2018 (4) TMI 583 - AAR - GST

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

In Re : M/s Synthite Industries Ltd., Ernakulam

The Kerala AAR ruled on IGST liability for high sea sales and international transactions. The applicant sold goods procured from China directly to USA ... Levy of GST IGST - high sea sale - supply from one country to another country without bringing the goods into India - goods sold to the company in USA, where goods sold are shipped directly from China to USA without entering India - On the sale of goods to the company in USA, where goods sold are shipped directly from China to USA without entering India - goods procured from China not against specific export order - sale of goods from Netherlands warehouse to their end customers in and around Netherlands, without entering India. Held that:- the integrated tax on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962 i.e.-on the date determined as per provisions of Section 15 of the Customs Act, 1962. Circular 33/2017-Customs dated 01.08.2017 has clarified that IGST on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at the time of importation i.e. when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time. Further, value addition accruing in each such high sea sale shall form part of the value on which IGST is collected at the time of clearance - The clarification given by the CBEC in the above Circular regarding the leviability of IGST and the point of collection thereof in respect of high sea sales of imported goods is, mutatis mutandis, applicable in the case of the applicant. Ruling:- The goods are liable to IGST when they are imported into India and the IGST is payable at the time of importation of goods into India - The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China, to customers, in and around Netherlands, as the goods are not imported into India at any point. 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.