moved from Haldia under specific export order and can be either cleared for home consumption or exported. It is, therefore, far from a mere transit point, but the point of storing and final clearance. The final clearance being made from the export warehouse at Raxaul, it is the Bihar Unit that is responsible for export or payment of duty if diverted to home consumption. In fact, Indian Oil Corporation Ltd admittedly reports the export in the GST returns of his Bihar Unit and not in the ones for the West Bengal Unit. If it were to be treated as export of the West Bengal Unit, export reported would have widely varied with the act
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e, however, is of little help to the Applicant, as it is already discussed that the movement of goods from Haldia Refinery to Raxaul Depot is not occasioned by an export order, nor is it inextricably linked with any such order. In Hindusthan Unilever Ltd (WPTT 636 of 2007) the petitioner purchased tea in Kolkata, transferred it to its branches at Pune and Cochin against declarations in form F, where the tea was blended and packed and exported out of India. Calcutta High Court observed that notwithstanding the intervening factors like transfer to other states or issue of declarations in form F, the tea purchased by or sold to the petitioner in Kolkata was the last sale preceding export within the meaning of section 5(3) of the CST ACT. The case is not relevant in the present context, as scope of export under section 2(5) of the IGST Act does not include the situations provided under section 5(3) of the CST Act. 20. Transfer of ATF and other non-taxable supplies from Haldia Refinery to R
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