2021 (12) TMI 1265 - AAR - GST

Levy of IGST - supply of imported goods on High Sea sale basis or supply of goods from FTWZ facilities by the Applicant to the Indian customers - input tax credit already taken will have to be reversed or not - discharge of obligation in terms of Sec 31 of the CGST Act, 2017 - whether the Applicant ought to obtain registration in the States of Maharashtra and Tamil Nadu (location of the FTWZ facilities) for sale of such goods from the FTWZ facilities belonging to the logistic service provider namely DHL? HELD THAT - The transactions proposed to be made by the applicant are covered by Entry 8 of Schedule III of CGST/SGST Acts inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019, i.e., supply of goods by the consignee to any other person, by endorsement of document of title of the goods, after the goods have been dispatched from the port of origin located outside India but before the clearance for home consumption; or supply of warehoused goods to any person before clearance for home consumption. And such transactions by virtue of Entry 8 of Schedule III do not attract tax under CGST or SGST or IGST Acts. Further, according to the explanation to section 17(3) of CGST Act inserted vide CGST (Amendment) Act 2018, w.e.f. 1-2-2019 all transactions falling under Schedule III except Entry 5 will not be considered as 'value of exempted supply for purpose of reversal of ITC of common input services. Therefore the value of the transaction referred will not form part of value of the exempt supply. The applicant directs the FTWZ warehouse keeper to deliver the goods to a customer chosen by the applicant. Under Section 10(1)(a) of the IGST Act the place of supply in such case shall be the location of goods at the time of which the movement of goods terminates for the delivery to the recipient - the applicant i.e. supplier in this case is situated at Hyderabad, Telangana State whereas the goods are delivered in Other States. That is the supplier of the goods and the place of supply of goods are in two different states. Therefore it is an inter-state supply. Hence the applicant need not obtain any registration in the Other State in order to effect such inter-state transactions.

Summary

Issues:
1. Determination of liability to IGST on supply of imported goods on High Sea Sale basis or from Free Trade Warehousing Zone (FTWZ).
2. Reversal of input tax credit if no IGST liability.
3. Qualification of invoice issuance from one office for supplies from FTWZ facilities.
4. Requirement of registration in states where FTWZ facilities are located.

Analysis:
1. The applicant sought clarification on the liability to IGST for supplying imported goods on High Sea Sale basis or from FTWZ. The Authority determined that such transactions fall under Schedule III of CGST/SGST Acts and do not attract tax under CGST, SGST, or IGST Acts. The value of these transactions is not considered as 'value of exempted supply,' as per the explanation to section 17(3) of CGST Act, thereby exempting them from ITC reversal.

2. In case of no IGST liability, the issue of reversing input tax credit was raised. The Authority ruled that no reversal of ITC is required for inputs, input services, and capital goods used for the aforementioned supplies, as they are not considered exempt supplies under Schedule III, except for Entry 5.

3. The applicant inquired about issuing invoices from their Hyderabad office for supplies from FTWZ facilities in Mumbai and Chennai. The Authority clarified that the place of supply is where the goods are located at the time of delivery to the recipient, making it an inter-state supply. Hence, the applicant does not need registration in other states to carry out such transactions.

4. Lastly, the question of obtaining registration in Maharashtra and Tamil Nadu, where the FTWZ facilities are situated, was raised. The Authority reiterated that registration in those states is not necessary as the supplier's location and the place of supply are in different states, constituting an inter-state supply, eliminating the need for additional registrations.

In conclusion, the Authority ruled that there is no liability to IGST on the mentioned transactions, no reversal of ITC is required, invoice issuance from one office suffices for inter-state supplies, and registration in states with FTWZ facilities is unnecessary due to the nature of the transactions.