Applicability of GST on auction by the custodians

[Vel Murugan]

Dear Sir,

Could you please throw some light on the following. In some cases, a person actually imports the goods but has not come forward to clear the goods from Customs due to many reasons. Hence, the goods are lying in the customs bonded premises. As per Sec 48 of the Customs Act,1962, the custodian (usually the cfs) sell the goods under auction, after getting approval from the Customs dept. Consideration received through bidding is cum-duty price for the purpose of Customs Act. Hence, BCD, IGST and other customs component are deducted and remaining amount is retained by the custodian.

Usually this amount is considered as the price in lieu of their service by way of storage/ other services. In pre-GST era, it is clear that since recipient does not exist (actual importer is not known) activities of providing storage service can not be qualified as a service [any activity provided by a person, for ANOTHER, for consideration].

However, in GST, taxable event is supply and definition of supply is broad as per Sec.7 which is inclusive definition and starts with all forms of supply of goods and services or both. This being the scope of supply, whether amount retained by the custodian attracts GST liability?

AI Summary

GST Applicability on Auctioned Goods: Service Fee Retained by Custodians for Storage Subject to GST Under Certain Conditions. A discussion on the applicability of GST on auctions conducted by custodians when goods remain uncleared in customs bonded premises. The query addresses whether the amount retained by custodians after auctioning these goods, which is considered a service fee for storage, is subject to GST. One response suggests that the remaining amount after customs duties is liable to GST as it constitutes consideration for storage services. Another agrees with this view, while a third adds that if the amount is a deposit, GST applies only when adjusted for services.