Customer in France and shipping of material in NCR, what will GST implications?

[Babasaheb Gadakh]

Hello Sir,

We have got an order from our customer who is located in France and material has to be physically delivered to Gurugram at the place of customers customer. Is GST is applicable for this transaction. In this case Bill to is ABC France Ship to is XYZ, Gurgram (HR). We are recieveing payment from France in EURO. Please guide for GST transaction.

[Sadanand Bulbule]

Dear

In terms of Section 2(5) of the IGST Act, 2017, “export of goods” with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India.

So in your case goods are not taken physically out of India. As such the subject transaction being a domestic in nature, shall attract either CGST/SGST if it is intra-state supply or IGST in case of inter-state supply. Payment from France in EURO has nothing to do with such transaction to claim it as zero rated supply.

[Raam Srinivasan Swaminathan Kalpathi]

To further add to the explanation provided by respected Shri.Sadanandji, as place of supply is India the transaction will attract GST.  The fact that moneys are received in FE is irrelevant for goods.  Also, as regards documentation to qualify as exports one needs, the export invoice, shipping bill and bill of lading / airway bill. As the last 2 documents will be missing in your case the supply will only be inter-state of intra-state attracting GST.  

[YAGAY andSUN]

In this case, since the material is being physically delivered to Gurugram (India), the GST implications are based on the nature of the transaction and the location of the delivery.

Here’s a breakdown of the GST treatment in your scenario:

1. Nature of the transaction:

• Bill to: ABC France (Foreign customer).
• Ship to: XYZ, Gurugram, Haryana (Customer's customer, located in India).

Since the goods are delivered within India (Gurugram), it is considered a domestic supply under GST, even though the payment is being made from a foreign country.

2. GST Applicability:

• The transaction involves supply of goods within India, which is subject to GST.
• Inter-State or Intra-State Supply: Since the goods are delivered to Gurugram, which is within India, this would be considered Intra-State Supply (if both the supplier and recipient are located within Haryana).
• If the seller is based outside Haryana but within India, it would still be treated as Intra-State Supply because the destination of the goods (Gurugram) is within the same state.

3. GST Registration:

• If the seller (you) is not registered for GST, you may need to obtain registration if your turnover exceeds the prescribed threshold for GST registration (usually ₹40 lakhs for goods).
• If the seller is registered under GST, you will need to charge GST on the transaction as per the applicable rate for the goods being sold.

4. Foreign Exchange Consideration:

• Payment in Euro: The payment you receive from ABC France in Euros does not impact the applicability of GST. However, it will need to be converted to Indian Rupees (INR) for the purpose of reporting under GST.

5. Invoice:

• The invoice issued by you (supplier) should mention the GST rate and GST amount.
• Even though the payment is from a foreign country (France), the GST is charged on the supply within India, and it needs to be properly reported in your GST returns.

6. Customs & Export Consideration:

• Since the goods are being delivered to an Indian location (Gurugram), this is not an export transaction. If the goods were delivered to a foreign destination, you would consider export procedures, but that is not applicable here.

Conclusion:

GST is applicable for this transaction because the goods are being delivered to an Indian location. It will be treated as a domestic supply subject to the GST rate for the goods involved. You will need to follow standard GST compliance for the invoicing, payment, and filing of returns.

[KASTURI SETHI]

In support of the above comprehensive replies of both experts here is case-law of Bombay High Court :-

2018 (12) TMI 148 - BOMBAY HIGH COURT - GLAXOSMITHKLINE ASIA PVT. LTD. Versus DEPUTY COMMISSIONER OF SALES TAX

 

[Shilpi Jain]

GST would become payable and in your facts becomes a cost.

AI Summary

Goods Delivered in India Face Domestic GST: Intra-State or Inter-State Rules Apply Despite Payment in Euros. A customer in France has ordered materials to be delivered to Gurugram, India, raising questions about GST implications. Since the goods are not exported out of India, the transaction is considered domestic, subject to either CGST/SGST for intra-state supply or IGST for inter-state supply. Payment in Euros does not affect GST applicability. The transaction requires GST registration if the turnover exceeds the threshold, and GST must be charged and reported in INR. The delivery within India disqualifies it as an export, thus standard GST compliance applies, including invoicing and returns.