Deemed Export GST Refund criteria.

[SARAVANAN RENGACHARY]

Dear All,

DTA unit will raise the invoice on foreign Customer in USD & ship the goods to an EOU in India.  NO export of goods.  GST is leviable.

Is the transaction qualify for GST refund under deemed export.

Please note the EOU located in India will not make any payment to the supplier as the goods are only shipped based on foreign supplier to EOU company.

Please confirm whether the GST refund under Deemed Export is eligible.

[Sadanand Bulbule]

CGST Act, 2017:

Deemed Exports.

147. The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Refer for more details:

Notification No. 48/2017–Central Tax, dated 18th October, 2017

[SARAVANAN RENGACHARY]

Dear sir,

Payment will be received in foreign currency against the invoice from the foreign customer.  The local EOU recipient will not make the payment as he is merely receiving the goods for further process and export.

Please clarify whether the transaction qualify for GST Refund.

[Sadanand Bulbule]

Dear Sir

This is not a deemed export because the EOU is not the “recipient” of supply under GST—payment is made by the foreign customer, not the EOU—and deemed export refund requires the EOU to be the buyer and to make payment to the supplier. Since these conditions are not met, the supply cannot be treated as deemed export. Consequently the subject transaction does not qualify for GST refund,

You may consult tax experts.

[SARAVANAN RENGACHARY]

Dear Sir,

If a DTA company ship the goods to another company located in FTZ and raise the invoice in USD to a foreign customer & receive proceed in foreign currency from the foreign supplier, will it be treated as Zero Rated Sales.  The sale invoice of a DTA company will be supported by FIRC and Shipping bill addressed to FTZ.  Please clarify.

 

[Shilpi Jain]

In case of export to be a zero rated supply the goods have to go out of India which is not happening in the present case.

Also EOU is not the recipient - so not a deemed export.

 “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 1[for authorised operations] to a Special Economic Zone developer or a Special Economic Zone unit.

Supply to SEZ would mean that again recipient should be an SEZ. 

So in your case it will still not be a zero rated supply

 

 

AI Summary

No GST refund: DTA supply to EOU fails CGST deemed export conditions, not zero-rated under IGST Section 16 A domestic tariff area (DTA) supplier invoices a foreign customer in USD and ships goods to an Indian EOU/FTZ unit, with no physical export of goods outside India and no payment from the EOU/FTZ recipient. Forum replies explain that for 'deemed export' under CGST and Notification 48/2017, the notified recipient (e.g., EOU) must be the buyer and make payment; here, the foreign customer is the recipient, so conditions fail and GST refund as deemed export is not available. It is also not a zero-rated supply, because zero rating requires goods to leave India or supply to an SEZ unit/developer as recipient, which is not the case.