Cross Border transaction

[Yogesh Ashar]

Dear Sir

There is logistic movement from a place outside India to a destination outside India. The Service Provider is an Indian Forwarder and the Recipient is an Indian Company. The goods do not touch the shores of India.

1. Whether in view of the Amendment in IGST act , this transaction will be exempt from tax.

2. Whether it can be treated as export as the condition of Service recipient outside India is not fullfilled. The money may be received in foreign currency as transfer from EEFC account by the Service Recipient.

3. Impact due to Sec 7(5) and whether IGST will be applicable regards

Yogesh Ashar

[Mahadev R]

The amended Section 12(8) is provided below:

(8) The place of supply of services by way of transportation of goods, including by mail or courier to,''

(a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

¹[Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.]

In this case, place of supply would be destination outside India. However, it would be subject to IGST and not exempt as conditions of export not being satisfied. One such unsatisfied condition is recipient is not located outside India.

 

[KASTURI SETHI]

Intelligent interpretation and analysis by Sh.Mahadev R.

[Yogesh Ashar]

Dear Sir

They have added this transaction in Schedule III to the CGST Act. In view of this will it be exempt

regards

[Spudarjunan S]

Dear Yogesh Ashar sir,

Through the CGST Amendment Act, 2018 the entry no.7 which has been added is only for "SUPPLY OF GOODS" the same is extracted below:-

32. In Schedule III of the principal Act, -

(i) after paragraph 6, the following paragraph shall be inserted, namely:––

“7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India."

In your given case the supplier is providing services (i.e. Logistics services) not supply of goods, so the same could not get covered under Schedule III of CGST Act, 2017.

However you can go through notification no.02/2018 I.T(R) dated 25th January 2018 Sl.no. 20 A and 20 B as amended by notification no.15/2018 I.T(R) dated 26th July 2018 for examining the exemption applicability based on your facts of the case.

[KASTURI SETHI]

Sh. Spudarjunan S Ji,

You are absolutely right. You have gone into depth to clear the air.

AI Summary

Place of supply rules: transportation to foreign destination attracts IGST where recipient is located in India, not exempt. Under the amended place-of-supply rule for transportation of goods, the place of supply is the foreign destination when goods are transported to a place outside India, but that alone does not exempt the service where export conditions are unmet - notably because the recipient is located in India; the Schedule III insertion for supplies between non-taxable territories covers only goods and does not apply to logistics services.