Bill to ship to transaction

[Venukumar HJ]

Dear All,

Company 'A' registered in 'India' entered into contract with Company 'B' located in 'France' for manufacture and supply of Goods. 'B' Company instructed 'A' to supply goods to 'SEZ unit Nagpur' in India. Company 'A' subcontracted the contract to 'C'. 'C' will deliver the goods to 'A'. Later contract terms changed to 'A' has to deliver goods 'SEZ unit in AP' to 'D'. Then Goods will be assembled in SEZ AP. Responsibility of A ends once goods are delivered to 'SEZ Unit AP' to 'D'. But 'A' will raise invoice to the 'B' on whole contract. After assembling in SEZ AP. Goods are supplied and installed in SEZ Nagpur. D is the agent of Customer B. 'A's' risk will end only once goods are installed in SEZ Nagpur.

Query.

1. Is Supply can be treated as ' Zero rated supply' or ' Interstate Supply'?

2. How Invoice to be raised?

[YAGAY andSUN]

Please make your query bit easy for us to understand and enabling us to revert.

[Ganeshan Kalyani]

In my view it is not a zero rated supply.

[CASusheel Gupta]

Dear Venukumar HJ

In my opinion, the transaction seems to be Inter state.

A shall raise bill to B of France.

A shall not raise bill to SEZ unit

It is not export since goods are not moving out of India.

This transaction gets covered under section 7(5)(c)

Opinion of experts also required.

Thanks and Regards

CA Susheel Gupta

8510081001, 9811004443

AI Summary

Interstate supply: invoice should be raised to the foreign principal while the transaction is not a zero rated export. The principal issue is whether the supply is zero rated or interstate. Facts: A (India) contracts with B (France); goods delivered to an SEZ unit in AP to D (agent of B) for assembly and later supplied and installed in SEZ Nagpur. A invoices B for the full contract. Commentators conclude it is not an export/zero rated supply because goods remain in India and should be treated as an interstate supply; A should raise the invoice to B rather than to the SEZ unit, with reference made to provision 7(5)(c).