Applicability of GST on indigenous purchase of raw materials under Advance Authorisation scheme.

[Keval Shah]

Is the payment of GST exempted if there is a supply in which raw materials are procured indigenously under Advance Authorisation Scheme for making export products? If yes, what is the method? Through Invalidation or Advance release order (ARO)?

How does the transaction & it's working takes place with respect to the GST and Foreign Trade laws?

[Shilpi Jain]

Idigenous procurement of materials would not be exempt from GST under AA, Though the supplier can pay the GST and claim refund and the AA holder need not pay tax. Even if the AA holder is required to pay tax, such person can apply for refund. Refer notification 48 & 47/2017-CT R

AI Summary

GST applicability on indigenous inputs: suppliers must charge GST with refund route; Advance Authorisation holders can claim refunds. GST is not exempt on indigenous procurement under the Advance Authorisation scheme; suppliers must charge GST and may claim refunds, and Advance Authorisation holders who pay GST can apply for refund under the GST refund framework rather than relying on an automatic exemption or a separate invalidation/Advance Release Order process.