PROCEDURE FOR PROCUREMENT OF SUPPLIES OF GOODS FROM ‘DTA’ BY ‘EOU’, ‘EHTP’, ‘STP’, ‘BTP’

Deemed Exports

Section 147 of Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides that the Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods do not leave India and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Decision of GST Council

In the 22^nd meeting of GST Council, held on 06.10.2017 at New Delhi decided to resolve certain difficulties being faced by exporters in the post GST regime, the Council decided that the supplies of goods by a registered person to EOUs etc., would be treated as deemed exports under section 147 of the Act.  The refund of tax paid on such supplies can be claimed either by the recipient or supplier of such supplies.

Notification

The Central Government accepted the recommendations of the GST Council as above issued a Notification No.48/2017, dated 18.10.2017.   The Central Government notified the following supplies of goods as deemed exports-

• Supply of goods by a registered person against Advance Authorization;
• Supply of capital goods by a registered person against Export Promotion Capital Goods Authorization;
• Supply of goods by a registered person to Export Oriented Unit;
• Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorization.

Rules for refund

Rule 89 of Central Goods and Services Tax Rules, 2017 (‘Rules’ for short) provides for filing application for refund of tax, interest, penalty, fees or any other amount.  The third proviso to Rule 89(1) provides that in respect of supplies regarded as deemed exports, the application shall be filed by the recipient of deemed export supplies.  Notification No. 47/2017, dated 18^th October, 2017 amends Rule 89 by substituting the new proviso for the third proviso to Rule 89 (1).  The new proviso provides that in respect of supplies regarded as deemed exports, the application may be filed by-

• the recipient of deemed export supplies; or
• the supplier of deemed export supplies in cases where the recipient does not avail of input tax credit on such supplies and furnishes an undertaking to the effect that the supplier may claim the refund.

Procedure and safeguards

Circular No. 14/14/2017-GST, dated 06^th November, 2017 issued by the GST Policy wing prescribes the procedure and safeguards for supplies to EOU in terms of Notification NO. 48/2017, which is as follows-

• The recipient EOU unit shall give prior intimation in Form A bearing a running serial number containing the goods to be procured, as pre-approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made;
• The said information shall be given to-

• the registered supplier;
• the jurisdictional GST Officer in charge of such registered supplier; and
• its jurisdictional GST Officer.

• The registered supplier, then, will supply goods under tax invoice to the recipient EOU unit;
• On receipt of such supplies the EOU etc.,unit shall endorse the tax invoice and send a copy of the endorsed tax invoice to-

• the registered supplier;
• the jurisdictional GST officer in charge of such registered supplier; and
• its jurisdictional GST officer.

• The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU etc.,
• The recipient EOU/EHTP/STP/BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in Form B, for which the following information is to be given-

• Name of EOU/EHYP/STP/BTP unit and address;
• GSTIN No;
• Address ofjurisdiction GST Officer;
• Sl No.
• Date of prior intimation given for procuring deemed export supplies;
• Details of registered person;
• Jurisdictional GST officer details of registered person;
• Invoice No. and date of registered person;
• Details of supplies received-
  • Description;
  • Value;
  • Quantity;
• Amount of GST paid by supplier-
  • Central Tax;
  • State Tax/Union Territory Tax;
  • Integrated Tax;
  • Cess
• Date of endorsed copy of tax invoice by EOU;
• Removal for processing-
  • Date and time of removal;
  • Quantity
  • Value
• Remarks (The goods removed for processing shall be accounted in a manner that enables the verification of input-output norms, extent of waste, scrap generated etc.,)
  • Other removals/Returns
  • Purpose of removal;
  • Date & Time;
  • Quantity
  • Value
• Balance in stock
  • Quantity
  • Value

• The software for maintenance of digital records shall incorporate the feature of audit trail;
• The data elements in Form B are mandatory; however the recipient unit will be free to add or continue with any additional data fields, as per their commercial requirements;
• All recipient units are required to enter data accurately and immediately upon the goods being received in, utilized by or removed from the said unit;
• The digital records should be kept updated, accurate, complete and available at the said unit at all times for verification by the proper officer, whenever required;
• A digital copy of Form B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month, by the 10^th of the month, in a CD or Pen drive, as convenient to the said unit;
• The above procedure and safeguards are in addition to the terms and conditions to be adhered to by a EOU etc., in terms of the Foreign Trade Policy, 2015 – 2020 and the duty exemption notification being availed by such unit.