2019 (7) TMI 848 - AAR - GST

Levy of IGST - Job-work - import of iron ore for conversion into pellets and export the resultant product (Iron ore pellets) back to the same supplier - import duty is not applicable in view of the exemption under General Exemption No. 66 (Exemption Notification No. 32/97-Cus dated 01 st April, 1997) - HELD THAT - In the instant case, goods are temporarily imported into India for the process of conversion into pellets and arc exported after such process, the exclusion clause provided under Section 13(3) of the IGST Act, 2017 is applicable. Hence the place of supply of service is determined as per Section 13(2) of the IGST Act, 2017 which is the location of the recipient of the service i.e. outside India. Since the place of supply of service is outside India, condition (iii) under Section 2(6) of the IGST Act, 2017 is also fulfilled. Hence the service provided by the applicant falls within the definition of export of service as defined under Section 2(6) of the IGST Act, 2017. Whether the applicant is eligible to take refund of the unutilized input tax credit or not is determined as per the provisions of Section 16 of the IGST Act, 2017 and Section 54 of the CGST Act, 2017? - HELD THAT - The Government of India vide Notification No. 1-2016/Customs dated 04th Jan 2016 reduced the rate of export duty on Iron Ore Pellets from 5% to Nil. It is a settled law that NIL rate of tax is also a rate of tax. Since the goods exported are covered under Second Schedule of the Export Tariff appended to the Customs Tariff Act, 1975 the same goods are to be considered as subjected to tax - the exclusion clause provided under Section 54(3)(ii) is applicable in the instant case - the applicant is not eligible for the refund of unutilized input tax credit.

Summary

Issues:
1. Applicability of IGST on import of iron ore for conversion into pellets and export of resultant product.
2. Liability of the applicant to pay IGST as the consignee of imported iron ore.
3. Eligibility of the applicant to avail input tax credit for IGST paid on import.
4. Claiming refund of unutilized input tax credit on export of services.

Analysis:

Issue 1:
The applicant sought clarification on whether IGST at 5% is applicable on importing iron ore for conversion into pellets and exporting the resultant product back to the same supplier. The Authority determined that the applicant is liable to pay IGST on the imported iron ore as per the provisions of the IGST Act, 2017. The Authority clarified that the exemption notification referred to by the applicant does not fall under the jurisdiction of the relevant Acts.

Issue 2:
Regarding the liability to pay IGST as the consignee of the imported iron ore, the Authority stated that the applicant is indeed liable to pay IGST as per the relevant provisions of the Acts.

Issue 3:
The applicant inquired about availing input tax credit for the IGST paid on import. The Authority confirmed that as the imported goods are used in the furtherance of business, the applicant is eligible to claim input tax credit for the IGST paid on the import of iron ore.

Issue 4:
The applicant also questioned the possibility of claiming a refund of unutilized input tax credit on export of services. The Authority explained that the applicant is not eligible for a refund of unutilized input tax credit based on the provisions of the Acts, specifically citing the exclusion clause under Section 54(3)(ii) of the CGST Act.

In conclusion, the ruling under Section 98 of the CGST/GGST Act, 2017 was as follows:
1. The applicant is liable to pay IGST on the import of iron ore.
2. The applicant can avail input tax credit for the IGST paid on import.
3. The applicant is not eligible for a refund of unutilized input tax credit on export of goods or services as per the relevant provisions of the Acts.