TMI Blog2020 (1) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of goods but results in further movement of goods at the hands of recipient to SEZ. So the final destination i.e. SEZ in the case on hand is the supply point. The actual place of supply by plain interpretation of Section 10(1) is within the SEZ in Madras, State of Tamilnadu, but not in State of Kerala. - Therefore, the contention of respondents 1 and 2 that supply of goods is completed at Marayoor Forest Department and subject sets is an intra state transaction is unsustainable. Rate of tax / GST - @18% or Zero rated supply - Held that:- Under the scheme of IGST supplies to SEZ unit and SEZ developer are treated at par with physical exports. The exporting units to compete with world market need raw materials without payment of taxes and duties. Either the denial of zero-rated tax benefit by respondents or calling upon the petitioner to pay 18% tax and claim refund is not in line with statutory scheme discussed above. Respondents 1 2 by calling upon petitioner to pay 18% IGST are acting contrary to the scheme under IGST. Misuse is one of the gray areas in implementation of zero-rated tax. Respondent No.3 has informed that if the supplier and recipient are situated in dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Economic Zone earmarked for 100% export industrial units. The industrial unit of petitioner is manufacturing natural and essential oils, nutraceuticals, oleoresins, food supplements, aromatic chemicals etc. for supply to perfumeries, pharmaceuticals, cosmetics and detergent companies. On 22.5.2018 respondent Nos.1 and 2 issued e-auction notice for sale of sandal wood from Govt. Sandal Depot, Marayoor. Eauction is conducted subject to the sale conditions published in Kerala Gazette No.2, Volume IV dated 13.1.2015 vide notification No.Pro-(4) 54954/14 dated 23.12.2014 of the Additional Principal Chief Conservator of Forests (Protection) Thiruvananthapuram read with the general conditions set out in vide Kerala Gazette No.36, Volume III dated 16.09.2014 vide notification No.Pro-(4) 29243/2013 dated 21.8.2014, Kerala Gazette No.43, Volume III dated 4.11.2014 read with notification No.Pro(4) 29243/13 dated 17.10.2014. The petitioner is one of the tenderers in e-auction notice dated 22.5.2018. The petitioner in the e-auction held on 4.7.2018 and 5.7.2018 is the successful bidder for Lot No.198/18 of 315.00 kgs. of class X sandal wood. On 13.7.2018, the auction was confirmed in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third respondent, are excerpted for immediate reference and read thus: With reference to your letter cited, it is informed that 1. Supply of goods by any supplier in India to a unit located in Special Economic Zone is Deemed Export. 2. As per Section 10(a) of the IGST Act, 2017, if the supplier and recipient are situated in different States will be treated as interstate supply ie. IGST transaction. 3. As per Section 8(1)(i) supply to SEZ even within State is considered as IGST transaction. 4. Any supply of Goods or Services by a supplier located in India to a unit located within SEZ zone is exempt from IGST as such supplies of goods or services are treated as Exports. (emphasis added) 5. The supplier has an option of supplying goods without charging 18% IGST by submitting a letter of undertaking to their jurisdictional CGST/SGST authorities, or supplier can supply the goods on payment of IGST, and thereafter claim refund of IGST paid. 3.2 According to petitioner, de hors clarification in Ext.P6, the first and the second respondents insisted upon paying 18% IGST on the goods purchased by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch conditions, safeguards and procedure, as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit, or b) He may supply goods or services or both subject to such conditions, safeguards and procedures, as may be prescribed on payment of integrated tax and the claim refund of such tax paid on goods or services or both supplied. 3.7 Therefore petitioner contends that the demand of 18% IGST for the subject sale by respondents 1 and 2 is illegal and hence prays that the demand of IGST at 18% from petitioner is liable to be set aside. 4. First respondent filed statement for himself and on behalf of second respondent. The first and the second respondents do not dispute dates and events referred to above. The case of respondents 1 and 2 is that firstly the e-auction notified vide Kerala Gazette dated 22.5.2018 refers to general and special conditions which are binding in the conduct and confirmation of sale. The special and general conditions of e-auction are appended as Annexures R1(a) to R1(c) to the statement. In fact the parties are not at issue on the conditions of e-auction notification dated 22.5.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same; ii) to issue a writ of mandamus or any other writ, direction or order directing respondents 1 to 3 to permit the petitioner to remit the balance sale consideration deducting the amount demanded towards IGST and forthwith supply the sandalwood purchased by the petitioner; iii) to issue a writ of mandamus or any other writ, direction or order directing respondents 1 to 3 not to adjust the remittance made by the petitioner towards any loss/cost incurred by the department; And iv) to grant such other reliefs as this Honourable Court may deem fit in the circumstances of this case. 5.1 The present writ petition is an offshoot of non-compliance with the condition stipulated by respondents while confirming the sale on 13.7.2018. The circumstances leading to the writ petition have been stated in sufficient detail in the preceding paragraphs. Therefore, for brevity, these circumstances are not stated once again. Ext.P16 dated 13.7.2018 confirms sale in favour of petitioner. The petitioner submits that first and foremost when the substantive issue is sub judice in Writ Petition No.24675 of 2018, the respondents ought no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST, respondents 1 and 2, while finalising the sale, are required to implement the law i.e. CGST/IGST which is in force as on date. By referring to proviso to Section 8, he contends that the proviso explicitly excludes the supply to or by SEZ unit has not falling within the meaning of intrastate supply. He contends that respondents 1 and 2 do not have locus to determine the tax liability but it is for third respondent to answer on the tax liability of the subject sale transaction. Ext.P6 in unequivocal terms states that for movement of inter state goods without paying tax. According to him, the subject transaction shall be treated as zero rated supply, and for the said purpose he refers to Section 2(23) and Section 16 of IGST Act. According to him, the petitioner/purchaser satisfies the applicable definitions of place of business, place of supply and is admittedly located in SEZ, outside the State of Kerala follows the procedure under Rule 87 read with Rule 96A(6). In other words, the sale of sandal wood by respondents 1 and 2 is treated as an export and not liable for tax. 7. The petitioner contends that the petitioner participated in eauction conducted on 4.7.2018 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents 1 and 2, therefore, rightly insisted upon payment of 18% tax. She submits that even by legal fiction the meaning of 'export' is extended to supply of goods to SEZ. Such legal fiction of export is available, if the delivery is actually made in SEZ. In other words, according to her, the sale is concluded in SEZ. According to her, in the instant sale of goods actual delivery of goods i.e. in Government Sandal Depot, by supplier assumes great importance. The petitioner pays tax and then lifts the goods for onward movement. The Government Pleader relies on Ext.R1(d) W.A. Judgment to contend that the delivery is at Marayoor Sandal Depot is held as intra state transfer. Respondents rely on Ext.P16 which according to them is self explanatory and they are justified in cancelling the sale in Ext.P3. Lastly it is argued that default of performance of argued conditions warranted cancellation of sale confirmation dt. 13.7.2018 in Ext.P3 and for valid and just reasons cancellation in Ext.P16 (WPC No.41418 of 2018) has been made and no exception within the scope of judicial review under Article 226 of Constitution of India has been made. She prays for dismissing the writ petitions. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction from the beginning till the end is completed within the State of Kerala. Thirdly, under GST regime destination based tax is implemented and the place of delivery of goods assumes importance and in the case on hand the delivery of goods is at Marayoor Depot, State of Kerala. 11. I prefer to first examine the effect of the judgment of this Court in W.A. No.2665 of 2015. The petitioner in W.P.(C) No.21530 of 2015 prayed for the following reliefs: (i) a declaration that sale effected to a unit in Special Economic Zone established under the Special Economic Zone Act, 2005 by any dealer in the domestic tariff area is an export sale and no Value Added Tax can be levied or collected by the respondents in respect of such sale. (ii) a writ of Certiorari or any other writ, order or direction, quashing Exhibits P9, P10, P14, P16 and P19 in so far as it demand sale tax on the sale of sandalwood to the petitioner treating the transaction between the petitioner and respondents 2 to 4 as a local sale taxable under Section 6 (1) of the Kerala Value Added Tax Act, as the demand and collection of sale tax being illegal, unjust and violative of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /State. It is open for the owner of the goods to stipulate the terms for sale of the goods of the owner, to the extent it is within the four walls of law. Apart from the revenue to be obtained towards the value of the property to the State/Forest Department, the State is also entitled to get appropriate extent of tax as well, as in any other instance of sale, if covered by any taxable event. The sale conditions were specifically laid down so as to protect the interest of the State/Department in all respects and it was accepting such terms that the appellant had participated in the bid. The terms of the 'e-auction' notification and the special conditions by way of Exts. P5/P6 clearly indicated that it was nothing but a 'local sale'. Having purchased the goods by participating in such sale and having effected the entire payment in terms of the Tender notification/Special conditions and having taken delivery of the goods from the godown of the State/Department in Kerala, the subsequent conduct of the appellant/bidder, whether he wanted to sell it within the State of Kerala or intended to take it from this State to some other place or whether he wanted to effect some ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble in a given jurisdiction only if the supply is considered to take place in that jurisdiction. The basic principle behind provisions relating to place of supply is that GST is destination based tax. Therefore, tax is finally payable where goods and services are consumed. It is admitted that the supply of goods is to an SEZ Unit. 15. Section 2 (85) and (86) 1 of CGST, define place of business and place of supply. Place of business includes a) a place from where the business is ordinarily carried on including a warehouse, a godown, a place where a taxable person stores his goods b) a place where the books are maintained by the taxable person c) a place where the business is carried on through an agent. 16. The case attracts the first and foremost of the definition and then the place of business of petitioner is in Madras Special Economic Zone, Madras. 17. Section 2(86) deals with what constitutes place of supply of goods or services. According to Sec.2(86), place of supply means place of supply as referred to in Chapter V of the Integrated Goods and Services Tax Act, 2017. 18. Chapter IV d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vides for determining what is the place of supply of goods or services or both. According to Section 10(1) 5 of IGST Act the place of supply of goods shall be in cases where the supply involves movement of goods whether by the supplier or recipient i.e. recipient of goods, or by any other person, i.e. transport by road/rail etc.; place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery movement of goods terminates for delivery to the recipient. Section 10(1)(b) to (e) are not applicable and hence are not adverted to. Therefore, from the above, assuming that the goods upon payment of sale price are handed over to petitioner at Marayoor Depot, such delivery of good is for onward movement to Madras SEZ in State of Tamil Nadu. The definition and the substantive provisions in the applicable Statute that is binding between the parties but not the inference respondents 1 and 2 draw on the alleged completed transaction at Marayoor. The place of supply of goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient. Therefore, as rightly contended by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deals with: 'zero rated supply'. According to Section 16(1) export of goods or services or both are zero rated supply . The word export of goods according to section 2(5) of IGST means taking goods out of India to a place outside India. The recipient of goods can move/transport the goods without paying applicable IGST. The next category is covered by Section 16(1)(b), i.e. the supply of goods or services to a SEZ developer or a special Economic Zone Unit. Section 16(2) enables taking credit of input tax on zero rated supplies, however subject to Section 17(5) of CGST Act. Section 16(3) deals with refund under two circumstances. (a) when goods are supplied under bond or letter of undertaking etc., (b) a registered person may supply goods subject to such conditions, etc. on payment of interpreted tax and claim refund in accordance with section 54 8 of CGST Act or the Rules made thereunder. IGST defines what is 'zero-rated tax', and under what circumstances zero-rated tax is applicable and the manner of undertaking transactions with no incidence of tax liability on the recipient. From the above analysis, it is sufficiently clear that the argument of petitioner t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of subject goods from Government Sandal Depot, Marayoor to SEZ. The petitioner through Ext.P16 has reported her willingness to comply with the conditions except deposit tax and take delivery of goods. This statement shows that the petitioner has been ready and willing to perform her obligations under the sale confirmation letter dated 14.07.2018. 24. The applicable provisions have been considered in extenso. Therefore the conclusion is that the subject supply comes as inter-State movement of goods to SEZ outside the State of Kerala. The first and second respondents though have proceeded to conduct e-auction by reference to applicable VAT, the same is understood as applicable taxes i.e., GST/IGST, and the transaction is concluded or completed by the parties with reference to the legal obligations under GST/IGST. 25. Keeping in view the above discussion the writ petitions are ordered as follows: a) In the circumstances noted supra it is held that the subject transaction shall be treated as zero-rated tax supply. b) The petitioner is given four weeks from today to comply with the conditions which the petitioner is under obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 5 10. (1) The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under, (a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient; (b) where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person; (c) where the supply does not involve movement of goods, whether by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Privileges and Immunities) Act, 1947, Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55, entitled to a refund of tax paid by it on inward supplies of goods or services or both, may make an application for such refund, in such form and manner as may be prescribed, before the expiry of six months from the last day of the quarter in which such supply was received. (3) Subject to the provisions of sub-section (10), a registered person may claim refund of any unutilised input tax credit at the end of any tax period: Provided that no refund of unutilised input tax credit shall be allowed in cases other than (i) zero rated supplies made without payment of tax; (ii) where the credit has accumulated on account of rate of tax on inputs being higher than the rate of tax on output supplies (other than nil rated or fully exempt supplies), except supplies of goods or services or both as may be notified by the Government on the recommendations of the Council: Provided further that no refund of unutilised input tax credit shall be allowed in cases where the goods exported out of India are subjected to expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in sub-section (5), the refundable amount shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to- (a) refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies; (b) refund of unutilised input tax credit under sub-section (3); (c) refund of tax paid on a supply which is not provided, either wholly or partially, and for which invoice has not been issued, or where a refund voucher has been issued; (d) refund of tax in pursuance of section 77; (e) the tax and interest, if any, or any other amount paid by the applicant, if he had not passed on the incidence of such tax and interest to any other person; or (f) the tax or interest borne by such other class of applicants as the Government may, on the recommendations of the Council, by notification, specify. (9) Notwithstanding anything to the contrary contained in any judgment, decree, order or direction of the Appellate Tribunal or any court or in any other provisions of this Act or the rules made thereunder or in any other law for the time being in force, no refund shall be made except in acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s refund of tax paid on zerorated supplies of goods or services or both or on inputs or input services used in making such zerorated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3). (2) relevant date means- (a) in the case of goods exported out of India where a refund of tax paid is available in respect of goods themselves or, as the case may be, the inputs or input services used in such goods, (i) if the goods are exported by sea or air, the date on which the ship or the aircraft in which such goods are loaded, leaves India; or (ii) if the goods are exported by land, the date on which such goods pass the frontier; or (iii) if the goods are exported by post, the date of despatch of goods by the Post Office concerned to a place outside India; (b) in the case of supply of goods regarded as deemed exports where a refund of tax paid is available in respect of the goods, the date on which the return relating to such deemed exports is furnished; (c) in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it up to ten thousand rupees per challan in case of an Over the Counter payment shall not apply to deposit to be made by (a) Government Departments or any other deposit to be made by persons as may be notified by the Commissioner in this behalf; (b) Proper officer or any other officer authorised to recover outstanding dues from any person, whether registered or not, including recovery made through attachment or sale of movable or immovable properties; (c) Proper officer or any other officer authorised for the amounts collected by way of cash, cheque or demand draft during any investigation or enforcement activity or any adhoc deposit: Provided further that a person supplying online information and database access or retrieval services from a place outside India to a non-taxable online recipient referred to in section 14 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017) may also make the deposit under sub-rule (2) through international money transfer through Society for Worldwide Interbank Financial Telecommunication payment network, from the date to be notified by the Board. Explanation. For the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er by an order made in FORM GST PMT-03. (12) A registered person shall, upon noticing any discrepancy in his electronic cash ledger, communicate the same to the officer exercising jurisdiction in the matter, through the common portal in FORM GST PMT-04. Explanation 1.- The refund shall be deemed to be rejected if the appeal is finally rejected. Explanation 2. For the purposes of this rule, it is hereby clarified that a refund shall be deemed to be rejected, if the appeal is finally rejected or if the claimant gives an undertaking to the proper officer that he shall not file an appeal. (13) A registered person may, on the common portal, transfer any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger under the Act to the electronic cash ledger for integrated tax, central tax, State tax or Union territory tax or cess in FORM GST PMT-09. 10 Rule 96A: Export of goods or services under bond or Letter of Undertaking (Chapter-X: Refund) (1) Any registered person availing the option to supply goods or services for export without payment of integrated tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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