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2025 (4) TMI 222 - AAR - GSTSupply of goods or not - goods supplied by the applicant who became a victim of fraud without receiving consideration - section 21 under the IGST Act - HELD THAT - Factually it is not disputed that a supply has been done by the applicant that the goods were removed which in terms of the FIR have also been received at the destination. The applicant s averment is that since the entire transaction emanated out of a fraudulent/bogus order it goes out of the ambit of supply. An element of fraud may vitiate a contract but how it would enable the applicant to move out of the ambit of the term supply as defined under section 7 is neither explained nor forthcoming. The goods supplied by the applicant will be considered as supply of goods in terms of section 20 of the IGST Act 2017 read with section 12 and 7 of the CGST Act 2017.
ISSUES PRESENTED and CONSIDERED
The core legal question considered in this judgment is whether the goods supplied by the applicant, who became a victim of fraud without receiving consideration, could be considered as a supply of goods under the provisions of Section 21 of the Integrated Goods and Services Tax (IGST) Act, 2017. ISSUE-WISE DETAILED ANALYSIS Relevant Legal Framework and Precedents The analysis primarily involves the interpretation of the IGST Act, 2017, particularly Section 21, which concerns the import of services and its applicability to the supply of goods. Additionally, the provisions of the Central Goods and Services Tax (CGST) Act, 2017, specifically Section 12, which determines the time of supply of goods, and Section 7, which defines the scope of supply, are pertinent to this case. Court's Interpretation and Reasoning The Tribunal noted that Section 21 of the IGST Act pertains to the import of services and is not directly applicable to the supply of goods. The question posed by the applicant was deemed vaguely framed, as it attempted to apply a provision concerning services to a transaction involving goods. Further, the Tribunal emphasized that under the GST framework, the levy is on the supply of goods and services, not on the sale. Therefore, the definition of "supply" under Section 7 of the CGST Act, which includes various forms of transactions such as sale, transfer, barter, and exchange, was crucial in determining the applicability of GST to the applicant's transaction. Key Evidence and Findings The Tribunal considered the fact that the applicant had issued invoices for the goods supplied, which were dispatched and received at the destination. The issuance of invoices established the point of taxation as per Section 12 of the CGST Act, which states that the time of supply of goods is the earlier of the date of invoice issuance or the date of payment receipt. Application of Law to Facts The Tribunal applied the provisions of Section 12 of the CGST Act to determine that the supply of goods occurred when the invoices were issued. Despite the fraudulent nature of the order, the issuance of invoices constituted a supply under the GST framework. Treatment of Competing Arguments The applicant argued that the fraudulent nature of the transaction invalidated the contract under the Sales of Goods Act, 1930, and therefore, it should not be considered a supply under the GST Act. The Tribunal rejected this argument, clarifying that the GST Act focuses on the concept of "supply" rather than "sale," and the fraudulent nature of the order did not remove the transaction from the ambit of supply as defined under Section 7 of the CGST Act. Conclusions The Tribunal concluded that the goods supplied by the applicant are considered a supply of goods under Section 20 of the IGST Act, 2017, read with Sections 12 and 7 of the CGST Act, 2017. The fraudulent nature of the order did not negate the occurrence of a supply for GST purposes. SIGNIFICANT HOLDINGS The Tribunal held that the goods supplied by the applicant are to be considered as a supply of goods in terms of the relevant provisions of the IGST and CGST Acts. This establishes the principle that the issuance of an invoice constitutes a supply under GST, regardless of the fraudulent nature of the underlying transaction.
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