Manufacturer filing shipping bill deemed actual exporter; overseas transactions fall outside GST scope under Section 11(b) IGST Act

AAR Karnataka ruled on classification of supply involving goods exported by manufacturer to applicant then supplied to overseas customer. The authority held that manufacturer, who files shipping bill and receives bill of lading, is the actual exporter with ownership until goods cross customs frontiers. First transaction between manufacturer and applicant has place of supply outside India under Section 11(b) IGST Act. Second transaction from applicant to overseas customer, occurring entirely outside India, falls under Entry 7 Schedule III CGST Act, treated neither as supply of goods nor services.

---

---

Issues Involved:
1. Whether the supply of goods from the Applicant to the overseas customer is taxable under GST as a zero-rated supply or not.
2. Admissibility of the application under Sections 97(2)(e) of the CGST Act 2017.

Summary:

Issue 1: Taxability of Supply of Goods as Zero-Rated Supply

The applicant, a Private Limited Company registered under CGST/KGST Act 2017, is engaged in trading finished goods and providing support services to customers outside India. They intend to supply domestically procured goods to customers outside India. The applicant sought an advance ruling on whether this supply is taxable under GST as a zero-rated supply.

Facts:
- The overseas customer issues a purchase order to the applicant, who then places an order with a domestic manufacturer.
- The Indian manufacturer is responsible for customs duty compliances and ships the goods directly to the overseas customer.
- Two invoices are raised: one from the Indian manufacturer to the applicant and another from the applicant to the overseas customer.
- Payment is received in convertible foreign currency, and the applicant records the transactions as 'purchase of goods' and 'sale of goods' in their books.

Applicant's Interpretation:
- The applicant argued that the transaction qualifies as an "export of goods" under Section 2(5) of the IGST Act 2017, as the goods are taken out of India to a place outside India.
- They contended that this should be treated as a zero-rated supply under Section 16 of the IGST Act 2017.
- Alternatively, they argued that if the transaction is not considered an export, it should fall under Entry 7 of Schedule III of the CGST Act 2017, which treats it as neither a supply of goods nor services.

Authority's Findings:
- The Indian manufacturer, who files the shipping bill and receives the bill of lading, is considered the exporter as per Section 2(20) of the Customs Act 1962.
- The manufacturer holds the title of goods until they cross the customs frontiers of India, making them the exporter under Section 2(5) of the IGST Act 2017.
- The place of supply for the first transaction (manufacturer to applicant) is outside India as per Section 11(b) of the IGST Act 2017.
- The second transaction (applicant to overseas customer) is from a location outside India to another location outside India, covered under Entry 7 of Schedule III of the CGST Act 2017, and is treated neither as a supply of goods nor services.

Ruling:
The supply of goods from the Applicant to the overseas customer is treated neither as a supply of goods nor as a supply of services.

---