2018 (9) TMI 1342 - AAR - GST

Input tax credit - railway freight for transportation of the goods from the its Haldia Refinery to the its export warehouse at Raxaul - export or not - distinct persons. Whether or not the products transported and supplied by the Applicant are non- GST products , non-taxable supplies exempt supplies or zero rated supply of goods ? Whether the transportation to Raxaul warehouse is to be considered to be for export of supply to Nepal or transfer of goods to Indian Oil Corporation s Bihar Unit for ultimate export to Nepal? Held that - The exporter, registered as export warehouse, can store goods that may be diverted for home consumption. As the nature of clearance, whether for home consumption or export, is finally determined only at the time of removal from the export warehouse, the Excise Authority shifts the incidence of duty to the time of clearance from the export warehouse. Duty free removal from the factory is, therefore, allowed under prescribed procedure for goods being moved to the export warehouse - It is, therefore, not correct that submission of endorsed copies of ARE-3 to the concerned Excise Authority at Haldia, where the Applicant s factory is located, is evidence of export. It is evidence of re-warehousing of the goods cleared duty free from the factory. Actual evidence of export is ARE-1, endorsed by the Customs Authority, submitted before the appropriate Excise Authority at the export warehouse, failing which the exporter is liable to pay the duty with interest. Removal without paying duty (under Bond) from Haldia Refinery to the export warehouse at Raxaul, therefore, does not as such amount to export. The goods re-warehoused at Raxaul Depot are not moved from Haldia under specific export order and can be either cleared for home consumption or exported. It is, therefore, far from a mere transit point, but the point of storing and final clearance. The final clearance being made from the export warehouse at Raxaul, it is the Bihar Unit that is responsible for export or payment of duty if diverted to home consumption - Clearly, the transportation from Haldia to the export warehouse at Raxaul is no measure of actual export. Input tax credit - export or not - distinct persons - Held that - Transfer of ATF and other non-taxable supplies from Haldia Refinery to Raxaul Depot are not, therefore, export of goods in terms of section 2(5) of the IGST Act, but exempted supplies from the West Bengal Unit to the Bihar Unit of the Applicant, who are distinct persons in terms of section 25(4) of the GST Act - Sections 16(1)(a) and 16(2) of the IGST Act are, therefore, not applicable. The Applicant cannot claim credit of the GST paid on the input services like railway freight on ATF and other non-taxable supplies from West Bengal to his Bihar Unit. Ruling - ATF and other non-taxable supplies from the Applicant s Haldia Refinery to the export warehouse of Indian Oil Corporation Ltd at Raxaul are not zero rated supplies. They are non-taxable supplies from the Applicant to the Bihar Unit of Indian Oil Corporation Ltd, who are distinct persons in terms of section 25(4) of the GST Act. The Applicant cannot claim credit of the GST paid on the railway freight for transportation of ATF and other non-taxable supplies from West Bengal to the Bihar Unit.

Summary

Issues Involved:
1. Classification of the products transported and supplied by the Applicant.
2. Nature of transportation to Raxaul warehouse – whether it is for export to Nepal or a transfer to the Bihar Unit for ultimate export.

Detailed Analysis:

1. Classification of Products:
The judgment discusses whether the products transported and supplied by the Applicant are "non-GST products," "non-taxable supplies," "exempt supplies," or "zero-rated supply of goods."

Key Points:
- Petroleum products like HSD, ATF, and Motor Spirit are non-taxable supplies under the GST Act, as GST is not levied on these products until a date notified by the GST Council.
- Non-taxable supplies are included in the turnover of the Applicant, who is a taxable person under the GST Act.

Relevant Sections:
- Section 2(78) of the GST Act defines non-taxable supplies.
- Section 2(47) includes non-taxable supplies under exempt supplies.
- Section 2(112) defines turnover in State, including exempt supplies.

2. Nature of Transportation:
The judgment examines whether the transportation of goods to the Raxaul warehouse is for export to Nepal or a stock transfer to the Bihar Unit.

Key Points:
- The Applicant argues that the transportation is for export to Nepal, claiming it as zero-rated supply under Section 16(1)(a) of the IGST Act.
- The officer concerned argues that it is a stock transfer to the Bihar Unit, making it an exempt supply under Section 17(2) of the GST Act, and thus, input tax credit is not admissible.

Relevant Sections:
- Section 5(1) of the CST Act defines export of goods.
- Section 2(5) of the IGST Act defines export as taking goods out of India.
- Section 10(1)(a) of the IGST Act determines the place of supply.

Judgment Analysis:
- The Agreement with Nepal Oil Corporation (NOC) is an umbrella agreement, not a specific export order.
- The Raxaul Depot is a supply point, not merely a transit point, and the goods can be diverted for home consumption.
- The movement from Haldia to Raxaul is not inextricably linked to export to Nepal, breaking the link and making them separate supplies.
- The goods are stored and finally cleared from the export warehouse at Raxaul, making the Bihar Unit responsible for export or duty payment if diverted for home consumption.

Conclusion:
- The goods transported from Haldia Refinery to Raxaul Depot are not zero-rated supplies but exempt supplies from the West Bengal Unit to the Bihar Unit.
- The Applicant cannot claim credit of the GST paid on the railway freight for transportation of these non-taxable supplies.

Ruling:
- ATF and other non-taxable supplies from the Applicant’s Haldia Refinery to the export warehouse at Raxaul are non-taxable supplies.
- The Applicant cannot claim credit of the GST paid on the railway freight for transportation from West Bengal to the Bihar Unit.

This ruling is valid subject to the provisions under Section 103(2) until and unless declared void under Section 104(1) of the GST Act.