TaxTMI 
TaxTMI 
2026 (6) TMI 157
X X X X Extracts X X X X
X X X X Extracts X X X X
....without payment of IGST? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean the CGST Act and the MGST Act. It is further noted that during the proceedings, vide letter dated 15.12.2021, the applicant has withdrawn Question No. 2 which reads as: "If these outward supplies are treated as Export Sales, then under LUT, we can Export these items without payment of IGST". The advance ruling is, accordingly, sought and rendered only in respect of Question No. 1. 1. FACTS AND CONTENTION - AS PER THE APPLICANT 1.1 The applicant, M/s. Sanctum Trading Corporation Private Limited, is a private limited company registered under the GST Act bearing GSTIN 27AAUCS0963MIZJ and having its registered office at 101, Sajjad Yasin Chamber No. 2, 1st floor, 30-G Bomanji Lane, Fort, Mumbai - 400001. The app....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Customs Act, 1962; and • Advance Ruling No. AAR/AP/10(GST)/2018 dated 20.08.2018 rendered by the Authority for Advance Ruling, State of Andhra Pradesh, in the case of M/s. Fairmacs Shipstores Pvt. Ltd. 2. STATEMENT CONTAINING APPLICANT'S INTERPRETATION OF LAW 2.1 The applicant submits that it has been importing into India various items, principally cigarettes, from manufacturers located outside India, and that the said goods are stored, duty-free, in its bonded warehouse for being supplied as ship stores to merchant vessels on foreign run, to vessels of the Indian Navy and to vessels of the Indian Coast Guard. The applicant contends that the said supplies are governed by the provisions of Chapter X of the Customs Act, 1962, more particularly Sections 85, 86, 87, 88, 89 and 90 thereof. 2.2 It is the applicant's contention that the items so supplied are exempt from payment of customs duty, cess, special additional duty and value added tax, and that this exemption-status under the Customs Act has the consequence, on a parity of reasoning, of qualifying the supplies as exports under the GST Act. 2.3 The applicant places reliance, in particular, on Section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....jurisdictional Authority is situate, the applicant has approached this Authority seeking a similar ruling in respect of the State of Maharashtra. Prayer: In the foregoing premises, the applicant prays that this Authority be pleased to hold that the outward supplies of warehoused goods made by the applicant from its bonded warehouse to ocean-going merchant vessels on foreign run, Indian Navy ships and Indian Coast Guard ships qualify as "export of goods" under the GST Act, and are accordingly to be treated as zero-rated supplies under Section 16 of the IGST Act, 2017. 3. CONTENTION - AS PER THE CONCERNED JURISDICTIONAL OFFICER: 3.1 The application was forwarded to the concerned jurisdictional officer in terms of Section 98(1) of the CGST Act, 2017 read with Rule 104 of the CGST Rules, 2017, calling for comments on the issues raised by the applicant. 3.2 However, despite sufficient opportunity having been afforded, no written submissions or records have been furnished by the jurisdictional officer. In the absence of any response from the department, the Authority has proceeded to consider and decide the application on the basis of the facts pleaded, the documents placed o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....thout payment of customs duty. Such warehoused goods are then supplied to- (i) ocean-going merchant vessels on foreign run, (ii) Indian Navy ships and (iii) Indian Coast Guard ships, against an "Intent to Purchase" issued by the Master of the vessel (in the case of foreign-going merchant vessels) or against a Purchase Order issued by the Indian Navy / Indian Coast Guard (in the case of naval / coast-guard ships), and only after a Duty-Free Shipping Bill is filed and customs approval is obtained. 5.3 It is undisputed that, throughout the supply chain in question, the goods retain the character of "warehoused goods" within the meaning of Section 2(44) of the Customs Act, 1962, and that no Bill of Entry for clearance for home consumption is filed in respect of such goods. The supplies are made directly from the bonded warehouse to the recipient vessel under customs supervision. 5.4 During the course of the proceedings, the applicant withdrew Question No. 2 vide letter dated 15.12.2021. The present advance ruling, accordingly, is confined to Question No. 1, which is whether the outward supplies made by the applicant of warehoused goods from its bonded w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vices or both; or (b) supply of goods or services or both [for authorised operations] to a Special Economic Zone developer or a Special Economic Zone unit." 5.8 It is therefore evident that, for a supply to be a zero-rated supply under Section 16, it must answer to the description of an "export of goods" (or services), or be a supply to an SEZ developer / unit. The latter is admittedly not in issue here. The whole question therefore turns upon the meaning of "export of goods" under the IGST Act, 2017. 5.9 Section 2(5) of the IGST Act, 2017 defines the expression "export of goods" as follows:- "(5) "export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India." 5.10 Section 2(56) of the CGST Act, 2017, which is to be read in pari materia for the meaning of "India" under the IGST Act by virtue of Section 2(24) of the IGST Act, defines "India" as under: "India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as refe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....said Act, be exported to a place outside India without payment of import duty subject to compliance with the conditions stipulated therein. It is also true that Section 88(a) of the said Act extends the same exemption from import duty to warehoused goods that are taken on board any foreign-going vessel as stores. Section 90 of the Customs Act, 1962 makes a corresponding provision in respect of supplies of stores to ships of the Indian Navy. By virtue of Notification No. 37/2017-Customs dated 30.06.2017 issued under Section 25(1) of the Customs Act, 1962, supplies of warehoused goods are further exempt from import duty and integrated tax subject to the conditions specified therein. None of these provisions, however, has the effect of converting the said supplies into "exports of goods" within the meaning of Section 2(5) of the IGST Act, 2017. They operate on a different field. What they grant is an exemption from the levy of import duty (and, in the case of Notification No. 37/2017-Customs, from integrated tax on the import-leg) - they do not, and indeed cannot, alter the statutory definition of "export of goods" enacted by Parliament in the IGST Act. 5.15 The expression "export"....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e GST regime, of zero-rating under Section 16 of the IGST Act is available only to a supply that either qualifies as an "export of goods or services or both" or is made to an SEZ developer or unit for authorised operations. The supplies under consideration fall within neither limb. In the absence of either, the supplies cannot be treated as zero-rated supplies under Section 16 of the IGST Act, 2017. 5.18 We have given careful consideration to the applicant's reliance on Circular No. 113/32/2019-GST dated 11.10.2019 issued by the Central Board of Indirect Taxes and Customs. The said Circular addresses the GST treatment of certain supplies and is to be read in the context of the entries in the rate notifications and the scheme of the IGST Act. A Circular issued by the Board operates within the field permitted by the statute and cannot enlarge or alter the statutory definition of "export of goods" laid by Parliament in Section 2(5) of the IGST Act. The Circular does not, on its plain terms, declare that supplies of warehoused ship stores from a bonded warehouse to vessels stationed in India are "exports" within the meaning of Section 2(5) of the IGST Act. Even assuming, for the sak....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... with Section 7(2)(a) of the CGST Act, 2017. 5.19.4 The legal consequence that follows is dispositive. Where an activity or transaction is one specified in Schedule III, it is, by force of Section 7(2)(a), to be treated neither as a supply of goods nor as a supply of services. It is, in other words, lifted entirely out of the field of "supply", which is the foundational notion on which the GST levy under Section 9 of the CGST Act, 2017 / Section 5 of the IGST Act, 2017 rests. The question whether such an activity is "zero-rated" under Section 16 of the IGST Act does not arise at all, because zero-rating presupposes a supply; if there is no supply, there is nothing to rate at zero or at any other rate. 5.19.5 It is in this light that we are of the considered view that the applicant's endeavour to characterise the said transactions as "export sales / zero-rated supplies" is not legally sustainable. The transactions are, in law, not supplies at all for the purposes of the GST Act. They do not attract levy of GST. They simultaneously do not qualify for zero-rating, refund of unutilised input tax credit under Section 54 of the CGST Act read with Section 16(3) of the IGST Act, or a....