TMI Blog2021 (12) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... asmuch as the movement of goods terminates for delivery at the premises of the buyer located outside India - As per clause (24) of section 2 of the IGST Act, 2017, words and expressions used and not defined in 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. As the supplier (appellant) is located in India and the place of supply is outside India, the transaction of supply of goods to buyer in case of trading in foreign countries would be treated as supply of goods in the course of inter-State trade or commerce. As IGST is levied on all inter-State supplies of goods or services or both, (unless exempted or provided otherwise in any other provision of law) as per Section 5 of the IGST Act, 2017, the supply of goods by the appellant to the buyer located outside India is covered under the ambit of the said provision of the IGST Act, 2017. As the transactions of the appellant, wherein the goods are supplied from a place in the non-taxable territory to another place in the nontaxab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Machine etc. and also carries out trading of such goods. 2. In respect of trading in foreign countries, the appellant has submitted that the trading business is undertaken in the following manner. (i) The appellant s parent company M/s. SPX Flow Technology, located in Poland (herein after referred to as M/s. SPX Poland ), ships goods such as spare parts of Dairy Machinery, to recipient customer company, BRAC Dairy and Food Project located in Bangladesh (herein after referred to as M/s. BRAC, Bangladesh ). The transaction involves generation of one invoice by M/s. SPX, Poland to the appellant and generation of another invoice by the appellant on the recipient company located in Bangladesh. (ii) The recipient customer company receives such Dairy Machinery and its spare parts directly from M/s. SPX, Poland. In other words, the goods are directly delivered from Poland to the customer located at Dhaka, on CIF basis. While undertaking this transaction, the invoices are generated parallel to each other, whereby M/s. SPX, Poland raises a set of invoices to appellant (M/s. SPX Flow Technology (India) Pvt. Ltd., India) and at the same time, the appellant company raises anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct Taxes Customs CBIC) and held that where Bill of Entry / Import Declarations are not being filed with respect to the goods procured, GST would not be leviable. 4.2 The GAAR referred to the meaning of supply given in section 7 of the Central Goods and Services Tax Act, 2017 (herein after referred to as the CGST Act, 2017 , which also includes reference to similar provisions contained in the Gujarat Goods and Services Tax Act, 2017, referred to as the GGST Act, 2017 ) and held that the appellant, who is the third party in the transaction involved in the instant case, is acting as an agent on behalf of the supplier i.e. M/s. SPX Poland and is therefore covered under the definition of supplier as mentioned in Section 2(105) of the CGST Act, 2017. It has further been held that as the appellant, who is the supplier in the instant case, is selling goods for a consideration in the course or furtherance of business and such transaction tantamount to supply in terms of the definition of supply . The GAAR thereafter examined the provisions of section 7 of the IGST Act, 2017 and observed that in the event that the supplier is located in India and the place of supply is outsid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 02.2019 in Schedule III of the CGST Act, 2017 (which covers activities or transactions treated neither as a supply of goods nor a supply of services), vide the Central Goods and Services Tax (Amendment) Act, 2018 read with Notification No. 2/2019-Central Tax dated 29.01.2019. Entry 7 of the said Schedule III covers supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India . The GAAR further observed that the supply of goods in the instant case takes place from Poland, which is a non-taxable territory, to Bangladesh, which also is non-taxable territory, without the said goods entering into India, the transactions are covered by said Entry 7 of Schedule III. The GAAR, therefore held that no GST is leviable on such type of transactions which have taken place with effect from 01.02.2019 and onwards. 4.4 The GAAR , vide Advance Ruling No. GUJ/GAAR/R/102/2020 dated 14.10.2020, ruled as follows :- (i) The activity undertaken by the applicant M/s. SPX Flow Technology (India) Pvt. Ltd., Ahmedabad is covered under Entry No. 7 in Schedule 3 of the CGST Act, 2017 in respect of the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the foreign supplier. 6.2 The appellant has submitted that the findings of the authority on the basis that the supplier was located in India and place of supply was outside India is also erroneous inasmuch as when the appellant is not a supplier of the goods within the meaning of the statute then the appellant cannot be held liable to pay IGST for the supply of these goods. 6.3 The appellant has also submitted that the reference to section 10 of the Integrated Goods and Services Tax Act, 2017 (herein after referred to as the IGST Act, 2017 ) by the GAAR is also not proper as the said section is not applicable in the present case; that the said section would be applicable only when the supply is carried out in between the parties who are in India. The appellant has placed reliance on the decision in case of M/s. Enmarol Petroleum [2019 (20) GSTL 442]. 6.4 As regards section 7(5) of the IGST Act, 2017, the appellant has submitted that just because a transaction is in the course of inter-state trade or commerce, such transaction cannot by itself become taxable. It has been submitted that if it is considered that there are no goods within India, then there can be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the GAAR has accepted that the supply of goods was being undertaken from a place in the non taxable territory to another place in the non taxable territory, without the goods entering into India. If that is so, then the decisions of the Hon ble Gujarat High Court are squarely applicable in the present case and since it is undisputed that the supply of goods has been undertaken from the non taxable territory to another non taxable territory, then even before 29.01.2019 (sic), such activities are not taxable under the IGST Act, inasmuch as they are extra territorial activities and the IGST Act, 2017 cannot be applied to events which are being undertaken beyond the territory of India. FINDINGS : 8. We have carefully gone through and considered the submissions made by the appellant in the grounds of appeal, in the further written submission and at the time of personal hearing as well as Advance Ruling given by the GAAR and other materials available on record. 9.1 The main issue involved in this case is whether trading in foreign countries by the appellant (described at para 2 above), wherein the goods are supplied from a place in the non-taxable territory to another ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (5) of the said Section 7 reads as follows (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) ; or (c) , shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce. Therefore, in order to determine whether the transaction involved in the present case is an inter-state transaction or otherwise, the location of the supplier and the place of supply are required to be determined. 10.3 As per clause (a) of sub-section (1) of Section 10 of the IGST Act, 2017, 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 . In the present case, the supply involves movement from the premises of the vendor located outside India to the buyer of the appellant located outside India. Therefore, the place of supply in this case is outside India inasmuch as the movement of goods terminates for delivery at the premises of the bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of trading in foreign countries would be treated as supply of goods in the course of inter-State trade or commerce. As IGST is levied on all inter-State supplies of goods or services or both, (unless exempted or provided otherwise in any other provision of law) as per Section 5 of the IGST Act, 2017, the supply of goods by the appellant to the buyer located outside India is covered under the ambit of the said provision of the IGST Act, 2017. 11.1 The appellant has submitted that the insertion of Entry 7 to Schedule-III of the CGST Act, 2017 is explanatory by nature and hence it should be adopted for the prior period also. 11.2 We observe that Entry 7 has been inserted in Schedule-III of the CGST Act, 2017 vide section 32 of the Central Goods and Services Tax (Amendment) Act, 2018 (No. 31 of 2018), which came into force with effect from 01.02.2019 vide Notification No. 2/2019-Central Tax dated 29.01.2019. The said Paragraph 7 reads as follows :- 7 : Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India. 11.3 It is further observed that as per sub-section (2) of section 7 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be said to have neither availed the services of transportation of goods in a vessel nor he was liable to pay the consideration of such service, hence the writ applicant therein was not the recipient of the transportation of goods in a vessel service as per Section 2(93) of the CGST Act. Further, in that case the service of transportation of goods was being supplied by the person (shipping line) from a non taxable territory to a person (foreign exporter) in a non taxable territory, from a place outside India up to the customs station of clearance in India. The case of M/s. SAL Steel Ltd. involves similar facts, though it pertains to Service Tax matter. The fact situation in the present case is totally different than those in case of M/s. Mohit Minerals Pvt. Ltd. and M/s. SAL Steel Ltd. In the present case, the supplier (appellant herein) is located in India who is supplying the goods to the buyer located in non-taxable territory. Therefore, the said judgements are not applicable in the facts of the present case. 13.1 The appellant has contended that section 10 of the IGST Act, 2017 would be applicable only when the supply is carried out in between the parties who are in India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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