GST - Export of Goods

[Ethirajan Parthasarathy]

Rule 96A of GST Rules provides that an exporter has to pay the applicable taxes with interest, provided the goods are not exported for more than three months.

Due to logistic issues, goods might not have left the shores and goods are brought back to vendor’s place. Brought back goods may be supplied subsequently locally or may even be exported later. In such a situation what is the idea behind making the exporter to pay IGST for the first transaction which has not materialised.

For export of services, there is a condition that the exporter has to pay the tax with interest, if sale proceeds are not realised within the time allowed. It is not clear why no such condition is prescribed for export of goods.

Rule 96A of GST Rules provides that an exporter has to pay the applicable taxes with interest, provided the goods are not exported for more than three months.

Due to logistic issues, goods might not have left the shores and goods are brought back to vendor’s place. Brought back goods may be supplied subsequently locally or may even be exported later. In such a situation what is the idea behind making the exporter to pay IGST for the first transaction which has not materialised.

For export of services, there is a condition that the exporter has to pay the tax with interest, if sale proceeds are not realised within the time allowed. It is not clear why no such condition is prescribed for export of goods.

AI Summary

IGST liability on non-exported goods: obligation to pay tax and interest when export fails, despite later domestic resale or re-export.
Rule 96A makes exporters liable to pay applicable IGST with interest if goods are not exported within the prescribed three-month period; this raises the legal question why tax is required on an export transaction that did not materialise and why goods are treated differently from export of services, where tax consequences hinge on realisation of sale proceeds. Administrative replies emphasise revenue protection, legislative policy, the right to make representations, and advise following the "Back to Town" procedure for returned consignments.