MERCHANT EXPORT UNDER GST, Goods and Services Tax - GST

[SURYAKANT MITHBAVKAR]

We have manufacturing Pharma machinery registered under GST Act. We have doing export for our Manufacturing machinery under LUT also We are doing trading Export (Material procured under CT-1).

Now, under GST regime, there is no (B1 Bond) hence we can not issue CT-`1 for our trading purchases for export.

What is procedure to adopt related to Trading Export under GST .

Posts / Replies

[Kishan Barai]

There is also procedure to export via Bond / LUT under GST but for Merchant Exporter customs / port are yet demanding Bank Guarantee

[KASTURI SETHI]

Because Bank Guarantee makes revenue 100% safe. It is discretion of Custom Officer how he thinks revenue is safe.Bonds and LUTs do not provide complete safety.These lead to litigation only.

[GOKARNESAN.S SUBRAMANIAN]

Mr. Suryakant Mithbavkar

Under the existing Central Excise provisions, Merchant Exporter can execute a Bond and obtain CT-1 certificate to procure goods from local manufacturers for the purpose of export. However, under the provisions of GST / IGST, the concept of merchant exporter is not there.

Assume Merchant Exporter "X" place order with "Y" a manufacturer to procure goods for onward export to foreign customer "Z" and both X and Y are situated in the same state. Here both X and Y have to obtain GST Registration.

Under GST, the manufacturer "X" has to raise local GST Invoice with CGST and SGST and supply the goods to "Y".

"Y" can take credit the CGST and SGST as per "X" Invoice after

"Y" can raise an Export Invoice on the foreign buyer "Z" either with ZERO duty after executing Bond with the Jurisdictional Central or State Authorities OR "X" can pay IGST on the export value ( here the tax can be paid either out of credit earned for the purchase made from the manufacturer or pay by cash) and supply the goods for export through the port. While submitting Shipping Bill and Bill of Lading, "X" has to give his GSTN Register Number and the Invoice reference in the said documents.

If he is eligible for execution of Letter of Undertaking, he can also do so accordingly .

After completion of Export, the particulars of export will be automatically transferred from Customs Department to "Y" account maintained in GSTN portal. The duty paid amount will also be refunded by way of direct credit to "Y" Bank account.

If "Y" cleared the export goods under Bond without payment of duty, he can claim refund of input tax credit earned on the purchase of said goods from the manufacturer as rebate.

Please refer the following provisions of IGST Act

a) IGST Act section 2(5) for export definitions.

b) IGST Act section 10(a) and (b) for place of supply of goods other than import or export.

c) IGST section 11 - for place of supply of goods for export and import

d) IGST Act section 16 (1) to (3) for Zero rated supply and for refund of input tax credit / refund of IGST paid.

Advised accordingly

S. GOKARNESAN

Advocate, Chennai

98400 87349

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In my previous post, I made mistake of mentioning "X" and "Y" wrongly. You may read with the following corrections

Under the existing Central Excise provisions, Merchant Exporter can execute a Bond and obtain CT-1 certificate to procure goods from local manufacturers for the purpose of export. However, under the provisions of GST / IGST, the concept of merchant exporter is not there.

Assume Merchant Exporter "Y" place order with "X" a manufacturer to procure goods for onward export to foreign customer "Z" and both X and Y are situated in the same state. Here both X and Y have to obtain GST Registration.

Under GST, the manufacturer "X" has to raise local GST Invoice with CGST and SGST and supply the goods to "Y".

"Y" can take credit the CGST and SGST as per "X" Invoice

"Y" can raise an Export Invoice on the foreign buyer "Z" either with ZERO duty after executing Bond with the Jurisdictional Central or State Authorities OR "Y" can pay IGST on the export value ( here the tax can be paid either out of credit earned for the purchase made from the manufacturer or pay by cash) and supply the goods for export through the port. While submitting Shipping Bill and Bill of Lading, "Y" has to give his GSTN Register Number and the Invoice reference in the said documents.

If he is eligible for execution of Letter of Undertaking, he can also do so accordingly .

After completion of Export, the particulars of export will be automatically transferred from Customs Department to "Y" account maintained in GSTN portal. The duty paid amount will also be refunded by way of direct credit to "Y" Bank account.

If "Y" cleared the export goods under Bond without payment of duty, he can claim refund of input tax credit earned on the purchase of said goods from the manufacturer as rebate.

Please read my previous posting with the above corrected one.

I regret for the confusion while typing "X" and "Y"

Regards

S. Gokarnesan

[Kishan Barai]

It was a wonderful reply but I would like to do bit correction

Under GST, the manufacturer "X" has to raise local GST Invoice with IGST and supply the goods to "Y". "X" has to mention that supply meant for Export Purpose with GST number of X & Y in his bill

"Y" can take credit the IGST as per "X" Invoice

Invoice of export raised with CGST & SGST will not be allowed for refund, all exports would be treated as interstate supply as per GST Law

Thank You.

[HimansuSekhar Sha]

Dear kishanji,

How can x claim igst from y when it is an intra state supply. Only y will pay Igst. Please look into it as x will clear it as domestic supply.

Regards.

Himansu

[Kishan Barai]

No Sir, I am talking about only exports not inter State , it's just an procedure for it

Thank You

[Sudha Tallapaneni]

Dear Sir,

Please suggest , if the Manufacturer ( X seller) is in one state and (Y buy & export) is in other state and being in 100% EOU zone. Can ( Y) give CT bond to (X). Please suggest.

[RAMJI RAMJI]

Thanks for the clarity provided on GST refunds on Exports.

We are a merchant exporter & the Pre-GST documentation helped us in procuring products from 100% EOU without payment of Excise & Customs Duty via CT1/ARE1 process. GST refund process is well understood. But there is no info on the refund of the Basic Customs Duty + Cesses (and is not under the GST Act) that will be charged by the 100% EOU . Does the BCD+Cess have to be charged by the 100% EOU supplier and refund to be applied by the merchant exporter? Or is there a process of getting an exemption as the material is destined for exports? Will apprecaite any info alongwith pertaining documentation info.

[MAHESH JAGTAP]

If Merchant Exporter is located in Maharashtra & Manufacture is located in Gujarat the what transaction will have to done for Export.

[SHIVAKUMAR GOKARNESAN]

Friends

Please refer to my postings (reply to query on Merchant exporter) above where in I have stated that

a) the existing concept of getting goods from manufacturer by Merchant exporter under CT-1 is no longer available in GST.

b) In GST the first transaction from Manufacturer to Merchant exporter is a supply which attracts GST,

c) In GST the transaction from Merchant Exporter to foreign buyer is another supply which attracts zero rate. He can take credit the GST paid by the manufacturer and claim refund after export. He is the actual exporter under GST and he has to execute Bond Or LUT for export supply.

The Government has issued a circular on 11.7.2017 in which it is clarified all the issues on Merchant exporter transactions. The circular confirm my above views. Please see the below circular for more details.

Circular No. 5/5/2017 - GST F. No. 349/82/2017-GST

Government of India Ministry of Finance Department of Revenue

Central Board of Excise and Customs GST Policy Wing New Delhi,

Dated the 11th August, 2017

Regards

Gokarnesan. S

Advocate

12.8.2017

[Suman Jhamb]

If we purchase goods from delhi from mr. X for export then x will charge igst in his invoice and we will take the credit of that igst, like normal other igst. In that case at the time if making the invoice if we are having bond then we will not charge igst in our invoice and if we are not having then we will mention gst amount in our invoice. For example if product value is usd 5000 +gst usd 600?

My question is what amount will the buyer pay to us to whom we are exporting the goods. He pay usd 5000 or usd 5600??

Correct me if i am wrong. And reply urgently plz.

[KASTURI SETHI]

5000 USD. Bond or LUT means Govt Tax. I.e. GST is secure without payment of GST while exporting. Who is actual export, can get benefit of export.

[Kishan Barai]

5000 USD for export against bond as correctly coined by Sir

[saraswathi P]

By: Saraswathi

We are placing order to malaysia and selling to Dubai without reaching material to India, as per GST, what is the procedure to adopt under GST

[Kishan Barai]

Procedure would remain same for this as you were doing earlier, Transaction via Switch B/L

[saraswathi P]

MERCHANT EXPORT UNDER GST

We have manufacturing Air filter registered under GST Act. We are doing merchant Trading (goods import & export) out territory of India, here few query's

01. Whether LUT cover for Merchant Trading As per GST

02. we are raising Inv. packing list & switch B/L for final destiny

03. How about GSTr-1 returns , whether we need show for import and export both transactions

04. On which coloumn we need to show

Please provide act as per GST & information for filing GSTR1