Importer of German storage solutions can claim IGST credit on imports under section 5 of IGST Act 2017

AAR Karnataka ruled that an importer of storage solutions from Germany can claim IGST credit paid on imports. The applicant must pay IGST on imported goods' value on reverse charge basis per section 5 of IGST Act 2017. Place of supply for imports is the importer's location (Karnataka), making direct supplies from port to customers in other states inter-state transactions requiring IGST invoices. No separate registration needed at port clearance state unless the applicant has an establishment there.

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Issues:
1. Credit of IGST paid on import of goods
2. Issuance of tax invoice with IGST to the customer
3. Requirement of registration in the state where the port of clearance is located

Analysis:

Issue 1: Credit of IGST paid on import of goods
The applicant, an importer of storage solutions, sought clarification on whether they can claim credit of IGST paid on imported goods. The Authority examined the provisions of the IGST Act and the CGST Act, determining that the applicant, who imports goods from Germany, is liable to pay IGST on the imported goods. As per Section 20 of the IGST Act 2017 and Section 16 of the CGST Act 2017, the applicant can avail credit of IGST paid on imported goods if those goods are used in the course or furtherance of their business, which was confirmed as the case for the applicant.

Issue 2: Issuance of tax invoice with IGST to the customer
The applicant inquired whether they can issue a tax invoice with IGST to the customer. The Authority clarified that as per the IGST Act 2017 and the CGST Act 2017, when goods are directly dispatched from the port of import to the customer's location, the transaction is treated as an interstate supply. Therefore, the applicant can issue a tax invoice with IGST to the customer for such interstate transactions, with invoicing done from the registered place of business.

Issue 3: Requirement of registration in the state where the port of clearance is located
The applicant questioned whether they need to obtain registration in the state where the port of clearance is located. The Authority determined that since the applicant is already registered under the GST Act in Karnataka and uses this registration for import and payment of IGST, there is no statutory requirement for the applicant to obtain separate registration in the state where the port of clearance is located, provided they do not have an establishment in that state and are not making supplies from that location.

In conclusion, the Authority ruled that the applicant is eligible to claim credit of IGST paid on imported goods, can issue tax invoices with IGST for interstate transactions, and is not required to obtain registration in the state where the port of clearance is located if no supplies are made from that state.

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