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2020 (5) TMI 604 - AAR - GSTPlace of supply - Levy of IGST - manufacture and supply of die to the foreign customer - export or not - location and time of supply - reverse charge mechanism (RCM) for import - HELD THAT - The applicant manufactures the Die as per the requirement and specifications given by the foreign buyer and using this die applicant manufacture and export the Aluminium and Zinc die Castings to the foreign buyer by retaining the Die with them till the completion of the export order or completion of Die life. However applicant raised the tax invoice for this die immediately after the manufacture in the name of overseas customer in foreign currency for receipt of payment though the die not physically moved out of India to the place outside India. Hence manufacture and supply of die to the foreign customer does not amounts to export as per section 2(5) of the IGST Act 2017. It is rightly admitted by the applicant that the tax invoice is raised after the manufacture of the Die in the name of the foreign customer in foreign currency for receipt of payment. The date of issue of tax invoice by the applicant is the time of supply of Die to the foreign customer as per section 12 of the CGST Act, 2017. Further on date of issue of tax invoice the die is with the applicant and it is not moved either by the applicant or by the foreign customer. Hence the place of supply of goods other than supply of goods imported into or exported from India shall be the location of such goods at the time of the delivery to the recipient as per clause (c) of sub section (1) of section 10 of the IGST Act 2017. Therefore the place of supply of die in this case is the location of the applicant. The location of the supplier of die and place of supply of the die to the foreign customer are one and the same i.e. location of the applicant and such being the case said transaction shall be treated as infra-State transaction as per sub section (1) of section 8 of the IGST Act 2017 and the applicant has to issue the CGST and SGST tax invoice to the foreign customer and liable to collect and pay the CGST and SGST tax. The applicant is an importer of the Aluminium casting and pressure die Casting component of Aluminium from Thailand. The Thailand supplier first manufacture die as per the requirement and specifications given by the applicant retained with them and used for the manufacture of the Aluminium casting and pressure die Casting component of Aluminium to the applicant. Thailand supplier raise the tax invoice in the name of the applicant though the die not physically imported by the applicant. Hence said transaction does not amounts to import as per section 2(10) of the IGST Act 2017 - However after the completion of the order or die life if applicant physically imports the Die from the place outside India to a place in India then the applicant liable to pay the IGST tax on reverse charge mechanism and claim the IGST tax paid as input tax credit if eligible. Further if the steel die belonging to the applicant is scrapped at the location of the overseas supplier without die coming to India then such transaction is a transaction occurring outside the taxable territory i.e. India and hence is not under the purview of GST.
Issues Involved:
1. Tax invoice procedure for steel dies manufactured by the applicant and invoiced to a foreign buyer without physical export. 2. GST liability procedure for steel dies manufactured by a foreign supplier and invoiced to the applicant without physical import. Issue-wise Detailed Analysis: 1. Tax Invoice Procedure for Steel Dies Manufactured by the Applicant and Invoiced to a Foreign Buyer Without Physical Export: The applicant, a manufacturer and exporter of Aluminium and Zinc die castings, raises tax invoices for steel dies in the name of the overseas customer in foreign currency, even though the dies are not physically exported. The applicant retains the steel dies until the completion of the export order or the die's life. The applicant sought clarification on whether to raise a tax invoice addressed to the foreign buyer, a self-invoice, or an invoice under the reverse charge mechanism, and the procedure to discharge GST liability. The judgment clarified that as per Section 2(5) of the IGST Act, 2017, the transaction does not qualify as an export since the goods are not taken out of India. The time of supply is determined by the date of issue of the tax invoice or the date of receipt of payment, whichever is earlier, as per Section 12 of the CGST Act, 2017. The place of supply, as per Section 10(1)(c) of the IGST Act, 2017, is the location of the goods at the time of delivery to the recipient, which in this case is the applicant's location. Therefore, the transaction is treated as an intra-State supply, and the applicant must issue a CGST and SGST tax invoice, collect and pay the CGST and SGST tax. If the steel die is scrapped at the applicant's end without moving out of the country, the applicant must issue an intra/interstate tax invoice and collect and pay the applicable tax as per the GST Act, 2017. 2. GST Liability Procedure for Steel Dies Manufactured by a Foreign Supplier and Invoiced to the Applicant Without Physical Import: The applicant also imports Aluminium casting and pressure die casting components from a Thailand supplier, who manufactures the die as per the applicant's specifications and retains it until the completion of the order or the die's life. The Thailand supplier raises a tax invoice in the applicant's name, even though the die is not physically imported. The applicant sought clarification on whether to account for the purchase commercial invoice and pay GST under the reverse charge mechanism and the procedure to discharge GST liability. The judgment clarified that the transaction does not qualify as an import as per Section 2(10) of the IGST Act, 2017, since the goods are not brought into India. However, if the applicant physically imports the die after the completion of the order or the die's life, they must pay IGST under the reverse charge mechanism and claim the IGST paid as input tax credit, subject to eligibility. If the steel die is scrapped at the overseas supplier's location without being imported to India, the transaction occurs outside the taxable territory and is not under the purview of the GST Acts. Ruling: 1. For the manufacture of dies by the applicant and invoiced to the recipient without moving the goods, the applicant must raise a tax invoice addressed to the foreign buyer, collect CGST and SGST, and discharge the liability. The applicant cannot claim the payment as input tax credit. If the steel die is scrapped at the applicant's end, an intra/interstate tax invoice must be issued, and applicable tax must be collected and paid. 2. For the manufacture of dies by the Thailand supplier, if the applicant physically imports the die to India, they must pay IGST under the reverse charge mechanism and claim the IGST paid as input tax credit, subject to conditions. If the steel die is scrapped at the overseas supplier's location without being imported to India, the transaction is outside the taxable territory and not under the purview of the GST Acts.
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