Section - 003 - Meaning and scope of supply

MODEL GST LAW - GOODS AND SERVICES TAX ACT, 2016 - Draft June 2016

As per Section 3(1)(b) importation of services for any purpose, have included within the meaning and scope of the term "Supply"

It is for the obvious reason that, importation of goods are subject to Customs Duty since the same would be crossing the Custom Borders Physically, but services may not be subject to crossing of customs barriers, GST will be levied on reverse charge on such services.

But, since importation of services would be subject to GST under the reverse charge method, what will happen to the goods brought to India under the terms and agreement of right to use. Whether such importation would be subject to Customs and GST both. There may be various other circumstances where goods are brought into India through custom borders, but which as per the GST law will be treated as supply services.

Here, we understand that, as it cannot be the intention of the Government to levy Customs duty and GST under reverse charge simultaneously on the same transaction, we have to wait for more clarification and details.

At present under the Customs Laws, temporary import of goods for Repair, for delay in Exhibitions, for Scientific research etc for different periods and for different conditions, are exempt from duty of customs. However, scope of such exemptions are limited and restricted.

Now, will there be a new exemption under Customs that where import of services are falling with the scope of section 3(1)(a) of GST law, the same will be exempt from the duties of customs. On the contrary, there may be an exemption under the GST laws so that where import of services have suffered duties of Customs, the same will be exempt from GST on importation from the reverse charge mechanism.

Exemption from Reverse Charge

Further, asper section 9(3)(c), import of services for personal use upto a specified value be allowed to imported without levying GST. Though the scope of Section 9(3)(c) covers only taxable person. Therefore, the question arises whether non-taxable person will be allowed to avail the similar exemption? The answer according to the opinion of the author is that, where Government would grant exemption to taxable person, similar exemption will be granted to non-taxable persons. And if that is so, what was the purpose to create two exemption one for taxable and one for non-taxable person. A fine tuning is must.