AAAR remands case for fresh consideration after lower AAR failed to address appellant's questions on FTWZ supply scope

The AAAR remanded the case to the lower AAR for fresh consideration after finding that the original authority failed to address the appellant's questions comprehensively regarding scope of supply and transfer of title of goods in FTWZ. The AAR had not discussed all contentions raised by the appellant in their original application. The AAAR directed the lower authority to examine whether the proposed activities fall under entry 8(a), 8(b) or other entries in Schedule III of CGST Act, 2017, consider all questions raised, provide findings on all points, and offer another personal hearing opportunity before deciding according to law provisions.

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Issues Involved:
1. Whether the transfer of title of goods within the FTWZ results in bonded warehouse transactions covered under Schedule III of the CGST Act, 2017.
2. Applicability of Integrated Tax (IGST) Circular No. 3/1/2018 to the present factual situation.

Summary:

Issue 1: Transfer of Title of Goods within FTWZ and Schedule III of CGST Act, 2017

The Appellant, a private limited company, proposed to operate import and resale transactions from a Free Trade Warehousing Zone (FTWZ) and sought clarification on whether such transactions would be covered under Schedule III of the CGST Act, 2017. The Authority for Advance Ruling (AAR) ruled that these transactions would not be covered under Schedule III, specifically paragraph 8(a), as FTWZ is not a warehouse licensed under the Customs Act, 1962. The Appellant contended that their transactions should be covered under paragraph 8(b) of Schedule III, which pertains to the supply of goods by the consignee to any other person by endorsement of documents of title to the goods before clearance for home consumption. The Appellate Authority found that the AAR had restricted its findings to paragraph 8(a) and had not considered paragraph 8(b) or other relevant points raised by the Appellant. Therefore, the case was remanded to the lower authority for reconsideration and a comprehensive ruling.

Issue 2: Applicability of IGST Circular No. 3/1/2018

The AAR stated that the IGST Circular No. 3/1/2018 had been rescinded due to amendments in Schedule III of the CGST Act, 2017. The Appellant agreed that this question no longer proved to be of relevance as the circular was rescinded. Therefore, this issue did not survive for further consideration.

Order:

The Appellate Authority set aside the Advance Ruling No. 23/ARA/2023 and remanded the matter to the lower authority for reconsideration, directing them to address the question in its entirety, including the applicability of paragraph 8(b) of Schedule III and other relevant points raised by the Appellant. The lower authority was instructed to follow the principles of natural justice and offer another opportunity of personal hearing before deciding the case.

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