In Re: M/s. Enmarol Petroleum India Pvt. Ltd.
GST
2018 (12) TMI 144 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 442 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 10-10-2018
GST-ARA-53/2018-19/B-127
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, (MEMBER)
PROCEEDINGS
(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by Enmarol Petroleum India Pvt. Ltd., the applicant, seeking an advance ruling in respect of the following ISSUE..
1) Whether the applicant is liable to pay GST on the supply of goods located outside India to customers within India without physically bringing the goods to India?
2) Whether the out & out supplies in the f
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trading in marine fuel additive chemicals.
1.2. The Applicant is an authorized dealer of M/s. Innospec Limited a company registered in the England and Wales. The Applicant sells the marine fuel additive chemicals of Innospec Limited to shipping lines in India and outside India.
1.3. In the relevant fact of the present Advance Ruling Application, one M/s. AZA Shipping Pvt. Ltd., an Indian Company, placed a purchase order no. 721 on the Applicant dated 02.02.2018, requisition no 2000188 dated 08.01.2018, for 75 Ltrs. of Innospec Fuel Specialities Octamar L15 Product. The said requirement has been specifically placed for the vessel M T CHAFA to be delivered to the vessel at Singapore Port on 13.01.2018 as per the email dated 08.012018, Copy of the P. O. No. 721 dated 02.02.2018 is marked as Annexure – 3. Copy of the email dated 0801.2018 from Aza Shipping to Applicant is marked and annexed herewith as Ann – 4.
1.4. On receipt of the above confirmed purchase order from the Aza Shipping,
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in USD. A copy of the said invoice dated 13.01.2018 from Innospec Limited to applicant is marked and annexed herewith as Annexure – 8.
1.8. Thereafter, the Applicant raised an invoice on its customer M/s. AZA Shipping Pvt Ltd. vide Invoice No. 2017-18-111 dated in INR. The copy of the invoice dated 18.01.2018 from Applicant to AZA Shipping is marked and annexed herewith as Annexure – 9.
1.9. The Applicant states that, the Applicant has not charged GST on the invoice raised to AZA Shipping considering the said Supply to be non-taxable under GST in India.
Statement containing the applicant's interpretation of law and or facts as the case may be, in respect of the aforesaid question(s)
1. The Applicant is not liable to charge on the out and out transaction.
1.1. The Applicant submits that the above supply effected by the Applicant is not liable for GST in India on following grounds:
a) The said supply does not take place in India
b) The said supply is an out & out transacti
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in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act 1976, and the air space above its territory and territorial waters,
2.3. Thus, on a plain reading of the above definition it is clear that the GST is applicable only to Supply as defined in Section 7 of the CGST Act, 2017 within the defined India.
2.4. The definition of India means territory of India as defined in Article 1 of the Constitution of India and its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters.
2.5. The Applicant submits that, in the present facts of the case, though the supplier and the recipient is located in India, the supply in the form of sale of goods has taken place in Singapore where the goods are l
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ce outside India;
3.4. Section 2(10) of the IGST Act, 2017 defines “import of goods” as under:
2(10) “import of goods” with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India;
3.5. Firstly, the above definitions are with reference to the movement of goods and not the location of the supplier or recipient.
3.6. In the present case, admittedly there is no movement of goods into India or from India. The goods are in Singapore Port only. Thus, the above transaction can neither be considered as import or export of the goods.
3.7. Secondly, the Place of supply of the of an import or export of goods is determined as per Section 11 of the IGST Act, extracted as under.
11. The place of supply of goods,
(a) imported into India shall be the location of the importer;
(b) exported from India shall be the location outside India.”
3.8. It is submitted, the place of supply as per Section 11 can be determined only in case the tra
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d to movement of goods within India only.
4.3. The above intention of the legislature is further clear from the scheme Chapter V of the IGST Act, 2017.
4.4. The Applicant submits that from the scheme Chapter V of the IGST Act, 2017, it can be seen that Section 10 is for determining the place of supply of goods other than import and export. Section is for determining the place of supply of goods for import and export. Section 12 is for place of supply of services for domestic transactions. Section 13 is for determining place of supply of service for international transaction.
4.5. Thus, it can be concluded that Section 10 if the IGST Act, 2017 is applicable for place of supply of goods in a domestic transaction.
4.6. In the present case, since the supply of goods is entirely outside India and not leg of the transaction is even remotely taking place in India, place of supply cannot be determined under Section 10 of the IGST Act, 2017.
5. The Applicant submits that Section 7(5) of th
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ly there should be two variables available:
a) supplier is located in India and
b) Place of supply is outside India.
5.3. The applicant submits that in the present case both the above variable are absent. Firstly, the location of the supplier of goods is not defined under the GST Act. Only location of supplier of service is defined. Thus, as far as the goods is concerned, there can be no location of the supplier. In any case, even if it is held that location of the supplier has to be interpreted contextually, then the same has to be located qua a particular supply made under the GST Act. Since, in the present case, the sale is taking place outside India, it is not a supply under the GST Act and hence location of the supplier qua that sale cannot be determined under the Act.
5.4. Secondly, as explained above, the place of the supply for the transaction in question cannot be determined under the GST Act, neither under Section 10 nor under Section 11. Thus, even the second variable
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A – 01
Commodity : Octamar LI-5 Product (HSN code-3811)
Contention : As per the documents submitted by the dealer it is no way proved that the delivery of the said goods is made at Singapore (out of territory of India). This office is therefore of the opinion that the commodity in question is delivered in the territory of India and liable for GST @ 18% under HSN code 3811 w.e.f. 14.11.2017.
04. HEARING
The case was taken up for Preliminary hearing on 08.08.2018 when Sh. Rahul Thakkar, Advocate along with Ms. Ritu Chaudhary, Director appeared and made written and oral submissions for admission of application as per contentions in their ARA, Jurisdictional Officer, Sh. Ashok G Hedau, State Tax Officer (C-610), Nodal Div. 3, Mumbai appeared & stated that they would be making submissions in due course.
The application was admitted and called for final hearing on 05.09.2018. Shri Rahul Thakkar, Advocate along with Ms. Ritu Chaudhary, Director appeared and made oral and written submiss
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sel M T CHAFA to be delivered to the vessel at Singapore Port on 13.01.2018 as per the email dated 08.01.2018.
4. On receipt of the above confirmed purchase order from the AZA Shipping, the applicant placed purchase order on the M/S. Innospec Limited vide P.O. No. EPM-1718-608 dated 08.012018 for delivering 75 Litres of OCTAMAR LI-5 to vessel M T Chafa at Singapore.
1.5. The said order placed by the applicant on Innospec was confirmed by vide Order Confirmation document dated 10.01.2018.
1.6. Thereafter on 11.01.2018, Innospec Limited delivered the goods through its Singapore Logistics Partner M/S. CWT Logistics Pte. Ltd. to the vessel MT Chafa at Singapore Port vide delivery order dated 11.01.2018 duly received by the vessel's Chief Engineer.
1.7. Thereafter, Innospec Limited raised invoice on the applicant on 13.01.2018 vide Invoice No. VSS1002165 in USD.
1.8. Thereafter, the Applicant raised an invoice on its customer M/s. AZA Shipping Pvt. Ltd. vide Invoice No. 2017-18-111
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upplies in the facts of the present case will be considered as export supplies or exempted supplies for the purpose Of the GST?
In view of the detailed facts put up before us we find that the applicant would be purchasing goods from M/s. Innospec on the basis of purchase orders received from their customer in India and the said goods would be delivered by M/s. Innospec from outside India to the ship/ vessel of the customer which is also outside India (non-taxable territory) i.e. Singapore. The order received by the applicant from their customers in India and order placed by them on
M/s. Innospec are back to back orders. Thus it is very clear that the goods are delivered by M/s. Innospec from a place situated outside the taxable territory of India to their customer's vessel which is also located outside the taxable territory of India. Thus we find that the transaction is similar to the selling of goods on High Seas Sale basis since in both the cases the goods purchased do not cro
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the location of the supplier and the place of supply of goods are in the same State or same Union territory shall be treated as Intra-State supply:
Provided that the following supply of goods shall not be treated as intra-State supply, namely:-
(i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
(ii) goods imported into the territory of India till they cross the customs frontiers of India; or
(iii) supplies made to a tourist referred to in section 15.
We find that Section 7(2) of the IGST Act reads as under:-
“Section 7(2) Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce”
Thus it is very clear that supply of goods imported into the territory of India till they cross the customs frontier shall be treated as supply of goods in the course of inter-state trade or commerce.
From the transact
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lue determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:
provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.
(2) ……………………….
(3) ……………………….
(4) ………………….;
(5) ……………………….;
We find that proviso to Section 5(1) of the IGST Act states that “Provided that the integrated tax on goods imported into India shall be levied and collected in
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the Customs Act, 1962 provides that custom duties which includes integrated tax in respect of imported goods would be levied only at the time of import or export of goods.
Thus in case of goods supplied on an out an out basis as is in the present case, there is no levy till the time of their customs clearance in compliance with Section 12 of the Customs Act and Section 3 of the Customs Tariff Act. In view of this the import goods sold from and to a non-taxable territory, though they are clearly in the nature of inter-state supply would come in the category of “exempt supply” as no duty is leviable on them except in accordance with proviso to Section 5(1) of the IGST Act.
We find that in the definition of exempt supply as given in Section 2(47) of the CGST Act is as under:-
Section 2(47) of the Central Goods and Services Tax (CGST) Act, 2017, “exempt supply” means supply of any goods or services or both which attracts nil rate of tax or which may be “wholly exempt from tax under sect
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