GST on sale of goods lying in customs warehouse, before payment of customs duty

[Aap Consulting Pvt. Ltd.]

Dear Experts

Please guide. X imports goods in India and files Bill of Entry for Home Consumption; the goods are lying in Customs Warehouse pending payment of duty. Before payment of duty, X sells goods to Y; however after the sales X pays the Customs Duty and gets OOC. Now the questions are:

1. Whether sales from X to Y will be liable to GST?

2. Is there any legal prohibition under Customs Act or GST Act on sale of goods imported pending clearance?

3. If the import is completed only after payment of duty, then this sales from X to Y would be domestic sales or high sea sale?

[Sadanand Bulbule]

The Customs Act, 1962:

47. Clearance of goods for home consumption.

[(1)] Where the proper officer is satisfied that any goods entered for home consumption are not prohibited goods and the importer has paid the import duty, if any, assessed thereon and any charges payable under this Act in respect of the same, the proper officer may make an order permitting clearance of the goods for home consumption.

[Shilpi Jain]

Supply of warehoused goods to any person before clearance for home consumption; - is neither supply of goods nor services. No GST liable if sold before clearance from warehouse.

 

AI Summary

Warehoused imported goods sold before home-consumption clearance are outside GST supply treatment pending customs duty payment. Supply of warehoused imported goods before clearance for home consumption is neither a supply of goods nor a supply of services and is not liable to GST. Clearance for home consumption requires payment of assessed import duty and applicable charges, satisfaction that goods are not prohibited, and an order permitting clearance by the proper officer.