GST to Overseas Customer

[DIPAK BIJAWE]

Sir,

We are rubber to Metal components manufacturing industry . To manufacture parts we need to develop tool as per the sister company(overseas Customer- UK) specification. Once the tool is developed and after submission of samples approved by customer we used to raise Invoice on overseas customer .

The tool retained by us for further manufacture of components .

Is IGST/GST applicable on the invoice for the tool cost recovery from overseas customer.

Please provide your valuable views in the GST regime whether GST is applicable on Invoice on overseas customer for the tooling cost recovery for which the tool retained by us for further manufacturing of components

Regards

Dipak Bijawe

[KASTURI SETHI]

In my view, IGST @ 18% is applicable. Analogy of the following case law is applicable :-

2019 (20) G.S.T.L. 124 (A.A.R. - GST) = 2018 (11) TMI 887 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA IN RE : BEHR-HELLA THERMOCONTROL INDIA PVT. LTD.

AI Summary

IGST applicability on tooling costs: IGST applies where tooling is invoiced to overseas customer but retained domestically.
IGST is applicable on invoiced tooling cost recovery where tooling is developed to an overseas customer's specification, samples are approved, the supplier invoices the overseas customer, and the tool is retained by the supplier for further manufacture; the view relies on analogy to an advance ruling in Behr Hella Thermocontrol treating such transactions as subject to IGST.