Iron ore job-work services qualify as exports but ineligible for input tax credit refund under Section 54(3)(ii)

AAR Goa ruled on IGST levy for job-work involving iron ore import for pellet conversion and export. The authority held that temporarily imported goods processed and exported qualify as export of services under Section 2(6) IGST Act, 2017, with place of supply outside India per Section 13(2). However, regarding input tax credit refund eligibility, since iron ore pellets are covered under Export Tariff's Second Schedule and subject to NIL export duty (considered a tax rate), the exclusion clause under Section 54(3)(ii) applies. The applicant was deemed ineligible for unutilized input tax credit refund despite providing export services.

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Issues:
1. Applicability of IGST on import of iron ore for conversion into pellets and export of resultant product.
2. Liability of the applicant to pay IGST as the consignee of imported iron ore.
3. Eligibility of the applicant to avail input tax credit for IGST paid on import.
4. Claiming refund of unutilized input tax credit on export of services.

Analysis:

Issue 1:
The applicant sought clarification on whether IGST at 5% is applicable on importing iron ore for conversion into pellets and exporting the resultant product back to the same supplier. The Authority determined that the applicant is liable to pay IGST on the imported iron ore as per the provisions of the IGST Act, 2017. The Authority clarified that the exemption notification referred to by the applicant does not fall under the jurisdiction of the relevant Acts.

Issue 2:
Regarding the liability to pay IGST as the consignee of the imported iron ore, the Authority stated that the applicant is indeed liable to pay IGST as per the relevant provisions of the Acts.

Issue 3:
The applicant inquired about availing input tax credit for the IGST paid on import. The Authority confirmed that as the imported goods are used in the furtherance of business, the applicant is eligible to claim input tax credit for the IGST paid on the import of iron ore.

Issue 4:
The applicant also questioned the possibility of claiming a refund of unutilized input tax credit on export of services. The Authority explained that the applicant is not eligible for a refund of unutilized input tax credit based on the provisions of the Acts, specifically citing the exclusion clause under Section 54(3)(ii) of the CGST Act.

In conclusion, the ruling under Section 98 of the CGST/GGST Act, 2017 was as follows:
1. The applicant is liable to pay IGST on the import of iron ore.
2. The applicant can avail input tax credit for the IGST paid on import.
3. The applicant is not eligible for a refund of unutilized input tax credit on export of goods or services as per the relevant provisions of the Acts.

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