9911796707
TMI Blog2021 (10) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... a) * The Vendor will issue invoice on the appellant against which payment will be made by him in the foreign currency. * The appellant will raise invoice on the customer and will receive the consideration in foreign currency. 3. The appellant submitted an application before the Gujarat Authority for Advance Ruling (herein after referred to as the 'GAAR'), and raised the following questions for advance ruling :- (i) Whether GST is payable on goods procured from vendor located outside India in a context where the goods so purchased are not brought into India? (ii) Whether GST is payable on goods sold to customer located outside India, where goods are shipped directly from the vendor's premises (located outside India) to the customer's premises? 4.1 The GAAR referred to the definition of 'import of goods' given in clause (10) of section 2 of the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the 'IGST Act, 2017'), provisions of section 7 of the IGST Act, 2017, sub-sections (7) and (8) of section 3 of the Customs Tariff Act, 1975, section 12 and 15 of the Customs Act, 1962, Ruling of Kerala Authority for Advance Ruling in the case of M/s. Synthite In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2 of the IGST Act, 2017 and observed that the said definition indicates that the act of taking goods out of India to a place outside India qualifies as export, whereas, in the present case, the goods have not crossed the Indian customs frontier and as such it is clear that the goods are not physically available in the Indian territory; that when the goods are not available in the Indian territory, the question of taking goods out of India does not arise. The GAAR, therefore held that the subject transaction does not qualify as export of goods. The GAAR, therefore concluded that the transaction is covered under the ambit of Inter-state supply and is neither exempted nor covered under export of services; that as per the theory of elimination, such supplies would be subject to levy of IGST. 4.3 The 'GAAR', vide Advance Ruling No. GUJ/GAAR/R/04/2020 dated 17.03.2020, ruled as follows :- (i) GST is not payable on goods procured from vendor located outside India, where the goods so purchased are not brought into India? (ii) Applicable GST is payable on goods sold to customer located outside India, where goods are shipped directly from the vendor's premises (located outside Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be termed as 'inter-state' and for such transaction, the Constitution has not given power to the Government to formulate the principle as contemplated by Article 269A(5). It has been submitted that the provisions of section 7(5)(a) of the IGST Act, 2017 are ultra vires the law, since the law has defined a specific transaction to be an inter-state supply without having adequate powers to be so. Alternatively, it has been pleaded that the provisions of section 7(5)(a) of the IGST Act, 2017 be read so as to cover the transaction where the movement of the goods initiates from India, whereby this provision would not include the transaction where the movement of goods initiates from a place outside India and such goods are destined to place outside India. 6.4 The appellant has referred to the provisions of section 8 of the IGST Act, 2017 which inter-alia provides that (i) supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit, (ii) goods imported into territory of India till they cross the Customs frontiers of India; or (iii) supplies made to a tourist referred to in section 15 would not be treated as intra-state supply. It has been submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case where recipient is located outside India, unlike place of supply of goods. It has been submitted that in case of goods, there is no such provision which states that even where goods are situated / used / consumed outside India and the location of the supplier and the recipient is in India, the place of supply shall be outside India. It has been further submitted that in case of goods, location of supplier and recipient is not relevant and levy would then get linked to location of goods; that in case of transaction in question, since location of goods is outside India, the levy should not arise in India in the absence of specific provision in this regard. 6.7 The appellant has also referred to CBIC Circular No. 33/2017-Customs dated 01.08.2017 and submitted that the said Circular clearly mentions that the tax is leviable only at the time of importation of goods in India and not when the goods are sold while they are in High Seas. Similarly, when the goods are in Norway, i.e. outside India, it can be said that since the goods are outside India, no GST is applicable on the same as the subject on which tax is being levied are never brought in territory of India. The appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable be held as not liable to tax. Alternatively, it is requested that the transaction be held as not liable to tax from 01.02.2019 i.e. the date of amendment made in Schedule III of the CGST Act, 2017. 6.13 The appellant has relied upon the Advance Rulings in the case of Synthite Industries Ltd. [2018 (12) GSTL 395 (AAR-GST)] given by the Kerala AAR and in the cases of INA Bearing India Private Limited [2019 (20) GSTL 465 (AARGST) and Jotun India Private Limited [2018 (19) GSTL 663 (AAR-GST) given by the Maharashtra AAR. 6.14 It has also been submitted that the GAAR has issued Advance Ruling without taking into consideration the additional submission made by the appellant, which is violation of principles of natural justice. 7.1 The appellant, vide letter dated 05.08.2020, made further written submission. 7.2 It has been submitted that as per section 7(5)(a) of the IGST Act, 2017, supply of goods or services or both, when the supplier is located in India and the place of supply is outside India, shall be treated to be supply of goods or services or both in the course of inter-state trade or commerce. 7.3 It has been submitted that in case of supply of goods from one State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, as the location of the supplier and place of supply would be outside India and as the levy of GST is restricted to Indian territory, the provisions of section 7(5)(a) of the IGST Act, 2017 would not be applicable in the present scenario. 7.7 As regards the applicability of section 7(5)(a) of the IGST Act, 2017 to supply of services, it has been submitted that section 7(5) shall be applicable to goods as well as to services. The said section provides for determining the nature of supply, whether the same would be construed to be in the nature of inter-state supply or intra-state supply, on the basis of the location of supplier and the place of supply of particular transaction. Section 2(15) of the IGST Act, 2017 defines the 'location of supplier of services', unlike the 'location of supplier of goods' which has not been defined. Simultaneously, section 13 of the IGST Act, 2017 deals with the provision around determination of place of supply of services where location of supplier or location of recipient is outside India. Accordingly, for application of section 7(5)(a) of the IGST Act, 2017 to service transactions, first of all, the question around the location of supplier and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces Tax is leviable on the supply of Hardware by the appellant in the manner commercially known as 'Merchant Trade Transaction' (described at para 2 above), wherein the goods are supplied from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. 10.2 The Advance Ruling has been issued in this case in respect of two issues. The appellant is not aggrieved with respect to the first issue wherein the GAAR has held that GST is not payable on goods procured from vendor located outside India, where the goods so purchased are not brought into India. 10.3 The present appeal is in respect of the second issue wherein the GAAR has held that applicable GST is payable on goods sold to customer located outside India, where goods are shipped directly from the vendor's premises (located outside India) to the customer's premises. In the present proceedings, we are concerned with this issue only. 11.1 Section 5 of the IGST Act, 2017 reads as follows - "SECTION 5. Levy and collection. - (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Act (IGST Act, 2017) but defined in the Central Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act shall have the same meaning as assigned to them in those Acts. 11.5 Section 7 of the CGST Act, 2017 defines the scope of supply. As per clause (a) of sub-section (1) of said section 7, the expression "supply" includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. 11.6 The term 'consideration' has been defined under clause (31) of section 2 of the CGST Act, 2017. 11.7 As per clause (105) of section 2 of CGST Act, 2017, "supplier" in relation to any goods or services or both, shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. In the present case, the appellant is supplying the goods, therefore, the appellant is the supplier, who and whose principal place of business is located in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th effect from 01.02.2019. As such, Goods and Services Tax is not leviable on such transactions with effect from 01.02.2019. 12.4 We observe that various provisions of Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018), including section 32 whereby Paragraph 7 has been inserted in Schedule-III of the CGST Act, 2017, have specifically been declared to come into force with effect from 01.02.2019 vide Notification No. 2/2019-Central Tax dated 29.01.2019. Therefore, the Paragraph 7 of Schedule-III of the CGST Act, 2017 cannot be considered to have retrospective effect as the legislative intent is quite clear. 12.5 We, therefore, hold that Integrated Goods and Services Tax was payable during the period from 01.07.2017 to 31.01.2019 on supply of goods directly from the vendor's premises located outside India in the non - taxable territory to the customer's premises located at another place outside India in the non-taxable territory, without such goods entering into India. However, with effect from 01.02.2019, Integrated Goods and Services Tax is not payable on supply of goods directly from the vendor's premises located outside India in the non - taxable territory to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of goods under 'Merchant Trade Transaction' by a supplier located in India. Therefore, these Circulars are not applicable in deciding the present issue. 16.2 When a transaction is leviable to IGST / GST in terms of clear provisions of law, the same cannot be held as not liable to IGST / GST merely on the grounds that such transactions were not taxable under erstwhile Indirect Tax Laws or under the United Kingdom VAT legislation or that there is no mechanism to report place of supply of such transaction in GSTR-1 Return. 16.3 The Advance Rulings in the cases of Synthite Industries Ltd. [2018 (12) GSTL 395 (AAR-GST)], INA Bearing India Private Limited [2019 (20) GSTL 465 (AAR-GST)] and Jotun India Private Limited [2018 (19) GSTL 663 (AAR-GST)] have been issued by considering CBIC Circular No. 33/2017-Customs dated 01.08.2017 and 3/1/2018-IGST dated 25.05.2018. As the various provisions of IGST Act, 2017 and the CGST Act, 2017 discussed hereinabove in detail have not been considered in those Advance Rulings, we are not inclined to follow the said Advance Rulings. 17. In view of the foregoing, the Advance Ruling No. GUJ/GAAR/R/04/2020 dated 17.03.2020 is modified to the extent A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
