Outbound shipment transactions

[Nisha Prabhu]

Whether the outbound shipments where both parties; the customer and logistics company reside in India, will fall under IGST (Integrated Goods and Service Tax) with place of supply as "97- Other territory" with a value of 18%.

Is there any change from 01st Feb 2019?

[KASTURI SETHI]

See Section 12 (8)(b). Proviso has been inserted (effective from 1.2.19) vide Section 5 of the IGST (Amendment) Act, 2018 (32 of 2018).

Also compare with Section 13(9) of IGST ACT, 2017 for clarification.

[CSSANJAY MALHOTRA]

Rationale behind the Amendment, which is self explanatory.

Insertion of proviso to place of supply in case of transportation services - Section 12(8) of IGST Act, 2017

It has been proposed that place of supply of transportation services in relation to goods being exported outside India, shall be the destination of such goods.Accordingly, such transportation services would not be chargeable to GST.

This amendment has been proposed to provide a level playing field for the domestic transportation companies and promote the export of goods.

[Nisha Prabhu]

Whether ITC be availed against the cost incurred if the sales are not taxable?

[KASTURI SETHI]

No. It is hit by proviso to Section 16 (2) of CGST Act, 2017. See proviso below (d) to sub-section 2 of Section 16.

[SANJAY JAIN]

As per section 12(8) of the IGST Act, the place of supply is outside India but still it is a inter State supply as per section 7(5)(a) of the IGST Act as below:

(5) Supply of goods or services or both,––

(a) when the supplier is located in India and the place of supply is outside India;

(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or

(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,

shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.

[KASTURI SETHI]

It is inter-State supply. There is no doubt about it.. I agree with Sh.Sanjay Jain.

AI Summary

Place of supply rules: transportation for exported goods treated as outside India and not taxable, yet inter state supply.
An amendment effective 1 February 2019 to Section 12(8) of the IGST Act provides that transportation services relating to goods exported from India have their place of supply at the destination outside India, rendering those transportation services not taxable under GST; such supplies are nevertheless treated as inter State supplies when the supplier is in India, and input tax credit on costs for these non taxable outward supplies is not available under the proviso to Section 16(2) of the CGST Act.