Goods sent outside India on returnable basis

[Kaustubh Karandikar]

Goods are sent outside India for demonstration / Display on returnable basis. Can it be sent under a Delivery Challan without payment of GST and without following LUT procedure?

[Padmanathan KV]

As per section 2(5) of IGST Act, “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;

As per the definition, it seems even supply is not required. If goods are "taken" out of India, it shall be export of goods. Accordingly, LUT and invoice will be required.

Pls see the compliance as per Customs Act also

[Kaustubh Karandikar]

thanks padmanathan ji for your advice

[Shilpi Jain]

Zero rated supply.

16. (1)“zero rated supply” means any of the following supplies of goods or services or both, namely:––

(a) export of goods or services or both; or

(b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

For it to be a zero rated supply, it has to be a supply first. In the present case no supply so cannot be done under LUT and cannot be regarded as a zero - rated supply.

Can be transported on a DC. There was also a circular issued in this regard. Circular No. 108/27/2019-GST dated 18.07.2019

Also see press release https://pib.gov.in/PressReleasePage.aspx?PRID=1579708

[Kaustubh Karandikar]

Thanks Shilpi ji, the circular quoted by you will be of great help.

[Amit Agrawal]

Goods - on which ITC availed - were not lost by fire, but the 'intermediary goods during manufacturing' / 'finished goods after manufacturing' were lost. So, restriction u/s 17 (5) (h) does not apply. This is more so, in absence of any machinery provision prescribed for calculation of ITC involved in these events.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Please ignore my last post above, as it was mistakenly put here. Apology for the inconvenience caused!

[Padmanathan KV]

Thank you Shilpi Ma'am,

Dear querist, I stand corrected and agree with Shilpi Ma'am. The circular cited by Ma'am is directly on the issue.

AI Summary

Export of goods: returnable shipments may trigger export compliance and LUT obligations, not automatic zero-rated treatment.
Characterisation of returnable goods sent outside India depends on whether goods taken out of India are treated as export of goods under the IGST Act and whether a supply has occurred; if treated as export, invoice issuance and the Letter of Undertaking (LUT) mechanism apply, whereas zero-rated treatment requires an underlying supply. Delivery Challan use and Customs compliance are relevant operational considerations.