In Re: M\/s. Chambal Fertilisers & Chemicals Limited,
GST
2018 (9) TMI 1257 – AUTHORITY FOR ADVANCE RULING, RAJASTHAN – 2018 (17) G. S. T. L. 526 (A. A. R. – GST), [2018] 59 G S.T.R. 355 (AAR)
AUTHORITY FOR ADVANCE RULING, RAJASTHAN – AAR
Dated:- 25-8-2018
AAR NO. RAJ\/AAR\/2018-19\/14
GST
NITIN WAPA AND SUDHIR SHARMA MEMBER
\nPresent for the applicant: Mr. Sanjay Jhanwar, (Advocate) and Ms. Aditi Lodha (Advocate)
\nNote: Under Section 100 of the CGST\/ RGST Act 2017, an appeal against this ruling lies before the Appellate Authority for Advance Ruling constituted under section 99 of CGST\/RGST Act 2017, within a period of 30 days from the date of service of this order.
\nThe Issue raised by M\/s. Chambal Fertilisers & Chemicals Limited (here in after referred to as 'Applicant') is fit to pronounce advance ruling as it falls under ambit of the Section 97(2) (a), it is given as under:
\n(d) Determination of liability to pay tax on any goods or services or both.
\nFurther, the a<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n y is liable to bear the cost of transportation of goods, from the respective country upto Indian ports. Hence, for the transportation of the goods, the supplier\/ exporter avails the services of a foreign shipping company, for bringing the said goods to India in a vessel. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n to 01.07.2017, the government was empowered to notify the category of services on which tax was payable on reverse charge basis by the recipient of services or any other person. To this extent the provisions of the service tax regime differ from the current GST regime. In order to collect tax on the services of transportation of goods by vessels upto a port in India, the government notified the importer (i.e. person other than the service provider or service recipient) as the person liable to pay tax. Since, the same was within the legislative competence of the Central Government, the same was intra-vires the provisions of the Finance Act, 1994 but the same is not the case with GST as the statute specifically provides for service recipient only. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n territory of India. The relevant provisions read as follows: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n pecified under section 3 of the Tariff Act. As per section 3(8) of the Tariff Act the integrated tax on the imported goods shall be levied on the value of the imported article determined in accordance with section 14(1) of the Customs Act. Section 14 of the Customs Act lays down the provisions for determining the value of the goods. The said section reads as follows: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n de cost of transportation to the place of importation. Moreover, Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (hereinafter referred to as the 'Valuation Rules') lays down the provisions to determine the 'transaction value' of the imported Goods. The said rule reads as follows: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n onal hearing was given to the applicant, Mr. Sanjay Jhanwar, (Advocate) and Ms. Aditi Lodha (Advocate) of applicant appeared for personal hearing on 17.08.2018. During the PH they submitted a flowchart depicting CIF and FOB. They have also submitted a Supreme Court judgement 'Govind Saran Ganga Saran v\/s Commissionerate of Sales Tax and Ors' = 1985 (4) TMI 65 – SUPREME COURT. They also submitted that the case may be decided as per submission already made in the application for Advance Ruling and the case may be decided at the earliest. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Customs Act, 1962(52 of 1962), located in the taxable territory. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n valuation of imported goods is to be done by the Customs Authority under the Customs Act, 1962 and this authority is not empowered to decide on the issue of valuation of imported goods. Therefore, this authority cannot give any findings regarding exclusion of any component of expenditure upon imported goods (Ocean freight) while determining the value of imported goods at the time of import. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. Chambal Fertilisers & Chemicals Limited,GST2018 (9) TMI 1257 – AUTHORITY FOR ADVANCE RULING, RAJASTHAN – 2018 (17) G. S. T. L. 526 (A. A. R. – GST), [2018] 59 G S.T.R. 355 (AAR)AUTHORITY FOR ADVANCE RULING, RAJASTHAN – AARDated:- 25-8-2018AAR NO. RAJ\/AAR\/2018-19\/14 GSTNITIN WAPA AND SUDHIR SHARMA MEMBER Present for the applicant: … Continue reading “In Re: M\/s. Chambal Fertilisers & Chemicals Limited,”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-13885","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13885","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13885"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/13885\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nThe services by the foreign shipping entity of transportation of goods in a vessel to a port in India is an 'inter-state supply' in terms of section 7 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as 'IGST Act'). Hence, IGST is leviable on the same under Section 5 of the IGST Act. As per the charging section i.e. Section 5, IGST has to be paid by the taxable person. However, as per the provisions of Section 5(3), the government by notification may specify certain categories of supply of services on which tax will be paid by the recipient of the service on reverse charge basis. Hence, it is evident that the government is empowered to notify the categories of supplies\/ services on which the<\/p>\n
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\nWhile importing the said goods on FOB basis, the Applicant (importer) is liable to bear the cost of transportation of goods from the respective country upto Indian ports. Hence, for the transportation of the goods, the Applicant (importer) av<\/p>\n
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\nSection 5- Levy and Collection-
\nIjj***
\nProvided 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
\nSection 3- Levy of additional duty equal to excise duty, sales tax, local taxes and other charges-
\n***
\n(7) Any article which is imported into India shall, in addition, be liable to Integrated tax at such rate, not exceeding forty per cent, as is leviable under section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8).
\n(8) For the purposes of calculating the Integrated tax under sub-section (7) on any imported article where such tax is leviable at<\/p>\n
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\nSection 14 Valuation of Goods-(1) For the purposes of the Customs Tariff Act, 1975, or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specifi<\/p>\n
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\nRule 10- Cost and Services
\nFor the purposes of sub-section (1) of section 14 of the Customs Act, 1962 (52 of 1962) and these rules, the value of the imported goods shall be the value of such goods, for delivery at the time and place of importation and shall include – (a) the cost of transport of the imported goods to the place of importation:
\nAs per the aforesaid rule, the cost of transportation of the imported Goods up to the place of importation will be included in the value of imported Goods. Therefore, from the combined reading of section 14(1) of the Customs Act and Rule 10(2) of the Valuation Rules, it is evident that ocean freight will be included in the transa<\/p>\n
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\nThe jurisdictional officer in his comments has stated that the applicant in case of import of goods on CIF basis has to pay IGST on component of Ocean Freight paid by foreign supplier to the shipping company as per Notification No. 10\/2017-lntegrated Tax (Rate) dated June 28, 2017. He has further stated that for determination of value of import of goods on FOB basis, the component of Ocean freight will have to be included in the value of import of goods<\/p>\n
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\nThus, as per the Notification No. 10\/2017- Integrated Tax (Rate) dated 28.06.2017, in the case of import of goods on CIF (COST, INSURANCE AND FREIGHT) basis, the Applicant (Importer) is liable to pay GST on the component of Ocean freight paid by the foreign supplier to the shipping company.
\n5.2 The Applicant also sought clarification as to whether in the case of import of goods on FOB (Free on board) basis the Applicant (Importer), for the purpose of determination of value of goods for the payment of IGST on import of goods is required to exclude the value of the component of Ocean freight?
\nLevy and collection of IGST is governed by the Section 5(1) of IGST Act, 2017 which reads as under:-
\n'Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human con<\/p>\n
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\nThe question raised by the applicant is regarding the determination of valuation of imported goods at the port. The issue regarding determination of value as sought by the applicant does not fall under the purview of CGST\/RGST Act, 2017 as this issue should be correctly dealt as per the relevant provisions of the Customs Act, 1962.
\nBased on above facts along with provision of law the ruling is as follows:
\nRULING
\na. The applicant is liable to pay IGST on transportation of goods by vessel under Reverse Charge Mechanism (RCM) under Notification No. 10\/2017- Integrated Tax (Rate) dated 28.06.2017.\n<\/p>\n
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