gst applicability to FTZW

[Madhavan iyengar]

X Co is located in a Free trade warehousing zone (FTWZ) and provides warehousing services to customer abroad

X co stores goods in warehouse on behalf of foreign customers who send goods to the FTWZ

X co charges warehousing charges to the overseas customers and receives money if foreign exchange

Will X co require to charge GST on such warehousing services and which tax is applicable

Experts views solicited

[PAWAN KUMAR]

Dear Sir,

As per the IGST Act, since it is not the export of service because place of supply is in India. It will be supply of service by FTWZ and as per IGST Act, 7(5)(b), it will be supply of service by SEZ/FTWZ and hence will cover under inter-state trade and accordingly it will become IGST Payable.

[Madhavan iyengar]

Sir thanks for your reply

but one more query will SEZ and FTZW provisions override the gst act and can it not be treated as zero rated and qualify as export pls clarify as all other conditions of export of service is satisfied only exception being place of provision but since sez / ftzwis outside the territory of india will it not be considered as export

[PAWAN KUMAR]

Dear Sir,

I again checked the provisions. Since SEZ has been notified as the place outside indian territory. services from outside indian territory and as per other conditions of export of service, it will be cover under export of services since place of supply is sez which is outside indian territory.

AI Summary

Place of supply rules may determine whether FTWZ warehousing is treated as export of services or subject to IGST.
Taxability of warehousing services by an FTWZ depends on place of supply: one view treats supplies by SEZ/FTWZ as inter state with IGST payable where place of supply is in India; an alternate view notes that if the SEZ/FTWZ is notified as outside Indian territory and the place of supply is that SEZ/FTWZ, the services may qualify as export of services provided from outside India.