Sales tax applicability on export

[Guest]

We would be selling our products to a company that is based in the USA and receiving the payment in foreign exchange. However, our buyer has instructed us to dispatch the materials to a warehouse in SEZ. The export invoice /packing list etc. have the name of the buyer as our customer in the USA but the consignee is the warehouse in SEZ a/c buyer name. ARE1 and Bill of Export is also being filed. Our buyer states that no sales tax is payable as this is export transaction. Buyer can not issue Form I as he is not an Indian company & the warehouse in SEZ cannot issue Form I as they are only providing warehousing service and not consuming the materials. Please advice. Regards, Bimbita

[Surender Gupta]

It may not be possible to discuss all the provision here since this query is complicated one, but I believe that the transaction qualifies the conditions of section 5 of the CST Act, and there is no local tax is applicable.

AI Summary

Export qualification under section 5 of the CST Act confirms no local sales tax on consignment to an SEZ warehouse. The transaction-sale to a foreign purchaser with payment in foreign exchange and consignment to an SEZ warehouse, accompanied by export invoice, ARE-1 and Bill of Export-meets the export conditions under the Central Sales Tax export provision and local sales tax is not applicable even though the foreign buyer cannot issue a domestic Form I and the warehouse only provides storage.