In Re: M\/s. INA Bearings India Private Limited
GST
2018 (12) TMI 226 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 465 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AAR
Dated:- 9-7-2018
GST-ARA-04\/2018-19\/B-60
GST
SHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER
\nPROCEEDINGS
\n(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
\nThe 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 INA Bearing India Private Limited, the applicant, seeking an advance ruling in respect of the following question.
\na) Whether the sale of goods, which are located outside India, would be liable to tax in India under section 7(5) (a) of Integrated Goods and Services Tax Act, 2017?
\nb) If answer to (a) is yes, then whether th<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ngs and tools. The Applicant supplies bearings to a wide range of customers which inter-alia include Original Equipment Manufacturers (OEM). = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n physically moving goods from Germany would make the transaction liable to GST in light of provisions of 3-ection 7(5)(a) of Integrated Goods and Services Tax Act, 2017 (IGST Act, 2017) and will the Applicant be required to charge IGST on the tools sold to its customer in India. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Place of supply = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ndia. Hence, the said transaction could get covered under the ambit of Inter-state supply' in terms of section of IGST Act. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n n India. In order for section to come into play, the place of supply should be outside India and to determine the place of supply the provisions of Section seems to be relied on. The Applicant contends that the provisions of GST are travelling beyond its powers by stating that for the transaction under question where the goods are lying outside India i.e. in Germany, the place of supply shall be outside India. Hence, the Applicant pleads it is outside the jurisdictional powers of the GST law to determine the place of supply for goods when such goods are not located in India. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n r that Article 269A enables levy and collection of GST for supplies in the course of inter-state trade of commerce. An explanation has been inserted stating that import transactions will also be considered as inter-state supply of goods or services or both. If we consider the common parlance an inter-state transaction would mean transaction effected between two states and or union territories. It would be important to note that the Constitution has not defined the above transaction that is, where the supplier is located in India and the place of supply is outside India to be an inter-state supply. The provisions of section 7(5)(a) is ultra vires since the law has defined a specific transaction to be an inter-state supply without having adequate powers to do So. Since the Constitution of India has neither defined such transactions to be an inter-state transaction nor given powers to determine so, the provisions ought to be treated as ultra-vires. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n xtent and unless it is covered under territorial jurisdiction of IGST Act. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ion 7(5)(a) of IGST Act but not covered under section 16 of IGST Act would be considered as liable to IGST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n eates place of supply of service between the cases where location of both supplier and recipient is in India as against cases where either of the party is located outside India. Whereas in case of goods, place of supply is to be determined in terms of section 10 or 11 of IGST Act which provides for determining place of supply separately for domestic supplies and for export\/ import transactions. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n nbsp;E4. It can be observed from the aforesaid provisions that there is specific provision in case of services wherein it is specifically provided that the place of supply shall be the location of immovable property, however, if both the supplier and recipient are in India and location of immovable property is outside India then the place of supply for the purpose of GST will be location of recipient of service. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n e levy and collection of tax will be only at the time of importation of goods in India i.e. when import declarations are filed before Customs Authorities for customs clearance for the first time. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n GST returns to mention the Place of Supply in case of these transactions = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n as amended to bring the same in line with provisions of GST law. Also, that Parliament is empowered to formulate the principles to determine when the supply is said to be made outside the State or in the course of import or export. However, no such principles have been formulated till date for GST. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n der European VAT Laws = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n \/ or services. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n th tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n of IGST Act, 2017 since, the intention behind section 7(5) (a) was to specifically provide that export or import of goods and\/or services should be treated as inter-state transaction and not to tax the transactions under consideration. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n . Accordingly, without prejudice to Applicant's submission herein below, the place of supply would be location of goods at the time of delivery i.e. outside India. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n pplicant have two purchase orders as below: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n following attributes: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n find that the applicant would be purchasing from Schaeffer Germany, who is a manufacturer on principal to principal basis. The ownership of the said goods get transferred to the applicant without any physical movement of the goods from Germany to India. However the goods remain in the possession of Schaeffer Germany. Once the first transaction takes place applicant transfers the ownership of the goods to Indian customer by way of sale. In this case also the goods remain under the possession of Schaeffer Germany. In short, the order received by the applicant from their customer in India and the order placed by applicant On Schaeffer Germany is in the nature of back to back order. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n te trade or commerce. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n dations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n rator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Section 50) Of the IGST Act it is very clear that in respect of imported goods into the territory of India there is no levy and collection except in accordance with the provisions of Section 12 of the Customs Act, 1962 and Section 3 of the Custom Tariff Act, 1975. Section 12 of 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. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ct, 1975. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. INA Bearings India Private LimitedGST2018 (12) TMI 226 – AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – 2019 (20) G. S. T. L. 465 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULING, MAHARASHTRA – AARDated:- 9-7-2018GST-ARA-04\/2018-19\/B-60 GSTSHRI B.V. BORHADE, AND SHRI PANKAJ KUMAR, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services … Continue reading “In Re: M\/s. INA Bearings India Private 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-15338","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15338","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=15338"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/15338\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=15338"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=15338"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=15338"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\n * It is pertinent to note that for manufacture of bearings for specific customer, a specific type of tool is required. These tools are developed basis the requirements of the customers. Using these specially designed tools, child parts are manufactured and supplied to our customer. Typically, while entering into a contract for supply of bearings, the customer issued two purchase orders viz:
\n * PO NO. RNAIPL\/2013(B4A\/PTVT\/230 dated 13.09.2013 for supply of tools and
\n * PO No. RN15-MP-113W-K316 dated 28.05.2015 for supply of tappets.
\n * The Applicant in-turn raised a purchase order on Scaheffler Technologies AG & Co. KG (for the purpose of brevity herein after referred as “Scaheffler Germany”) for supply of tools. The tools which are required for manufacturing is developed outside India by Scaheffler Germany. Once the tool was developed, Sc<\/p>\n
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\n * If IGST is applicable on the transaction under consideration, then whether Applicant's customer would be eligible to avail the input tax credit of IGST charged by the Applicant.
\nThe Applicant is making detailed submission herein below to demonstrate why IGST should not be applicable on the transaction under consideration.
\nStatement containing the applicant's interpretation of law and\/or facts. as the case may be. in respect of the questions(s) on which advance ruling is required
\nA. Levy of IGST cannot be extended beyond territorial jurisdiction of the said legislation.
\nEvaluating IGST provisions to understand possibility of levying IGST
\nA1. With reference to facts of the applicant summarized in Annex<\/p>\n
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\nSupplier – IGST Act has not separately defined the term 'supplier' and hence the definition of CGST Act can be adopted in terms of section 2(24) of IGST Act, Section 2(105) of CGST Act defines 'supplier' as “supplier in relation to any goods or services shall mean the person supplying the said goods or services and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied”
\nAccordingly, in case of T2 in question, tool is supplied by Applicant to customer even if there is no movement of tool and hence, Applicant would be construed as 'Supplier'.
\nPlace of Supply – Section 10 of IGST Act provides for various scenarios to determine the place of supply of goods. In case of T2, the supply does not Involve movement of goods, Hence. without prejudice to Applicant's submission herein below, it appears that the said supply would get covered under section of IGST Act which is reproduced below:
\n“10. (1) The place of s<\/p>\n
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\nA4. IGST would be levied on all inter-State supplies of goods or services or both in terms of Section 5 of IGST Act. From the conjoint reading of abovementioned provisions, it appears that T2, could get covered within the purview of 'Inter-State supply' and hence could become liable to IGST.
\nA5. However, Applicant intends to draw your kind attention to section 1(2) of IGST Act which determines the extent of applicability of IGST Act. As per the said section IGST Act extends to whole of India except State of Jammu and Kashmir. 'India' has been defined in section 2(56) of CGST Act read with section 2(24) of IGST Act to mean 'the territory of as referred to in article 1 of the Constitution, 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 Water<\/p>\n
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\nA8. Given the aforesaid, the tax cannot be said to be payable on the transaction under consideration as the subject i.e. goods (tools), on which tax is payable in outside India i.e. beyond the jurisdictional extent of IGST Act, 2017.
\nB. Tax cannot be demanded on the said transaction as the collection. if at all tax is leviable, itself will be unconstitutional
\nB1. It is no more res-integra that no tax shall be co<\/p>\n
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\nC. Cross-border transactions are being <\/p>\n
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\nC2. Applicant wishes to draw your kind attention to proviso to section 8 which states that following supply of goods shall not be treated as intra-State supply –
\n(i) Supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
\n(ii) Goods imported into territory of India till they cross the Customs frontiers of India; or
\n(iii) Supplies made to a tourist referred to in section 15
\nThe above mentioned list has been excluded from ambit of 'intra-State supply” so that administrative and Jurisdictional powers would vests with Central Government and not State Government.
\nC3. In view of above submission, Applicant contends that section should be read only to exclude such transactions from the purview of State Government and said section should not be considered as piece of legislation which is empowering Central Government to travel beyond territorial jurisdiction and levy IGST on<\/p>\n
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\nD5. The terms 'Export' covers the cases of taking goods out of India, however, principally even tool being supplied to customer at d location outside India should get covered under the purview of term 'Export'. Interpreting the term 'Export' to only cover supplies where goods are taken out of India would be restrictive and would disregard the principle of consumption based tax. 'Export of goods' should be interpreted in a broader way to cover such cross-border transaction where goods are delivered to a customer outside India even if not taken from India. Restricting the concept of export only to cases involving movement from India would mean disregarding the fact that place of supply is outside India. Thus, Applicant pleads for extending the meaning of 'export of goods' even to cases where goods are delivered to customer outside India even if not taken from India.
\nD6. Assuming <\/p>\n
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\nE2. Your kind attention in this regard, is invited to proviso to section 12(3) of IGST Act, 2017, which provides that in case of supply of service in relation to immovable property is outside in India and if both the supplier and recipient are in India then the place of supply shall be the location of recipient.
\nE3. For your reference we have reproduced relevant portion of section 12(3) of IGST Act, 2017
\n(3) The place of supply of services,
\n(a) directly in relation to an immovable property, including services provided by architects, interior decorators, surveyors, engineers and other related<\/p>\n
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\nE5. Similar provisions were provided in Rule 8 of Place of Provision of Services Rules, 2011 under Service Tax regime. We have reproduced the said provisions below:
\n'8. Place of provision of services where provider and recipient are located in taxable territory
\nPlace of provision of a service, where the location of the provider of service us well us that of the recipient of service in the faxable territory, shall be the location of the recipient of service.'
\nE6. It can be observed that in case of services the legislatures have always specifically provided for levying tax <\/p>\n
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\nF2. The relevant para of the circular is reproduced below'
\n'4. GST Council has de liberated on the levy of Integrated Goods and Services Tax on high sea sales in the case of imported goods. The council has decided that IGST on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before Customs authorities for the customs clearance purposes for the first time. Further, value addition accruing in each such high sea shall form part of the value on which IGST is collected at the time of clearance.'
\nF3. The Circular clearly mentions that the tax is leviable only at the time of importation of goods in India and not when the goods the sold while they are in High Seas. Si<\/p>\n
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\nG1. A taxpayer is required to report all the transactions carried out by him in his GST returns i.e. GSTR-1 and GSTR-2. Further, the supplier of goods and\/ or services has to mention State code of place of supply for each invoice in the GSTR-1 while reporting the outward supply.
\nG2. Without prejudice to the aforesaid, even if the transaction is made taxable in GST, the place of supply, in accordance with section of IGST Act, 2017, is outside India, There is no mechanism in the GST returns to report the transaction in GSTR-1 mentioning the place of supply to be a place outside India. Accordingly, the collection mechanism of such IGST is unclear and consequently it is unclear as to whether only Central Government or both Central and State Government would receive this revenue.
\nG3. In the absence of ambiguity around collection mechanism and revenue sharing of such GST, it appears that intention of legislatures w<\/p>\n
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\nH4. The levying section 6 of GST Act provided that CST shall be levied on all inter-State sale of goods. Similar to GST, CST Act specifically defined inter-State supplies, sale in the course of import, sale in the course of export and intra-State sale out of which only inter-State sale was made liable to CST.
\nH5. Section 5 of CST Act, 1956 provided for the principles to determine whether the transaction is a sale or purchase in the course of import or export and the same are reproduced below:
\n(1) A sale or purchase of goods shall be deemed to take place in the course of the export the goods out of the territory of India only if the sale or purchase either occasions such export or is effec<\/p>\n
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\nI1. Applicant wishes to draw your kind attention to the fact that in case of supply of tools by INA Germany to Applicant, EUVAT is leviable since the goods are located in Germany at the time of supply.
\nI2. As per Article 31 of EU VAT Law the place of supply of goods which does not involve dispatch or transfer of goods, shall be the place where goods are located at the time of supply. We have reproduced the said provisions below”:
\n'Article 31
\nWhere goods are not dispatched or transported, the place of supply shall be deemed to be the place where the goods are located at the time when the supply takes place.'
\nI3. It can be observed from the aforesaid provision of EU VAT that the place of supply for the transaction under consideration will be Germany and has already attracted EU VAT. Hence, the same should not be made liable to GST in India. Levying GST on such transaction in India would lead to supply to same tools being taxed in Germany as well as in India. <\/p>\n
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\nJ3. The relevant provisions of section 16 of CGST Act, 2017 is reproduced below:
\n(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,
\n (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
\n (b) he has received the goods or services or both.
\nExplanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise
\n (i) where the goods are delivered by the supplier to a recipient or any other person on the direction <\/p>\n
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\nProvided also that the recipient shall be entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.
\n J4. Without prejudice to the aforesaid submission, if at all tax is payable on the transaction under consideration then the recipient of supply should be eligible to avail input tax credit of the supply made to him and the condition of receipt should be deemed to have been complied with by applying explanation to section 16(2)(b) of CGST Act, 2017.
\nJ5. The Applicant contends that if a transaction is held to be liable qua the supplier and not the goods or services or both, then <\/p>\n
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\n2. If at all the transaction is made taxable, the recipient should be eligible to avail the input tax credit.
\n03. CONTENTION – AS PER THE CONCERNED OFFICER
\nThe submission, as reproduced verbatim, could be seen thus-
\nQuestion raised.
\n(a) Whether the sale of goods, which are located outside India would be liable to tax in India u\/s 7(5) (a) of IGST Act 2017?
\nExplanation:
\nAs per section 7(2) of IGST Act 2017 which is reproduced below:
\nSupply of goods imported into the territory of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce.
\nIn this case goods doesn't move into the territory of India. Hence IGST Act will not apply in this case.
\nAlso section 10 of IGST Act provides for various scenarios to determ<\/p>\n
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\nThus in this type of transaction IGST will not be leviable u\/ s 7(5) (a) of IGST Act (i.e. when the supplier is located in India and the place of supply is outside India)
\n04. HEARING
\nThe case was taken up for preliminary hearing on dt. 16.05.2018, with respect to admission or rejection of the application when Shi Nitin Shah, Advocate, Sh. Niraj Menon, C.A., and Sh. Anant Joshi, Manager Taxation appeared and requested for admission of application as per their contentions in ARA application. The jurisdictional officer, Shi Y. A. Lokre, Dy. Commr. Of ST. (PUN-VAT-E-610), Pune appeared and made written submissions.
\nThe application was admitted and final hearing was held on 26.06.2018, Sh. Nitin Shah, Advocate, Sh. Niraj Menon, C.A., and Sh. Anant Joshi, Manager Taxation appeared and made oral and written submission as per t<\/p>\n
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\na. PO No. RNIAIPL\/2013\/B4A\/PTVT\/230 dated 13.09.2013 for supply of tools and
\nb. PO No. RN15-MP-113W-K316 dated 28.05.2015 for supply of tappets.
\nIn order to comply with purchase orders received by the applicant, applicant in turn places purchase orders for manufacture of tools on M\/ s. Schaeffer Technologies AG & CD. KG, Germany (for the purpose of brevity herein after referred as “Scaheffler Germany”). The tools which are required for manufacturing are developed outside India by Schaeffer Germany. Once the tools are developed, Schaeffer Germany raise an invoice on applicant at Pune and as corollary of this the ownership of the said tools get transferred to the Applicant, without physical movement of tools from Germany to India i.e. the tools continue to remain in the possession of Scaheffler Germany. It means that there is no transfer of goods [Tools] in physical form and the Tool remain under the possession of Schaeffer Germany. The Ap<\/p>\n
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\n1. Levy of IGST cannot be extended beyond territorial jurisdiction of the said legislation.
\n2. Tax cannot be demanded on the said transaction as the collection, if at all tax is leviable, itself will be unconstitutional.
\n3. Cross-border transactions are being covered under 'Inter-State supply' only to exclude the same from purview of State Government, however, that would not conclude IGST applicability unless authorized.
\n4. The term 'Zero-rated supply' should be read in liberal manner and should not be restricted only to taking of goods outside India.
\n5. Place of Supply of Service specifically covers case where recipient is located outside India, unlike Place of Supply of Goods
\n6. Circular issued for High Sea Sales will be applicable to the transaction under consideration.
\n7. To state code available in GST returns to mention the Place of Supply in case of these transactions
\n8. The transaction was not taxable under erstwhile indirect tax laws and henc<\/p>\n
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\nOn the basis of the above set facts we would be required to refer to the provisions of IGST Act, 2017. First of all to confirm the nature of supply of present goads i e. whether inter-state or intra-state we are required to refer to Chapter IV of the IGST ACT, 2017, which reads as under:-
\nCHAFTER IV DETERMINA<\/p>\n
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\nIntra-State supply.
\n8. (1) Subject to the provisions of section 10, supply of goods where 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:
\nProvided that the following supply of goods shall not be treated as intra-State supply, namely:
\n (i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit;
\n (ii) goods imported into the territory of India till they cross the customs frontiers of India; or
\n (iii) supplies made to a tourist referred to in section 15.
\nFrom the reading of Section 7(2) of the IGST Act We find 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.
\nIn addition to what is stated above we find that the location of the applicant as a supplier of goods is in India and the place of supply of g<\/p>\n
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\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.
\n(2) The integrated tax on the supply of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel shall be levied with effect from such date as may be notified by the Government on the recommendations of the Council.
\n(3) The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shal<\/p>\n
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\nProvided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
\nFrom the transactions placed by the applicant before us there is no doubt that the goods of the applicant would be imported goods if they are brought from outside the country into India and it is clear that when the location of the supplier is in India and the said goods are delivered\/ supplied from a place outside India to a place outside India, these goods have not crossed the customs frontiers of India, thus clearly the transaction in these goods are in the na<\/p>\n
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\nThus in case of goads 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 imported 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.
\nWe find that in the definition of exe<\/p>\n
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\nWe find that the above legal position is further reiterated and confirmed by Circular No. 3\/1\/2018-IGST dated 25.05.2018 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing.
\n6. In view of the extensive deliberations as held hereinabove, we pass an order as follows:
\nORDER
\n(Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
\nNO.GST-ARA-04\/2018-19\/B-60
\nMumbai, dt. 09\/07\/2018
\nFor reasons as discussed in the body of the order, the questions are answered thus –
\nQuestion:-Whether the sale of goods, which are located outside India, would be liable to tax India under section 7(5) (a) of Integrated Goods and Services Tax Act, 2017?
\nAnswer: – Answered m the Negative.
\nQuestion: – If answer to (a) is yes, then whether the recipient, to whom such goods are sold, be eligible to avail input tax credit of such goods?
\nAnswer: not relevant in view of answer to Question No. 1 above.
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