AAR rules no IGST liability for high sea sales when goods never enter India

The Kerala AAR ruled on IGST liability for high sea sales and international transactions. The applicant sold goods procured from China directly to USA customers without the goods entering India, and sold goods from Netherlands warehouse to local customers. The AAR held that IGST is levied only when goods are imported into India, following Circular 33/2017-Customs. Since the goods in both transactions never entered India, the applicant is not liable for GST on these sales. IGST liability arises only at the point of importation when customs declarations are filed.

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Issues:
1. GST liability on goods procured from China but not brought into India.
2. GST liability on goods sold from China directly to the USA without entering India.
3. GST liability on goods procured from China without specific export orders and not brought into India.
4. GST liability on goods sold from a warehouse in Netherlands to customers in and around Netherlands without entering India.

Analysis:
1. The applicant engaged in trading spices raised issues regarding GST liability on goods procured from China but not brought into India. The Authority analyzed relevant provisions of the IGST Act, Customs Tariff Act, and Customs Act. The ruling stated that IGST is payable at the time of importation of goods into India. Therefore, the goods are liable to IGST when imported into India.

2. Regarding the GST liability on goods sold directly from China to the USA without entering India, the ruling clarified that the applicant is not liable to GST on such transactions as the goods are not imported into India at any point. The ruling was based on the principles outlined in Circular No. 33/2017-Customs, which clarified the levy of IGST on high sea sales of imported goods.

3. The Authority also addressed the issue of GST liability on goods procured from China without specific export orders and not brought into India. The ruling reiterated that IGST is payable at the time of importation into India. Therefore, the applicant was not liable to GST on such transactions where the goods did not enter India.

4. Lastly, the ruling discussed the GST liability on goods sold from a warehouse in Netherlands to customers in and around Netherlands without entering India. The Authority confirmed that the applicant is not liable to GST on these transactions as the goods were not imported into India. The ruling aligned with the principles established in Circular No. 33/2017-Customs regarding the levy of IGST on high sea sales of imported goods.

In conclusion, the Authority ruled that the applicant is liable to IGST when goods are imported into India, and GST is payable at the time of importation. The applicant was not liable to GST on transactions where goods did not enter India, following the principles outlined in relevant circulars and Acts.

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