Goods procured from Indian company in liquidation for Myanmar export don't qualify as zero-rated supplies under Section 16 IGST Act without GST registration

AAR, Andhra Pradesh ruled that goods procured by an applicant from an Indian company in liquidation and intended for export to Myanmar do not qualify as zero-rated supplies under Section 16 of IGST Act. The place of supply was determined to be within India where goods were delivered to the applicant. Since the applicant lacked GST registration in India, the transaction did not constitute export of goods under GST provisions, thereby disqualifying it from zero-rated supply treatment without tax payment against LUT.

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Issues Involved:
1. Whether the outward supply of goods procured by the Applicant from an Indian company undergoing liquidation shall be treated as Zero-Rated Supplies as per Section 16 of IGST Act.
2. Whether the same can be exported under Zero-Rated supplies without payment of tax against Letter of Undertaking (LUT).

Issue-wise Detailed Analysis:

Issue 1: Zero-Rated Supplies under Section 16 of IGST Act
The applicant, a Singapore-based company not registered in India under GST, seeks to procure assets from an Indian company undergoing liquidation (M/s Lanco Kondapalli Power Limited) and export them to Myanmar. The applicant contends that this should be treated as Zero-Rated Supplies under Section 16 of the IGST Act, which defines zero-rated supply to include the export of goods or services. The applicant argues that since the assets will be taken out of India, this transaction qualifies as an export of goods.

The representation from Lanco Kondapalli Power Limited clarifies that the sale process will conclude in India upon issuance of the Sale Certificate by the Liquidator. The applicant will then be responsible for dismantling, transporting, and exporting the assets to Myanmar. The sale process, therefore, concludes in India, and the liquidator is not acting as an exporter.

The judgment notes that the delivery of goods occurs within the territory of India, making the place of supply the location where the goods are delivered to the applicant, which is the premises of Lanco Kondapalli Power Ltd. As the supplier is located in India and the place of supply is within India, the transaction does not qualify as an export under Section 2(5) of the IGST Act.

Further analysis under Section 2(6) of the IGST Act, which defines export of services, reveals that the applicant does not meet the conditions required for a transaction to be considered an export of services. Specifically, the applicant does not have a GST registration in India, and the transaction does not satisfy the conditions of export of services, such as the supplier being located in India and the place of supply being outside India.

Issue 2: Export under Zero-Rated Supplies without Payment of Tax against LUT
Given that the transaction does not qualify as an export of goods or services, it cannot be treated as a Zero-Rated Supply under Section 16 of the IGST Act. Consequently, the question of exporting under Zero-Rated supplies without payment of tax against a Letter of Undertaking (LUT) does not arise.

Ruling:
The supply covered under this application, subject to the agreement, facts, and information furnished by the Applicant, is neither exempted nor considered an export of goods/services. Therefore, the stated transaction is not treated as Zero-Rated Supplies. Consequently, the export without payment of tax against a Letter of Undertaking (LUT) for the said transaction does not arise.

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