2024 (9) TMI 661 - AAR - GST

Zero-Rated Supplies as per Section 16 of IGST Act or not - Place of supply - outward supply of goods procured by the Applicant from an Indian company undergoing liquidation (M/s Lanco Kondapalli Power Limited) as per the Companies Act, 2013 (These goods are intended to be exported to Myanmar) - Whether the same can be exported under Zero-Rated supplies without payment of tax againstLetter of Undertaking (LUT)? HELD THAT - It is an undisputed fact that the supply involves movement of goods and therefore the place of supply would be the termination for deliver to the recipient. The applicant purchases from LANCO, Kondapalli and the goods are procured from India and delivered in the territory of India. Hence the place of supply is location of point where goods delivered to applicant i.e, premises of Lanco Kondapalli Powder Ltd, plant office IDA, Kondapalli, Ibrahimpatnam Mandal-521 228, Krishna District, A.P, India. It indicates that in the event the supplier located in India and the place of supply is within the territory of India. It is to mention that for determining the taxability of any transaction is to ascertain whether the transaction tantamount to supply in terms of the provisions of law. The term supply has been defined at Sec.7 of the CGST Act, 2017 - an establishment of a person in India and another establishment of the said person outside India are considered as establishments of distinct persons. In the instant case, the applicant is not having any GST registration in India. Hence, the transaction done by the applicant does not fall under the definition of export of goods. Hence, the related transactions shall not be considered as ZERO-RATED SUPPLY under the provisions of the GST Act, 2017.

Summary

Issues Involved:
1. Whether the outward supply of goods procured by the Applicant from an Indian company undergoing liquidation shall be treated as Zero-Rated Supplies as per Section 16 of IGST Act.
2. Whether the same can be exported under Zero-Rated supplies without payment of tax against Letter of Undertaking (LUT).

Issue-wise Detailed Analysis:

Issue 1: Zero-Rated Supplies under Section 16 of IGST Act
The applicant, a Singapore-based company not registered in India under GST, seeks to procure assets from an Indian company undergoing liquidation (M/s Lanco Kondapalli Power Limited) and export them to Myanmar. The applicant contends that this should be treated as Zero-Rated Supplies under Section 16 of the IGST Act, which defines zero-rated supply to include the export of goods or services. The applicant argues that since the assets will be taken out of India, this transaction qualifies as an export of goods.

The representation from Lanco Kondapalli Power Limited clarifies that the sale process will conclude in India upon issuance of the Sale Certificate by the Liquidator. The applicant will then be responsible for dismantling, transporting, and exporting the assets to Myanmar. The sale process, therefore, concludes in India, and the liquidator is not acting as an exporter.

The judgment notes that the delivery of goods occurs within the territory of India, making the place of supply the location where the goods are delivered to the applicant, which is the premises of Lanco Kondapalli Power Ltd. As the supplier is located in India and the place of supply is within India, the transaction does not qualify as an export under Section 2(5) of the IGST Act.

Further analysis under Section 2(6) of the IGST Act, which defines export of services, reveals that the applicant does not meet the conditions required for a transaction to be considered an export of services. Specifically, the applicant does not have a GST registration in India, and the transaction does not satisfy the conditions of export of services, such as the supplier being located in India and the place of supply being outside India.

Issue 2: Export under Zero-Rated Supplies without Payment of Tax against LUT
Given that the transaction does not qualify as an export of goods or services, it cannot be treated as a Zero-Rated Supply under Section 16 of the IGST Act. Consequently, the question of exporting under Zero-Rated supplies without payment of tax against a Letter of Undertaking (LUT) does not arise.

Ruling:
The supply covered under this application, subject to the agreement, facts, and information furnished by the Applicant, is neither exempted nor considered an export of goods/services. Therefore, the stated transaction is not treated as Zero-Rated Supplies. Consequently, the export without payment of tax against a Letter of Undertaking (LUT) for the said transaction does not arise.