TMI Blog2024 (3) TMI 740X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed to be undertaken by the Appellant are covered by entry 8(a), 8(b) or any other entry in Schedule III of CGST Act, 2017 or otherwise. All aspects of the matter are kept open for decision by the AAR. - DR. RAM NIWAS AND DR. D. JAGANNATHAN, MEMBER Represented by : Shri. S Thirumalai, Advocate (Passed by Tamil Nadu State Appellate Authority for Advance Ruling under Section 101(1) of the Tamil Nadu Goods and Services Tax Act, 2017) Preamble 1. In terms of Section 102 of the Central Goods Services Tax Act 2017/Tamil Nadu Goods Services Tax Act 2017 ( the Act , in Short), this Order may be amended by the Appellate authority so as to rectify any error apparent on the face of the record, if such error is noticed by the Appellate authority on its own accord, or is brought to its notice by the concerned officer, the jurisdictional officer or the applicant within a period of six months from the date of the Order. Provided that no rectification which has the effect of enhancing the tax liability or reducing the amount of admissible input tax credit shall be made, unless the appellant has been given an opportunity of being heard. 2. Under Section 103(1) of the Act, this Advance ruling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The Applicant submits that FTWZ is a Special Economic Zone wherein trading, warehousing and other activities related thereto are carried out. The Appellant submitted that the operation flow of the proposed transaction would be as follows: The Appellant secures space in the FTWZ for a fee to store the imported goods from a unit holder. The Appellant executes required lease agreement with the FTWZ unit holder and deposits the goods from the port by filing Bill of Entry (BOE). FTWZ, owned and operated by independent third party merely clears and warehouses the goods imported. The FTWZ shall collect warehousing charges from the Appellant. On receipt of purchase order from the customer, the Appellant places an order with the overseas supplier for required goods. Once the goods are shipped, the Applicant intimates the FTWZ unit holder and provides copy of the purchase order and other documents for clearance of goods from the port and storage of the same in FTWZ. The FTWZ unit clears the goods from the port by filing Bill of Entry on behalf of the Appellant and stores the same in the warehouse. The FTWZ unit hands over the import invoice and other necessary documents to the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mework, for FTWZ. Instructions are also issued by the Ministry of Commerce Industries from time to time to clarify various operational aspects of FTWZ. Even though the day to day activities like warehousing and clearing of goods for home consumption on payment of applicable custom duties are supervised/ monitored by Customs officials posted in the FTWZ in accordance with SEZ Act, 2005 read with Customs Act, 1962, the approval/license/administrative control for FTWZ are fully governed under the provisions of SEZ Act, 2005. Therefore, FTWZ is not a warehouse licensed under Customs Act, 1962. Therefore, paragraph 8(a) in the Schedule III is specific to the warehoused goods lying in the warehouses licensed under Customs Act, 1962. 7.4.5. Whereas the transactions narrated in the application are in FTWG, which are warehouses governed under the provisions of SEZ Act, 2005 and not licensed under Customs Act, 1962. Therefore, the transactions in the FTWG narrated in question no.1 of the ARA , will not be covered under Schedule III of CGST Act, 2017 readwith CGST Amendment Act, 2018. 3. Aggrieved of the decision of AAR in the Order No: 23/ARA/2023 dated: 20.06.2023, M/s HAWORTH INDIA PRIVATE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... warehouse without payment of any duty; Although the provisions of bonding by a bonded warehouse and bonding by an SEZ/ FTWZ is governed by different laws with differing obligations, the rationale of bonding imported goods remains the same, viz. to avail duty benefit under the Customs Act, 1962 and therefore, it is submitted that every SEZ becomes a bonded premises under the Customs Act, 1962 by virtue of the deeming fiction created by Section 53(2) of SEZ Act and Rules mentioned thereunder; In support of the submission that the FTWZ are custom bonded warehouses, reliance was placed on M /s AIE Fiber Resource and Trading (India) P. Ltd., 2021 (12) TMI 1265 - AAR, Telengana. Reliance was placed on the following Advance Rulings passed by Tamil Nadu Advance Ruling Authority in case of: - The Bank of Nova Scotia - Order No. 23/AAR/2018 dated 31.12.2018 - Sadesa Commercial Offshore De Macau Limited - Order No. 24/AAR/2018 dated 31.12.2018 The above Rulings were rendered in favour of the Appellant, wherein it was held that transfer of ownership in FTWZ/ customs bonded warehouse prior to clearance for home consumption or removal of goods from FTWZ/ customs bonded warehouse is outside the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se Act, 1944, the Industries (Development and Regulation) Act, 1951, the Income-tax Act, 1961, the Customs Act, 1962 and the Foreign Trade (Development and Regulation) Act, 1992 shall have the meanings respectively assigned to them in those Acts. Sec 2(zd) of the SEZ Act, 2005 by way of referential legislation has adopted the meaning of warehousing from the Customs Act, 1962 for purpose of the said Act. Sec 2(44) of the Customs Act, 1962 defines warehoused goods as follows: 2(44) warehoused goods means goods deposited in a warehouse Provisions of the SEZ Act, 2005 read with relevant SEZ Rules, 2006 provides as under a) Sec 7 provides for exemption from duties, taxes and cesses; b) Sec 26 provides for exemptions from Customs Duties to FTWZ; c) Sec 51 has an overriding effect that notwithstanding anything inconsistent therewith contained in any other law for the time being in force ; d) Rule 27(10) of the SEZ Rules provides that: The Assessment of imports and domestic procurement by a Developer or a Unit, shall be on the basis of self-declaration. e) Rule 75 of the SEZ Rules says that the goods in the FTWZ shall be dealt with on the basis of self-declaration The AAR in Telangana in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T in a Customs matter where the interplay of Sec 5(2) of the IGST Act and Sec 3(7) of the CTA were examined in Interglobe Aviation Ltd 2020 (11) TMI 151 - CESTAT NEW DELHI. Therefore, it is to be held that the goods stored in the FTWZ under the SEZ Act, 2005 will be covered within the scope of Sch III of the CGST Act. Hence, the Appellant prayed that the Appellate Authority may pass orders to set aside impugned order under Appeal and pass such other orders, as deemed fit. PERSONAL HEARING: 5. The Appellant was given an opportunity to be heard vide virtual hearing on 11.12.2023. The Authorized Representative (AR), Shri S Thirumalai, Advocate, appeared for the virtual hearing and reiterated the submissions made in their grounds of appeal as well as in their additional submissions submitted on 11.12.2023. DISCUSSION AND FINDINGS: 6.1 We have carefully considered all the material on record, the various submissions made by the Appellant and the applicable statutory provisions. The Appellant is before us, seeking to set aside/modify the Ruling given by the Authority for Advance Ruling (hereinafter referred to as 'AAR') and pass any such order(s) as deemed fit and proper. We obser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y covered under paragraph 8(b) of Schedule III to the Act ibid, which states that 8(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption. Further, the Appellant in their additional submissions, has stated inter alia that, specifically mentioning that SEZ Act, 2005 by way of referential legislation has adopted the meaning of warehousing from the Customs Act, 1962 for purpose of the said Act. The Appellant has also placed reliance on the ruling No. 30/2021 dated 24.12.2021 passed by the AAR, Telengana in the case of M/s AIE Fiber Resource and Trading (India) Private Limited, wherein it was held that the transactions proposed to be made in a FTWZ are covered under Entry 8 of Schedule III of the CGST Act, 2017 and do not attract tax under CGST/SGST/IGST Acts. 6.5 We find, in respect of the second question, in the grounds of appeal, the appellant stated that the question no longer proves to be of relevance as the Circular No. 3/01/2018 - Integrated Tax (IGST) dated 25.05.2018 has been rescinded. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AAR has not answered the question raised by the Appellant in its entirety, by restricting their findings to only para 8(a) of the said Schedule. The AAR ought to have discussed the para 8(b) of said Schedule, which is also relevant provision of law to the activity proposed to be undertaken by the Appellant, when the Appellant had raised the question in general as to whether their proposed activity would be covered under Schedule III of the CGST Act, 2017. Further, we find that the Appellant has brought in points regarding FTWZ to be treated as Customs bonded warehouse in their original application which were not discussed in the ruling passed by the AAR. Also, the AAR has not discussed about the Advance rulings pronounced by the TN AAR in similar issues, which were cited by the Appellant in their original application. 6.9. Further, at the time of virtual hearing held on 11.12.2023, the AR was requested to state whether the approval/ licence/ monitoring of the FTWZ unit is governed by the SEZ Act or Customs Act for which the AR stated that he would examine and submit his reply. This is a moot point which needs to be decided, so that whether FTWZ unit can be classified as customs b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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