In Re: M\/s. Sadesa Commercial Offshore De Macau Limited
GST
2019 (2) TMI 194 – AUTHORITY FOR ADVANCE RULING, TAMILNADU – 2019 (21) G. S. T. L. 265 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, TAMILNADU – AAR
Dated:- 31-12-2018
Order No. 24\/AAR\/2018
GST
MS. MANASA GANGOTRI KATA AND THIRU S. VIJAYAKUMAR, M.SC. MEMBER
\nNote: Any appeal against the advance ruling order shall be filed before the Tamilnadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT\/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated.
\nAt the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a refer<\/p>\n
= = = = = = = =<\/p>\n
Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n by a foreign supplier which is cleared to Domestic Tariff Area (DTA) customer in India would result in supply subject to levy under sub section 1 of section 5 of the IGST Act 2017 or under the provisions of CGST Act, 2017 or Tamil Nadu GST Act, 2017 and the rules made there under. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ustomers in India of Sadesa on need basis. Sadesa would place a purchase order for import of goods (i.e. tanned bovine leather) from Sadesa Group (entities situated in Thailand, Argentina & Uruguay) to India (Chennai). Based on the said PO, Sadesa Group would export goods to India by mentioning M\/s. Sadesa Macau c\/o LSP as “Shipping address” in all export documents including export invoice. Prior to arrival of goods in the customs port, Sadesa would intimate the LSP in Chennai and on arrival of goods, the FTWZ unit of LSP would file 'BOE' in the name of M\/s. LSP, on account of M\/s. Sadesa Macau and the trans-shipment permission is stamped on the fifth copy of the 'BOE', along with other relevant documents and clear goods without payment of customs duty. Such goods are stored in the FTWZ unit on behalf of Sadesa Macau. The title to the goods stored in FTWZ unit remains with Sadesa during storage. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n s 2007 and the same is continued under the GST regime. As per Section 7(2) of IGST Act, sale through FTWZ units should be considered as interstate supply. However, as per proviso to Section 5(1) of IGST Act, imported goods would be subject to IGST at the point where Customs duty is levied, in this case clearance from FTWZ to DTA which is import of such goods. They stated that if there is no levy of GST on such supplies, they are not liable for registration as per Section 23(1) of CGST Act. The Applicant has stated that there is no clarity on the taxability of sale from the Applicant through FTWZ units to the DTA customers, hence SADESA has sought Advance ruling to clarify the same. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n and pays the appropriate BCD and IGST. The invoice price is paid to the applicant by the DTA purchaser. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n payable on such supplies and buyer will also pay the deferred customs duty at the time of clearance of goods from the warehouse. It has been represented that in this scenario, the buyer is being saddled with double taxation. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n upply of warehoused goods within the Customs bonded warehouse as 'no supply' under Schedule III of the CGST Act, 2017 so as to ensure that no integrated tax is paid at the time of supply of warehoused goods by the importer to the buyer. Since the amendment of the law would take time, it is proposed that such intention\/ decision of the GST Council may be effected through a circular. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n while being deposited in a customs bonded warehouse on or after 01.04.2018. = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" In Re: M\/s. Sadesa Commercial Offshore De Macau LimitedGST2019 (2) TMI 194 – AUTHORITY FOR ADVANCE RULING, TAMILNADU – 2019 (21) G. S. T. L. 265 (A. A. R. – GST)AUTHORITY FOR ADVANCE RULING, TAMILNADU – AARDated:- 31-12-2018Order No. 24\/AAR\/2018 GSTMS. MANASA GANGOTRI KATA AND THIRU S. VIJAYAKUMAR, M.SC. MEMBER Note: Any appeal against the … Continue reading “In Re: M\/s. Sadesa Commercial Offshore De Macau 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-16552","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16552","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=16552"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/16552\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16552"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16552"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16552"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
For full text:-Visit the Source <\/a><\/p>\n
\n2. Whether the foreign supplier being the applicant, located outside the taxable territory and supplying goods to DTA customers on the goods stored in third party FTWZ unit is required to get registered under the IGST ACT 2017 or under the provisions or CGST ACT 2017 or the Tamil Nadu Goods and Service Tax Act, 2017 and the Rules made thereunder:
\n2.1 Sadesa has informed that they are contemplating to make supplies to its Indian customers on just in time basis. Towards this, they are exploring the option of entering into a service agreement with a Logistics Service Provider ('LSP'), for clearance \/handling of goods from customs and for storage of goods in the warehousing unit of the LSP situated in a<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n2.4 The Applicant has also informed that they would identify customers and<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n3. The Authorized Representative of the Applicant was personally heard. They stated that the goods will be imported by LSP in the FTWZ. LSP is a unit of FTWZ. However, title of goods do not change and it remains with the Applicant. The Applicant submitted a flow chart of various transactions. They stated th<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n4.1 Chapter 7A of the Foreign Trade Policy 2015-2020 states that Free Trade 8s Warehousing Zones (FTWZ) are a special category of Special Economic Zones with a focus on trading and warehousing. The scheme envisages duty free import of all goods (except prohibited items, arms and ammunitions, hazardous wastes and SCOMET items) for ware housing. As far as bond towards customs duty on import is concerned, the units would be subject to similar provisions as are applicable to units in SEZs. These goods shall also be permitted to be sold in the DTA on payment of customs duties as applicable on the date of such sale. Payment of duty will become due only when goods are sold\/delivered to DTA and no interest will be charged as in the case of bonded warehouses. In the present case, the applicant is storing the imported goods in FTWZ which is a Customs bonded warehouse. Now, the applicant has <\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n 2. Kind attention is drawn towards sub-section (2) of section 7 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the “IGST Act”) whereby supply of goods imported into the territory of India, till they cross the customs frontiers of India, is treated as a supply of goods in the course of inter-State trade or commerce. Further, proviso to sub-section (1) of section 5 of the IGST Act provides that integrated tax on goods imported into India would be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 (hereinafter referred to as the “CTA”). Thus, in case of supply of such warehoused goods the point of levy would be the point at which duty is collected under section 12 of the Customs Act, 19<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n5. In view of the above, it is proposed that Circular No. 46\/2017-Customs dated 24.11.2017 may be rescinded and a fresh circular may be issued clarifying that supply of warehoused goods before their clearance from the warehouse would not be subject to levy of integrated tax and the same would be collected only when the warehoused goods are cleared for home consumption from the customs bonded warehouse. This clarification would be applicable from 1st of April, 2018. Accordingly, a draft circular as at Annexure-I is placed for approval of the GST Council.
\nAccordingly, Circular No.3\/1\/2018-IGST dated 25th May<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n
\n4.3 From the foregoing, it is evident that removal from the FTWZ to DTA is the point of deferred levy\/payment of Customs Duty, i.e., at the time of clearance for home consumption from FTWZ. Further, as explained in the Circular referred above, the goods are not to be subjected to IGST when bonded and the payment of integrated tax is to be effected when the goods are removed for home consumption from the bonded warehouse, under the Provisions of Customs Tariff Act. Therefore, there is no requirement to pay IGST under the provisions of GST law at the time of clearance from the FTWZ. In the case at hand, the Applicant proposes to effect sale when the goods are bonded and then DTA customer files Bill of Entry for Home Consumption and clears the goods from the FTWZ on payment of appropriate Custom duties (BCD & IGST). Therefore, as clarified in the Circular No.3\/ 1\/2018-IGST dated 25th May 2018, the payment of IGST<\/p>\n
For full text:-Visit the Source <\/a><\/p>\n