Court exempts IGST on FTWZ to DTA removal; no CGST registration needed for exports to FTWZ.

The court ruled that the applicant is not required to pay IGST at the time of removing goods from the Free Trade Warehousing Zone (FTWZ) to the Domestic Tariff Area (DTA) under the IGST Act. Additionally, the applicant is not obligated to register under the CGST Act or Tamil Nadu GST Act if their activities involve exporting goods to FTWZ and selling them to Indian customers who clear the goods after paying customs duties.

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Issues Involved:
1. Whether the sale of tanned bovine leather stored in a Free Trade Warehousing Zone (FTWZ) by a foreign supplier, which is cleared to a Domestic Tariff Area (DTA) customer in India, is subject to levy under Section 5(1) of the IGST Act 2017, or under the provisions of the CGST Act 2017 or Tamil Nadu GST Act 2017.
2. Whether the foreign supplier, located outside the taxable territory and supplying goods to DTA customers on goods stored in a third-party FTWZ unit, is required to get registered under the IGST Act 2017, CGST Act 2017, or Tamil Nadu GST Act 2017.

Detailed Analysis:

Issue 1: Levy of IGST on Sale of Goods from FTWZ to DTA
The applicant, M/s. Sadesa Commercial Offshore De Macau, specializes in high-quality bovine leather and stores goods in a FTWZ in Chennai. The goods are imported and stored in the FTWZ without payment of customs duties, with the title remaining with the applicant until sold to Indian customers.

The key question is whether the sale of these goods from FTWZ to DTA is subject to IGST. The judgment refers to Chapter 7A of the Foreign Trade Policy 2015-2020, which allows duty-free import of goods into FTWZ for warehousing. The goods can be sold in the DTA upon payment of customs duties applicable at the time of sale.

The GST Council's 27th meeting clarified that IGST on warehoused goods is payable at the time of clearance for home consumption, not at the time of sale within the warehouse. Circular No. 3/1/2018-IGST dated 25th May 2018, further clarified that integrated tax is levied and collected only when the goods are cleared for home consumption from the customs bonded warehouse.

Thus, the removal of goods from FTWZ to DTA is the point of deferred levy/payment of customs duty. The applicant is not liable to pay IGST at the time of removal from FTWZ to DTA, as the integrated tax is collected only at the time of clearance for home consumption.

Issue 2: Requirement for Registration under GST Acts
The applicant also questioned whether they need to register under the IGST Act, CGST Act, or Tamil Nadu GST Act. The judgment refers to Section 23(1) of the CGST Act, which exempts certain persons from registration.

Since the applicant's activity involves exporting goods to FTWZ and selling them to Indian customers who clear the goods on payment of appropriate customs duties, they are not liable for registration under Section 23(1) of the CGST Act and TNGST Act. The ruling confirms that if the applicant exclusively conducts the described activities, they do not need to register under the GST laws.

Ruling:
1. The applicant is not liable to pay IGST at the time of removal of goods from FTWZ to DTA under the provisions of the IGST Act, in addition to the duties payable under the Customs Tariff Act, 1975.
2. The applicant is not liable for registration under Section 23(1) of the CGST Act and TNGST Act if they exclusively conduct the activity of exporting goods to FTWZ and selling them to Indian customers who clear the goods on payment of appropriate customs duties.

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