9911796707
TMI Blog2021 (4) TMI 929X X X X Extracts X X X X X X X X Extracts X X X X ..... nts it and ships to the customers located in USA, UK and Canada. Further, in another business model the applicant is having an agreement with Amazon Inc. who through their website "amazon.com" based on the choice of the customers either prints the books and sells it to the consumers on their own account or will share the link to download the e-books material in an of the electronic devices and pays royalty to the applicant as agreed between the two parties. In view of the above, the applicant sought advance ruling, on classification of goods and services, in respect of the following questions: i. Whether the supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant are treated as supply under GST? ii. Whether GST is levied on the shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in USA, UK and Canada (non-taxable territory)? iii. Whether printing charges for prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quick delivery to the customer. The applicant shares the order details to the warehouse service provider, who in turn ships the books to customer. The applicant pays printing charges, warehouse charges and shipping charges to the respective service provider. The applicant collects the price of book along with shipping charges. B. Sales through Amazon platform: The customer places an order through Amazon web portal by making payment either of physical book or e-book. Amazon collates all the orders, prints the books and ships to customers located outside India and in case of e-books, Amazon will share the link to download the material in any of the electronic devices. Amazon will pay royalty to the applicant at agreed rates. C. Online Guitar training courses through the Applicant website: In this transaction, the applicant is proposing to start online guitar courses through its own website. The customers can purchase the course on the website. They will be provided with a User ID and grant access to the course platform. The customer is required to login with the user ID and password to view the course. The sessions are pre-recorded and require continuous availability of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ?? a. Section 7 of the IGST Act, 2017 lays down the principle to determine the nature of transaction as inter-state transaction. In this regard, the provisions of section 7(5) which reads as under: (5) Supply of goods or services or both, (a) When the supplier is located in India and the place of supply is outside India. (b) to or by a Special Economic Zone developer or a Special Economic Zone Unit; or (c) in the taxable territory, not being an intra state supply and not-covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-state trade or commerce. b. In order to evaluate applicability of section 7(5)(a), the applicant states that it is pertinent to evaluate following aspects of transaction in question- * Supplier * Place of Supply Supplier: 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 the 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 suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 15 of CGST Act and such rates not exceeding forty percent, as may be notified by the Government on the recommendation of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person" Provided 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. f. Thus, from the above, the applicant states that integrated tax on goods imported into India is to be levied and collected in accordance with Section 3 of the Customs Tariff Act, 1975 and Section 12 of the Customs Act, 1962 and the same is to be levied and collected at the time of import into India. The goods are considered to be imported into India only after they clear the customs frontier after compliance of applicable procedures and payment of duty as applicable. Since the goods has not cleared the customs frontier of India, it is not treated as Import of Goods. g. The CBEC vide Circular No 33/2017-Customs dated 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lies falling within the purview of Section 7 (5) (a) of the IGST Act, but not covered under section 16 of IGST Act would be considered as liable to IGST. k. The term 'Export' covers the cases of taking goods out of India, however, principally even book being supplied to the customer located in USA, UK and Canada (non-taxable territory) which is outside India should get covered under the purview of the term 'Export'. Interpreting the term 'Export' to cover only 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. Thus, applicant pleads for extending the interpretation for the meaning of 'export of goods' even to cases where goods are delivered to customer outside India even if not taken from India. l. From the above provisions and interpretation, the applicant is of the view that supply of books from warehouse located in USA (non-taxable territory) to a customer located in USA, UK and Canada (non-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncillary to principal supply, is outside the scope of GST and hence IGST is not chargeable on the same. 5.3 Whether printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant? a. Section 13 of IGST Act, lays down the provisions for Place of Supply of services where location of supplier or location of recipient is outside India. Since in this transaction, the printer located in USA (non-taxable territory) which is outside India, place of supply can be governed by section 13. b. From the above provision, printer requires materials for printing without which it is not possible to render the said printing services which are performed in USA (non-taxable territory) for supply to customers in USA, UK and Canada (non-taxable territory) without bringing the same to India. c. Hence, the applicant states that he is of the view that the printing services are rendered in USA (non-taxable territory) for supply to customers in USA, UK and Canada (non-taxable territory) without bringing the same to India is outside the ambit of GST and therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule III and not included as an exemption under section 11, he is of the view that reversal of credit is not required. 6. In view of the above submissions, the applicant requests this Authority to provide the Advance ruling as mentioned below: i. To include the supply of books from warehouse located in USA (non-taxable territory) to a customer located in USA, UK and Canada (non-taxable territory) is covered under Schedule III which are neither supply of goods nor a supply of service.". ii. To exclude shipping charges from levy of tax since supply of books being covered under Schedule III and shipping charges being ancillary to principle supply is outside the scope of GST and hence IGST is not chargeable on the same. iii. To exclude the printing charges from levy of RCM since printing services are rendered in USA (non-taxable territory) for supply to customers in USA, UK and Canada (non-taxable territory) without bringing the same to India is outside the ambit of GST and therefore, the liability under Reverse Charge Mechanism is not triggered. iv. To exclude the Warehousing charges from levy of RCM since the books are warehoused which is located in USA (non-taxable ter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books to customer. The applicant pays printing charges, warehouse charges and shipping charges to the respective service providers. The applicant collects the price of book along with shipping charges. It could easily be inferred from the aforesaid business model 'A' that the applicant is in receipt of the service of printing of the books where the content is supplied by the applicant and also moving the books so printed to the warehouse at USA; shipping of the books by the person (agent of the applicant) located in USA, on behalf of the applicant to the customer in USA/Canada/UK by the respective service providers. 11. Now we proceed to consider and examine each question, one at a time. The first question is Whether the supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant are treated as supply under GST? In the instant case the goods (books) are supplied by the person from the warehouse located in USA which is outside India (a non-taxable territory), to the customers in USA/UK/Canada, which is outside India (a non-taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uestion is Whether printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant. The applicant is supplying the content of the books and get the books printed and moves the said books to the warehouse located outside India. In this regard we invite the reference to the Circular No.11/11/2017-GST dated 20.11.2017. Para 2 of the aforesaid circular clarifies that supply of books, pamphlets, brochures, envelopes, annual reports, leaflets, cartons, boxes etc., printed with logo, design, name, address or other contents supplied by the recipient of such printed goods, are composite supplies and the question, whether such supplies constitute supply of goods or services would be determined on the basis of what constitutes the principal supply. The principal supply, in terms of Section 2 (90) of CGST Act 2017, is supply of goods or services which constitutes the predominant element of composite supply and to which any other supply forming part of that composite supply. Para 4 of the said circular specifies that in the case of printing of books, pam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder RCM basis on expenses incurred on warehousing charges of printed books. 15. The last question is Whether input tax credit can be availed, to the extent of inputs and input service on the transaction covered in Question 1 above? The instant question is subject to the answer to the first question. The applicant is not entitled to avail input tax credit on inputs and input services on the transaction covered in first question as the said transaction does not amount to supply under GST, as discussed at para 11 supra. 16. In view of the foregoing, we pass the following RULING i. The supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant does not amount to supply under GST. ii. The shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in USA, UK and Canada (non-taxable territory) are not exigible to GST. iii. The printing charges, for printing of books, charged by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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