Export of Goods with payment of Tax

[RAMNIRANJAN KANDOI]

Facts of the Case:

Party A exports material with payment of Tax.

The GST Tax Invoice is prepared where Tax is paid on material only.

Freight Value is shown in the Invoice but tax on freight is not calculated and paid..

The Export is made under CIF value.

In Commercial Invoice, a break up is given as under

Material Valu

Freight Valu

Total Amt

Buyer has made full payment i.e. of material and freight.

In shipping bill break up is shown as FOB Value and Freight Value Since GST was not paid on freight hence refund received to the extent of Tax paid i.e. on the material exported.

Query

1) Is the above process correct

2) If GST is to be paid on freight then will one get auto refund of the tax paid on freight

3) Now if Party A decides to pay tax with interest for prior period for the freight shown on Invoice then will the party get refund of tax? If yes what would be the process

4) Is there any way of paying Tax on freight and take ITC on the same?

AI Summary

FOB valuation determines IGST liability on exports, affecting refund eligibility when freight is separately invoiced.
Exports are taxable on the FOB transaction value; freight and insurance included under CIF/CFR should be shown separately and excluded from the taxable export value. The IGST amount and invoice value declared in the shipping bill must match the tax invoice and return disclosures to support IGST refund claims. Where exports are on CIF/CFR terms, freight must be separated from CIF to arrive at FOB in invoices and shipping bills to reflect the correct IGST base and facilitate refund or corrective measures for any tax paid on freight.