GST Judgment: Impact on Transactions Pre and Post 01.02.2019

The judgment determined that the applicant's activities from 01.02.2019 onwards fall under Entry No.7 in Schedule 3 of the CGST Act, 2017, and therefore, such transactions are not subject to GST. For transactions up to 31.01.2019, IGST is applicable on goods sold to customers located outside India. However, from 01.02.2019 onwards, no IGST is payable on such transactions due to the amendment in Schedule-III of the CGST Act, 2017.

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Issues Involved:
1. Whether the activity undertaken by the applicant is covered by Entry No.7 in Schedule 3 of the CGST Act, 2017.
2. Whether the applicant is liable to pay IGST on out and out transactions taking place beyond the Customs frontiers of India.

Issue-Wise Detailed Analysis:

1. Whether the activity undertaken by the applicant is covered by Entry No.7 in Schedule 3 of the CGST Act, 2017:

The applicant, M/s. SPX Flow Technology (India) Pvt. Ltd., is engaged in trading goods directly from Poland to Bangladesh without the goods entering India. The applicant's parent company in Poland ships goods directly to the recipient in Bangladesh, and the applicant issues invoices to the customer in Bangladesh while making payments to the Polish supplier.

The relevant legal provision is Entry No.7 in Schedule 3 of the CGST Act, 2017, which states that the "Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India" shall be treated neither as a supply of goods nor a supply of services. This provision came into effect on 01.02.2019.

The judgment concluded that the applicant's activities from 01.02.2019 onwards fall under Entry No.7 in Schedule 3, and therefore, such transactions are not subject to GST. The decision was based on the combined reading of the relevant provisions of the IGST Act, 2017, the Customs Tariff Act, 1975, and the Customs Act, 1962. The ruling also referenced similar decisions by the Authority for Advance Ruling in Kerala and Maharashtra.

2. Whether the applicant is liable to pay IGST on out and out transactions taking place beyond the Customs frontiers of India:

For transactions up to 31.01.2019, the judgment clarified that IGST is applicable on goods sold to customers located outside India, where goods are shipped directly from the vendor's premises (located outside India) to the customer's premises (located outside India). This conclusion was based on the definition of "import of goods" under Section 2(10) of the IGST Act, 2017, and the provisions of the Customs Tariff Act, 1975, and the Customs Act, 1962.

The judgment referenced Section 5(1) of the IGST Act, 2017, which states that integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975. The ruling also cited Circular No. 33/2017 Customs dated August 1, 2017, which clarifies that IGST on high sea sales transactions of imported goods shall be levied and collected only at the time of importation.

For transactions from 01.02.2019 onwards, the judgment concluded that no IGST is payable on such transactions due to the amendment in Schedule-III of the CGST Act, 2017, which includes Entry No.7, treating such transactions as neither a supply of goods nor a supply of services.

Ruling:
1. The activity undertaken by the applicant is covered under Entry No.7 in Schedule 3 of the CGST Act, 2017 for transactions from 01.02.2019 onwards.
2. IGST is payable on out and out transactions up to 31.01.2019. However, no IGST is payable on such transactions from 01.02.2019 onwards.

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