TaxTMI 
TaxTMI 
2021 (1) TMI 376
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....cipient customer company located in Bangladesh. The transaction involves generation of one invoice by M/s. SPX Flow Technology, Poland to the applicant and generation of another invoice by the applicant on the recipient company which is located in Bangladesh. (2) The recipient customer company in Bangladesh which is M/s. BRAC Dairy and Food Project, receives such dairy machinery and its spare parts directly from SPX Flow Technology, Poland. In other words, the goods are directly delivered from Poland to the customer located at Dhaka on CIF basis. While undertaking this transaction, the invoices are generated parallel to each other, whereby M/s. SPX Flow Technology, Poland raises a set of invoices to SPX Flow Technology India pvt.ltd. (herein the applicant) and at the same point of time, the applicant company raises another set of invoice to M/s. BRAC Dairy and Food Project, Bangladesh. Copies of these invoices, purchase orders and relevant documents are attached along with the application. (3) As it ordinarily happens in the international trade involving multiple parties, a purchase order is received by the applicant from the customer of Bangladesh (i.e. BRAC Dairy and Food Pro....
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.... Act, 2017, the transaction undertaken by the applicant does not constitute import for the purpose of the IGST Act, 2017 considering the fact that the goods are not physically brought into India from outside India; that Section 3(7) of the Customs Tariff Act is made applicable to goods imported into India in so far as levy of IGST on such goods is concerned; that in the present transaction, supply has taken place outside India and the Indian GST provisions will not apply to the transaction; that Section 1 of the CGST Act and Section 1 of the IGST Act, 2017 provide that the GST Acts apply to the whole of India except the state of Jammu and Kashmir; that GST is only applicable to supply as defined under Section 7 of the CGST Act, 2017 within the territory defined as India; that in the present case the sale of goods has taken place from Poland where the goods are located and the delivery has been directly given in Bangladesh; thus none of the territories involved in export and import falls within the territory of India and hence such supply would not be covered within the ambit of CGST Act, 2017 or the IGST Act, 2017; that the applicant refers to the relevant provisions and more parti....
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....levied at such rates as may be specified under the Customs Tariff Act, 1975, or any other law for the time being in force, on goods imported into, or exported from, India. (2) The provisions of sub-section (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government." 6. The applicant has stated that from the combined reading of the relevant provisions of the IGST Act, Customs Tariff Act and the Customs Act, it comes out that IGST can be levied and collected only when the duties of customs are assessed on the imported goods and on the duty that is determined under Section 15 of the Customs Act, 1962; that in the present case, the goods are not crossing the customs frontiers of India and therefore the goods cannot be considered as 'imported goods' for the purpose of levy of customs duty and also for the levy of IGST on such goods and therefore in the present case, IGST cannot be levied on this transaction under the Customs Tariff Act, 1975 considering such transaction to be a transaction of import of goods. Further, the definition of export of goods under Section 2(5) of the IGST Act, 2017 is as under: "Section 2(....
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....r India taxation laws. The applicant has mentioned the definition of recipient under Section 2(93) of the CGST Act, 2017 as under: "(93) "recipient" of supply of goods or services or both, means- (a) where a consideration is payable for the supply of goods or services or both, the person who is liable to pay that consideration; (b) where no consideration is payable for the supply of goods, the person to whom the goods are delivered or made available, or to whom possession or use of the goods is given or made available; and (c) where no consideration is payable for the supply of a service, the person to whom the service is rendered, and any reference to a person to whom a supply is made shall be construed as a reference to the recipient of the supply and shall include an agent acting as such on behalf of the recipient in relation to the goods or services or both supplied;" 9. The applicant has further submitted that as per the definition of recipient, it is clear that the recipient is a person who is liable to pay the consideration for the supply of goods; that in the present case, the recipient of the goods is M/s. BRAC Dairy and Food Project, Bangladesh in as much as M/s.....
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....eviability of Integrated Goods and Services Tax on High Sea Sales of imported goods and point of collection thereof was raised before the Central Board of Excise and Customs; that the CBEC Circular No.33/2017-Customs dated 01.08.2017 has clarified that such transactions take place beyond the Customs frontiers of India and therefore the same is not exigible to IGST because IGST can only be levied when the goods are imported into India and not otherwise; that the same reasoning is applicable in the present case in as much as the goods do not cross the Customs frontiers of India and are always in the foreign territory which is beyond India; that even otherwise, the provisions of the IGST Act, 2017 are not applicable in as much as the IGST Act, 2017 is only applicable to the transactions taking place within the territory of India; that to make the position clear beyond any doubt, the legislature has made an amendment in the CGST Act, 2017 wherein, in Schedule 3 of the CGST Act, 2017, entry No.7 has been inserted vide Notification No.2/2019-Central Tax dated 29.01.2019 and reads as under: "Schedule 3(7):- Supply of goods from a place in the non-taxable territory to another place in th....
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....saction. 13. The applicant has further submitted that the transaction in question falls within entry No.7 in Schedule 3 of the CGST Act, 2017 and accordingly, no tax can be levied on such transaction; that the authority of advance ruling, Kerala has in similar circumstances held vide Order No. CT/2275/18-C3 dated 26.03.2018 = 2018 (4) TMI 583 - AUTHORITY FOR ADVANCE RULING - KERALA that transactions in which goods are moving from one place overseas to another place overseas and such goods are never crossing the customs frontiers of India; in other words, never reaching the territory of India at any point would not be eligible for GST; that similarly in another ruling by the authority of advance ruling, Maharashtra in the case of M/s. Enmarol Petroleum Pvt. Ltd. reported at 2019 (20) GSTL 442 = 2018 (12) TMI 144 - AUTHORITY FOR ADVANCE RULING, MAHARASHTRA has held that the transactions like the present one are not eligible to GST and such transactions would be non taxable supplies as per Section 2(78) of the CGST Act, 2017; that in other words such supply of goods would be not leviable to tax; that the principle upheld by the advance ruling in the case of M/s. Enmarol Petroleum Ind....
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....2. 17. As per the submission of the applicant, the present application is in respect of trading by the applicant in foreign countries which is carried out as follows: (i) The applicant's parent company located in Poland is engaged in shipping goods such as spare parts of dairy machinery to recipient customer company namely M/s. BRAC Dairy and Food Product located in Bangladesh. (ii) A purchase order is received by the applicant from the aforementioned customer of Bangladesh specifying therein their requirements in terms of the components, parts etc., and quantity required. (iii) After receiving such order, the applicant would place its purchase order to the polish supplier (i.e. M/s. SPX Flow Technology, Poland) specifying therein details of the goods required, quantity of such goods etc. The details like name and address of the applicant's customer at Bangladesh are also notified to the polish supplier while placing the PO. (iv) Thereupon, the Polish supplier would dispatch the goods directly to the applicant's customer of Bangladesh and documents for transportation of the goods directly from Poland to Bangladesh are also prepared and issued by M/s. SPX Flow Technology, P....
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....ion (2) of Section 7 of the Integrated Goods and Services Tax Act, 2017, supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of interstate trade or commerce. Further, sub-section(1) of Section 5 of the Integrated Goods and Services Tax, 2017 states as under: "Section 5(1): subject to the provisions of sub - section (2), there shall be levied a tax called the integrated goods and services tax in all inter-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under Section 15 of the Central Goods and Services Tax Act, and at such rates, not exceeding forty percent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person; Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975, on the value determined under the said Act at the point when duties of customs are levied on the said go....
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....on (1) shall apply in respect of all goods belonging to Government as they apply in respect of goods not belonging to Government. SECTION 15: Date for determination of rate of duty and tariff valuation of imported goods. - (1) Rate of duty and tariff valuation, if any, applicable to any imported goods, shall be the rate and valuation in force, - (a) in the case of goods entered for home consumption under section 46, on the date on which a bill of entry in respect of such goods is presented under that section; (b) in the case of goods cleared from a warehouse under section 68, on the date on which a bill of entry for home consumption in respect of such goods is presented under that section; (c) in the case of any the goods, on the date of payment of duty: Provided that if a bill of entry has been presented before the date of entry inwards of the vessel or the arrival of the aircraft or the vehicle by which the goods-are imported, the bill of entry shall be deemed to have been presented on the date of such entry inwards or the arrival, as the case may be. (2) The provisions of this section shall not apply to baggage and goods imported by post." 23. From a combined readin....
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....es etc shall be collected at the time of importation i.e. when the import declarations are filed before the customs authorities for the customs clearance purposes. The importer (last buyer in the chain) would be required to furnish the entire chain of documents, such as original Invoice, high-seas-sales-contract, details of service charges/commission paid etc, to establish a link between the first contracted price of the goods and the last transaction. In case of a doubt regarding the truth or accuracy of the declared value, the department may reject the declared transaction value and determination the price of the imported goods as provided in the Customs Valuation rules." 25. The above circular is applicable in the present case. Similarly, we find that, where, Bill of Entry/import declarations are not being filed with respect to the goods so procured, GST would not be leviable. Further, we find that as far as the leviability of GST on outward supply from place of vendor to customer is concerned, it is to mention that the thumb-rule for determining the taxability of any transaction is to ascertain whether the transaction tantamount to 'supply' in terms of the provisions of law. T....
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....sions of section 12, supply of services, where the location of the supplier and the place of supply are in-- (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply of services in the course of inter-State trade or commerce. (4) Supply of services imported into the territory of India shall be treated to be a supply of services in the course of inter-State trade or commerce. (5) Supply of goods or services or both,-- (a) when the supplier is located in India and the place of supply is outside India; (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce." 28. The above statute indicates that in the event that the supplier is located in India and the place of supply is outside India, such supplies shall be treated as Inter-state supplies. The place of supply in the instant case would be governed by the provisions of Section 10 of the IGST Act, 2017 of whic....
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....t physically available in the Indian territory. When the goods are not physically available in the Indian territory, the question of taking goods out of India does not arise. Thus, the subject transaction does not qualify as export of goods. In view of the above, it appears that the transaction is covered under the ambit of Inter-state supply and is neither exempted nor covered under export of goods or services. Thus, the theory of elimination takes us to the conclusion that such supplies will be subject to levy of IGST. However, we also find that vide Central Goods and Services Tax (Amendment) Act, 2018, Schedule-III of the CGST Act, 2017 (which covers activities or transactions which shall be treated neither as a supply of goods nor a supply of services) has been amended with effect from 01.02.2019 (as per Notification No.02/2019-Central Tax dated 29.01.2019) and entries 7 and 8 have been inserted under the said Schedule. The same reads as under: "SCHEDULE III of CGST Act 2017: "Activities or transactions which shall be treated neither as a supply of goods nor a supply of services". Newly inserted paras after 6: 7. Supply of goods from a place in the non-taxable territory....