TaxTMI 
TaxTMI 
2021 (4) TMI 929
X X X X Extracts X X X X
X X X X Extracts X X X X
....inter located in USA, who in turn prints it and ships to the customers located in USA, UK and Canada. Further, in another business model the applicant is having an agreement with Amazon Inc. who through their website "amazon.com" based on the choice of the customers either prints the books and sells it to the consumers on their own account or will share the link to download the e-books material in an of the electronic devices and pays royalty to the applicant as agreed between the two parties. In view of the above, the applicant sought advance ruling, on classification of goods and services, in respect of the following questions: i. Whether the supply of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant are treated as supply under GST? ii. Whether GST is levied on the shipping charges collected by the applicant from the customers located in USA, UK and Canada (non-taxable territory) for the delivery of books from the warehouse located in USA (non-taxable territory) to the customer located in USA, UK and Canada (non-taxable....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s the bulk order with the printer, who prints and supplies to the warehouse. The books are stored in the warehouse for quick delivery to the customer. The applicant shares the order details to the warehouse service provider, who in turn ships the books to customer. The applicant pays printing charges, warehouse charges and shipping charges to the respective service provider. The applicant collects the price of book along with shipping charges. B. Sales through Amazon platform: The customer places an order through Amazon web portal by making payment either of physical book or e-book. Amazon collates all the orders, prints the books and ships to customers located outside India and in case of e-books, Amazon will share the link to download the material in any of the electronic devices. Amazon will pay royalty to the applicant at agreed rates. C. Online Guitar training courses through the Applicant website: In this transaction, the applicant is proposing to start online guitar courses through its own website. The customers can purchase the course on the website. They will be provided with a User ID and grant access to the course platform. The custome....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ly of books from the warehouse located in USA (non-taxable territory) to the customers located in USA, UK and Canada (non-taxable territory) without such books entering into India by the applicant are treated as supply under GST?? a. Section 7 of the IGST Act, 2017 lays down the principle to determine the nature of transaction as inter-state transaction. In this regard, the provisions of section 7(5) which reads as under: (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. b. In order to evaluate applicability of section 7(5)(a), the applicant states that it is pertinent to evaluate following aspects of transaction in question- * Supplier * Place of Supply Supplier: IGST Act has not separately defined the term 'supplier'....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... in respect of books would be as per Section 5 of the IGST Act which reads as under'- Section 5(1) of the IGST Act, lays that "there shall be a tax called integrated goods and service tax on 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 CGST Act and such rates not exceeding forty percent, as may be notified by the Government on the recommendation 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 as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the customs Act, 1962. f. Thus, from the above, the applicant states that integrated tax on goods imported into India is to be levied and collected in accordance with Section 3 of the Customs Tariff Act, 1975 and Section 12 of the Customs Act, 1962 and the same is to be levied and collected at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Supply of goods to a SEZ developer or unit Section 2 (5) of IGST Act, defines 'export of goods' with its grammatical Variations and cognate expressions, means "taking goods out of India to a place outside India". j. In order to identify these supplies as Zero-rated the same have been covered under the purview of inter-state supply. However, this cannot be interpreted to mean that all other supplies falling within the purview of Section 7 (5) (a) of the IGST Act, but not covered under section 16 of IGST Act would be considered as liable to IGST. k. The term 'Export' covers the cases of taking goods out of India, however, principally even book being supplied to the customer located in USA, UK and Canada (non-taxable territory) which is outside India should get covered under the purview of the term 'Export'. Interpreting the term 'Export' to cover only supplies where goods are taken out of India would be restrictive and would disregard the principle of consumption-based tax. "Export of goods" should be interpreted in a broader way to cover such cross-border transaction where goods are delivered to a customer outside India even....
X X X X Extracts X X X X
X X X X Extracts X X X X
....we are of the view that supply of books along with shipping charges, where in supply of books is a principle supply and shipping charges being naturally bundled in the ordinary course of business is an ancillary supply. Hence leviability of GST for shipping charges depends on the taxability of principal supply being supply of books. d. Therefore, the applicant states that he is of the view that the supply of books being covered under Schedule III and shipping charges being ancillary to principal supply, is outside the scope of GST and hence IGST is not chargeable on the same. 5.3 Whether printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant? a. Section 13 of IGST Act, lays down the provisions for Place of Supply of services where location of supplier or location of recipient is outside India. Since in this transaction, the printer located in USA (non-taxable territory) which is outside India, place of supply can be governed by section 13. b. From the above provision, printer requires materials for printing ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....III are "NOT SUPPLIES" and hence they are neither 'exempt supplies' nor are they 'non-taxable supplies. Thus, no credit would be required to be reversed for engaging in transactions referred under Schedule III. e. The applicant states that in the present case, since the supply of books from one non-taxable territory to another non-taxable territory without the books entering India covers under Schedule III, no reversal of credit would be required for engaging in these transactions and the fact that these supplies have been inserted in Schedule III and not included as an exemption under section 11, he is of the view that reversal of credit is not required. 6. In view of the above submissions, the applicant requests this Authority to provide the Advance ruling as mentioned below: i. To include the supply of books from warehouse located in USA (non-taxable territory) to a customer located in USA, UK and Canada (non-taxable territory) is covered under Schedule III which are neither supply of goods nor a supply of service.". ii. To exclude shipping charges from levy of tax since supply of books being covered under Schedule III and shipping charges b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vant facts and the applicant's interpretation of law. 10. The applicant sought advance ruling, with regard to business model 'A', in respect of the questions mentioned at para 2 supra. In this business model, customers in USA, UK and Canada places an order through applicant's website by making payment in Foreign Currency. The applicant places the bulk order with the printer, who prints and supplies to the warehouse. The books are stored in the warehouse for quick delivery to the customer. The applicant shares the order details to the warehouse service provider, who in turn ships the books to customer. The applicant pays printing charges, warehouse charges and shipping charges to the respective service providers. The applicant collects the price of book along with shipping charges. It could easily be inferred from the aforesaid business model 'A' that the applicant is in receipt of the service of printing of the books where the content is supplied by the applicant and also moving the books so printed to the warehouse at USA; shipping of the books by the person (agent of the applicant) located in USA, on behalf of the applicant to the customer in USA/Can....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from the warehousing agent outside India. In view of the above, it is clearly evident that the supplier providing the shipping services to the applicant is outside India, the recipient of the said service i.e. the applicant is within India and the place of supply is in India in terms of Section 13 of the IGST Act 2017. Thus the impugned service squarely qualifies to be an import of service, in terms of Section 2 (11) of the IGST Act 2017, in the hands of the applicant and hence the amount paid by the applicant towards the said shipment service is exigible to GST, under Reverse Charge Mechanism. 13. The third question is Whether printing charges for printing of books charged by the Printer located in USA (non-taxable territory) is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant. The applicant is supplying the content of the books and get the books printed and moves the said books to the warehouse located outside India. In this regard we invite the reference to the Circular No.11/11/2017-GST dated 20.11.2017. Para 2 of the aforesaid circular clarifies that supply of books, pamphlets, brochures, envelopes, annual rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... USA is covered under import of service or not. We invite reference to Section 2 (11) of IGST Act, 2017, in terms of which "import of Service" has been defined as a supply of service where -The supplier of service is located outside India; -The recipient of service is located in India; and -The place of supply of service is in India; In the instant case we observe that, though the supplier is located outside India and the recipient is located in India, the place of supply of service is outside India, in terms of Section 13 of IGST Act 2017. Therefore, the impugned service is not covered under import of service and hence is not exigible to GST under RCM basis on expenses incurred on warehousing charges of printed books. 15. The last question is Whether input tax credit can be availed, to the extent of inputs and input service on the transaction covered in Question 1 above? The instant question is subject to the answer to the first question. The applicant is not entitled to avail input tax credit on inputs and input services on the transaction covered in first question as the said transaction does not amount to supply under GST, as discussed at par....