Clarification on Deemed Export Status for EOU-to-EOU Supplies under GST

[Dashrath Walkoli]

sir

I am writing to seek clarification on the applicability of Notification No. 48/2017-Central Tax, dated 18.10.2017, and Circular No. 14/14/2017-GST, dated 06.11.2017, specifically concerning the treatment of a supply of goods from one Export Oriented Unit (EOU) to another EOU.

Notification No. 48/2017-Central Tax notifies "supply of goods by a registered person to an EOU" as a deemed export. Given that an EOU is also a "registered person" under the GST Act, a literal interpretation suggests that a supply from one EOU (as a supplier) to another EOU (as a recipient) should qualify as a deemed export.

The deemed export provision under Section 147 and Notification No. 48/2017-Central Tax was created for a very specific purpose: to provide a level playing field for domestic suppliers.

However, the procedural framework outlined in Circular No. 14/14/2017-GST, particularly the requirement for prior intimation in Form A and the endorsement of the invoice, seems to be primarily designed for DTA-to-EOU supplies, creating an ambiguity. This ambiguity leads to practical difficulties in determining the eligibility for a refund of GST paid on such supplies, as the refund mechanism under the deemed export provisions may not be applicable for EOU-to-EOU transactions.

I kindly request your official clarification on the following point:

Does a supply of goods by a registered EOU to another registered EOU qualify as a "deemed export" under Notification No. 48/2017-Central Tax, and whether refund of gst can be claimed?

[KASTURI SETHI]

     FAQ 

Q5. Whether an EOU can clear goods to another EOU (Inter-unit transfer) ?

A. Supply of goods from one EOU to another EOU will be treated as any other supply under GST Law.

Q1. Whether the EOU scheme will continue to be in operation in the GST regime and whether EOU is required to take registration under the GST law?

A. EOU is like any other supplier under GST and all the provisions of the GST Law will apply. However, the benefit of Basic Customs Duty exemption on imports will continue.

EOU will get same treatment as DTA unit under GST regime.

[KASTURI SETHI]

Supply of goods from one EOU to another EOU (inter-unit transfer) will require payment of applicable GST. The BCD exemption availed on inputs by the supplier EOU, utilized in such transferred goods would have to be reversed by the recipient EOU at the time

[Shilpi Jain]

Supply by one EOU to another is a deemed supply under GST and refund of GST can be claimed by either supplier or recipient.

Form A aspects, if it is impractical to issue in this scenario a suitable intimation can be made to the jurisdictional officer.

EOU to EOU transfer will not entail BCD reversal as per notification 52/2003 Customs, provided conditions therein satisfied.

[Sadanand Bulbule]

Supply of goods from one EOU to another EOU does not qualify as deemed export under Notification No. 48/2017-Central Tax.  

Consequently, refund of GST paid on such supplies is not admissible under the deemed export provisions.

[KASTURI SETHI]

 Dear Sir,

Concept of "ÉOU" stands changed for the purpose of GST. 

[Dashrath Walkoli]

Sir, 

Notification No. 48/2017-Central Tax notifies "supply of goods by a registered person to an EOU" as a deemed export. Given that an EOU is also a "registered person" under the GST Act, a literal interpretation suggests that a supply from one EOU (as a supplier) to another EOU (as a recipient) should qualify as a deemed export. Please clarify

[Dashrath Walkoli]

Dear Sir,

Regarding the concept of "EOU" (Export Oriented Unit) for the purpose of GST, could you please clarify how its status or the related regulations have changed? I would appreciate it if you could provide details on the specific changes and their implications for businesses operating as EOUs under the new GST regime.

[KASTURI SETHI]

Pl. go through DGFT Trade Notice No.11.2018 dated 30.06.2017. Most benefits to EOU stand withdrawn. 

[KASTURI SETHI]

Relevant extract of DGFT Trade Notice No.11.2018 dated 30.06.2017. issued by DGFT.

• Inter unit transfer/supply for EOU to other EOUs:

Applicable GST would be payable on the transfer/supply of goods from one unit of EOU / EHTP / STP / BTP to another.

AI Summary

Deemed export status of EOU-to-EOU supplies unclear; GST payable and deemed-export refund generally not available.
Supply of goods between EOUs is generally treated as a taxable supply under GST rather than an automatic deemed export; GST is payable on inter-unit transfers, procedural deemed-export requirements (Form A and invoice endorsement) may be impractical for such transfers, refund entitlement is disputed with some asserting possible refunds under administrative flexibility while others deny deemed-export coverage, and use of inputs on which customs duty exemptions were availed may trigger reversal or adjustment subject to customs conditions.