GST on air freight recovered

[Kaustubh Karandikar]

XYZ(India) imported goods from PQR, Singapore. These goods were found defective and therefore the same were re – exported under LUT. After repairs, it was again re – imported. The airfreight and other and customs related charges for export and re - import charged by the CHA was recovered from PQR, Haryana at actuals. Is XYZ required to pay GST on the amount recovered. Sir, in my view since Air Freight on export is exempted, no GST is payable however proportionate ITC to be reversed. Views of the experts please.

[Shilpi Jain]

Reco ery is from pqr haryana or pqr singapore

[Shilpi Jain]

Even if exemption is available that is only to the extent of the export freight. What about the re-import freight?

[Shilpi Jain]

Also in case the terms of the contract clearly mention thag the repairs for defects will be undertaken by the exporter then the reimbursement of expenses should not be treated as a supply of service to him. Though this fails to meet the pure agent conditions.

So wherever service provider has charged tax, credit can be taken by importer and in case it is exported to the foreig party then no need to pay gst. Else the tax cost can be passed to the exporter

[Kaustubh Karandikar]

Thanks Shilpi ji for your kind advice. In my view, since XYZ is recovering the amount from PQR, Haryana in INR, one of the conditions for export of service viz. payment to be received in foreign currency is not getting satisfied and therefore XYZ will be liable to pay GST. Your kind views please.

[Shilpi Jain]

Terms of the contract are important in deciding the taxability. However, as rightly pointed if the amount is received in INR there is no question of export of service

[Ganeshan Kalyani]

I agree with Shilpi Mam's view.

AI Summary

GST on freight recovery: export exemption limited; domestic currency reimbursement likely attracts GST unless contract and payment satisfy export conditions. GST on recovered airfreight depends on transaction character, payment currency, and contract terms: export freight is exempt only if export of service conditions (including payment in foreign currency) are met; re import freight is not automatically exempt. Recoveries may be reimbursements (not supplies) if contractually borne by the exporter, but pure agent tests often fail. Where tax is charged, importer may claim input tax credit and may need to reverse proportionate ITC or pass tax cost to the exporter.