TaxTMI 
TaxTMI 
2023 (3) TMI 1116
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....ter into a new business transaction wherein the applicant would be engaged in supplying domestically procured goods to customers outside India.- 3(a). In view of the above, the applicant has sought advance ruling in respect of the following question that "Whether the supply of goods from the Applicant to the overseas customer is taxable under GST as a zero rated supply or not?" 3(b) Admissibility of the application : The applicant claimed that the question on which advance rulings has been sought is with regard to "Determination of the liability to pay tax on any goods or services or both" which is covered under Sections 97(2)(e) of the CGST Act 2017 and hence the instant application is admissible. 4. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue: 4.1 The applicant is engaged in supply of goods and services to various customers/clients within as well as outside India and also engaged in rendering support services to customers located outside India; the applicant, with respect of to the operations of supply of goods, is engaged in trading of imported as well as domestically procured goods. They are proposing to enter into a new busine....
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....ion Certificates (BRCs), which will be received in foreign currency account maintained by the Applicant in India. Further, the applicant would remit the payment, towards purchase of goods, to the Indian Manufacturer in foreign currency out of its Foreign Currency Account maintained in India. Alternately, the Overseas Customer will open a Transferable LC in foreign currency in favour of applicant, in which case the applicant would partially transfer the same LC in favour of Indian Manufacturer for the price agreed between the Indian Manufacturer and Applicant and such transactions are permitted for EEFC accounts as allowed by the RBI and FEMA guidelines. 4.6 The transaction between the applicant and the Indian Manufacturer would be recovered, in the books of accounts of the applicant, as 'purchase of goods' transaction and the transaction between the applicant and Overseas Customer would be recorded as 'sale of goods' transaction. The Indian Manufacturer, as per the agreement with the applicant, would be responsible to arrange the logistics till customs port and also for filing the Shipping Bill for export of goods in accordance with provisions of the Customs Act 19....
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....urer is undertaking sale of goods to the applicant and delivering the goods directly outside India on direction of the Applicant. Such a transaction of 'Sale' between the Indian Manufacturer and the Applicant would amount to 'supply' under the GST Law. Further the above supply is merely a trading of goods transaction wherein agreement between Applicant and Overseas customer is on principal to principal basis. Similarly transaction between Applicant and Indian Manufacturer is also on principal to principal basis. 5.3 Once we have established that there is, indeed supply of goods being undertaken between the Indian Manufacturer and the Applicant, It would be important to analyse whether the same qualifies as "export of goods" under the GST Law. The term 'export of goods' is defined under Section 2(5) of the IGST Act, 2017. Relevant extract of said section is as under.- "(5) "export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India" 5.4 A perusal of Section provides that taking goods out of India to a place outside India would be treated as export of goods. In the present case, the In....
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.... Act, 2017. 5.9 As per Section 11 of the IGST Act, 2017, place of supply of goods exported out of India shall be the location outside India. Hence, place of supply for goods supply by Indian Manufacturer to the Applicant would be the location outside India. 5.10 Subsequently, the Applicant is supplying such goods to the Overseas Customer. Since, place of supply of goods supplied by Indian Manufacturer is outside India, it can be said that the Applicant is supplying goods from a location outside India to another location outside India. Accordingly, such transaction would fall under the ambit of entry number 7 of the Schedule III and would not be treated as supply for the purpose of GST law. 5.11 Hence, the Applicant humbly prays that in case the transaction is not treated as export of goods, it will still be covered under Schedule III and would not be subject to GST. PERSONAL HEARING PROCEEDINGS 6. Ms. Neha Kishore, C A and Sri. Devansh Gupta, C A, Ernst & Young LLP & Authorised Representatives of the applicant appeared for personal hearing proceedings held on 29-09-2022 and reiterated the facts narrated in their application. However on request an additional personal hearing wa....
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....e goods from their location/factory directly to the location of the overseas customer and thus the goods would be shipped from the Indian Manufacturer's premises to a foreign destination, without delivering the goods physically to the applicant. (iii) Two invoices will be raised in the transaction i.e. one invoiced by Indian Manufacturer on the Applicant and the other by the Applicant on Overseas Customer. (iv) The consideration, for the said transaction, would be paid by the Overseas Customer either in advance or subsequent to receipt of the goods, in convertible foreign currency duly supported by the Bank Realisation Certificates (BRCs) which is credited into the foreign currency account maintained by the Applicant. Further the Applicant remits the payment to the Indian Manufacturer in foreign currency out of their foreign currency account maintained in India. The Applicant also stated that alternatively the Overseas Customer will open a Transferable LC in Foreign Currency in favour of applicant and the applicant, in that case, would then partially transfer the same LC in favour of the Indian Manufacturer for the price agreed upon and such transactions are covered under p....