Appellate authority upholds IGST payment for international supply transactions outside India.

The appellate authority upheld the ruling that IGST was payable by the appellant on transactions involving the supply of goods from the vendor's premises outside India to the customer's premises outside India, without the goods entering India, for the period from 01.07.2017 to 31.01.2019. The authority determined that the appellant qualified as a supplier under the CGST Act, 2017, and that IGST applied to such inter-state supplies during the specified period, rejecting the appellant's arguments and citing relevant provisions of the IGST Act.

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Issues Involved:
1. Applicability of Entry No. 7 in Schedule 3 of the CGST Act, 2017.
2. Liability to pay IGST on out and out transactions beyond the Customs frontiers of India before 01.02.2019.

Issue-wise Detailed Analysis:

1. Applicability of Entry No. 7 in Schedule 3 of the CGST Act, 2017:

The appellant, engaged in trading activities involving direct shipment of goods from Poland to Bangladesh, sought clarity on whether these transactions fall under Entry No. 7 in Schedule 3 of the CGST Act, 2017. The GAAR concluded that transactions from 01.02.2019 onwards are covered under Entry No. 7 of Schedule III, which states, “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.” Consequently, no GST is leviable on such transactions from 01.02.2019 onwards.

2. Liability to Pay IGST on Out and Out Transactions Beyond the Customs Frontiers of India Before 01.02.2019:

The appellant contested the GAAR's ruling that IGST was payable on transactions before 01.02.2019. The GAAR had held that the appellant, acting as a supplier, is liable to IGST on these transactions as they are considered inter-state supplies under Section 7(5) of the IGST Act, 2017. The appellant argued that they are not an agent under Section 2(5) of the CGST Act, 2017, and thus not a supplier. They also contended that the IGST Act applies only within the taxable territory of India and cited judgments from the Gujarat High Court and the Supreme Court to support their stance.

The appellate authority examined the provisions of Section 5 and Section 7 of the IGST Act, 2017, and the definitions of 'supplier' and 'supply' under the CGST Act, 2017. It was determined that the appellant, whose principal place of business is in India, is considered a supplier. The authority noted that IGST is levied on all inter-state supplies unless exempted. The insertion of Entry No. 7 in Schedule III of the CGST Act, 2017, effective from 01.02.2019, does not have retrospective effect. Hence, IGST was payable on such transactions from 01.07.2017 to 31.01.2019.

The authority also addressed the appellant's reliance on the Mohit Minerals Pvt. Ltd. and SAL Steel Ltd. cases, clarifying that these judgments were not applicable as they pertained to different factual situations involving services, not goods. Furthermore, Section 10 of the IGST Act, 2017, was found applicable for determining the place of supply of goods, contrary to the appellant's claims.

In conclusion, the appellate authority confirmed the GAAR's ruling, holding that IGST was payable by the appellant on the supply of goods directly from the vendor's premises outside India to the customer's premises outside India, without the goods entering India, for the period from 01.07.2017 to 31.01.2019.

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