EXPORT- PLACE OF SUPPLY

[Richa Goyal]

SSSPL (Sure Safety Solutions Pvt. Ltd.), Mumbai has partnered with QTS (Qinetiq Target Systems), UK to meet the offset obligation for supply of 300nos. of AERIAL TARGET SYSTEMS & its accessories to the Indian Army & Indian Air Force over a period of 3years at TATA STEEL SEZ, Gopalpur, Odisha.

QTS has signed a teaming agreement and a contract for both supply & service to meet this requirement along with other requirements for various DRDO programmes in INDIA.

The supply of 300 targets would be from Gopalpur, Odisha at an average of 100 Targets per year for 3 years. SSSPL would be paid an upfront advance of 15% towards supply & service and the balance 85% amount on each delivery at pro-rata basis in GBP.

The contract has 3 principal parts.

1. SKD will be billed directly to Air force consigned to SSS Gopalpur.
2. SSS will be paid for 2 tier services

1. Payment for direct manufacturing and assembling work.
2. Payment for services such as man power and consultancy services required directly/indirectly to the above process.

Facts

1. SSS gets predetermined manufacturing charges as per contract, which is incurred in India under Make in India scheme. So as this is import substitution to be treated as deemed export in our opinion no VAT/GST is to be charges.

b.The SSS now pays service tax on the amount received for services rendered in Indiaeven though received in convertible foreign exchange.

Our quarries are

1. Whether the manufacturing and supplies made as value additions to the SKD be exempted from VAT/GST as import substitution or deemed export.
2. Whether service tax paid so far on services mentioned in (b) above can be claimed as input credit in GST regime.
3. A part of supplies are ready for delivery. Whether we will bill it before GST or After GST. Which will be beneficial?

[DR.MARIAPPAN GOVINDARAJAN]

Whether you have got clarified for the above queries. If not please inform.

AI Summary

Deemed export treatment for import substitution affects GST applicability, input tax credit of prior service tax, and billing timing. Inquiry whether manufacturing and value added supplies from a SEZ under an import substitution/Make in India arrangement qualify as deemed exports exempt from VAT/GST; whether service tax already paid on related services is available as input tax credit in the GST regime; and whether invoicing for ready consignments should be made before or after GST implementation to secure a preferable tax outcome.