AAR: No IGST on Goods from Outside India to Outside India

The Authority for Advance Ruling (AAR) determined that the supply of goods moved from a place outside India and delivered to a place outside India is not liable to tax in India under section 7(5)(a) of the Integrated Goods and Services Tax (IGST) Act. Consequently, the question of the recipient's eligibility to avail input tax credit was deemed irrelevant as the transaction was not subject to IGST.

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Issues Involved:
1. Applicability of IGST on supply of goods moved from and delivered outside the taxable territory.
2. Eligibility of the recipient to avail input tax credit if IGST is applicable.

Detailed Analysis:

1. Applicability of IGST on Supply of Goods Moved from and Delivered Outside the Taxable Territory:

The applicant, Jotun India Private Limited, sought clarification on whether the supply of goods moved from a place outside India and delivered to a place outside India would be liable to tax under section 7(5)(a) of the IGST Act. The applicant contended that such transactions should not be liable to IGST, arguing that the levy of IGST on such transactions would be ultra vires the IGST Act and beyond its territorial jurisdiction. They highlighted that the goods never cross the customs frontiers of India, and thus, the transaction should not be subject to IGST.

The Authority for Advance Ruling (AAR) examined the provisions of the IGST Act, particularly section 7(2), which states that supply of goods imported into India, till they cross the customs frontiers of India, shall be treated as inter-State trade or commerce. The AAR noted that the goods in question are delivered from a place outside India to another place outside India without crossing the customs frontiers of India. Consequently, such transactions are not liable to IGST as per the proviso to section 5(1) of the IGST Act, which mandates that IGST on imported goods is levied and collected only at the time of importation into India.

Conclusion on Issue 1:
The AAR concluded that the supply of goods moved from a place outside India and delivered to a place outside India is not liable to tax in India under section 7(5)(a) of the IGST Act.

2. Eligibility of the Recipient to Avail Input Tax Credit if IGST is Applicable:

Since the AAR determined that the supply of goods in question is not liable to IGST, the second issue regarding the eligibility of the recipient to avail input tax credit became irrelevant. The recipient's eligibility to claim input tax credit would only arise if the transaction were subject to IGST, which it is not.

Conclusion on Issue 2:
The question of the recipient's eligibility to avail input tax credit is not relevant as the supply of goods is not liable to IGST.

Final Order:
- The supply of goods moved from a place outside taxable territory and delivered at a place outside taxable territory is not liable to tax in India under section 7(5)(a) of the IGST Act.
- The question of the recipient's eligibility to avail input tax credit is not relevant in light of the above conclusion.

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