2022 (7) TMI 601 - AAR - GST

Maintainability of Advance Ruling application - Classification of supply - supply of goods or supply of services - supply of components of Pneumatic Conveying system by the applicant to its customers on High Sea Sales basis - place of supply - entry 8 to Schedule III of CGST Act - HELD THAT - It is found that CGST Act, UPGST Act and the IGST Act do not define the term high seas. A high sea sale is a sale of goods by a consignee, named in the relevant bill of lading, to another buyer while the goods are en route to their eventual destination. A high sea sale can be made any time after the vessel has crossed the territorial waters of the exporting country but before it enters the territorial waters of the importing country. The taxability on High Sea Sales requires the determination of occurrence of High Sea Sales. As such, the import as well as High Sea Sales is determined on the basis of 'place of supply'. The 'place of supply' is not covered by Section 97(2) of the CGST Act, 2017 at all. So, the ruling on matters concerning 'place of supply' is outside the purview of the Authority for Advance Ruling. The current application is not covered within the scope of Section 97 of the CGST Act, 2017 as such the same is not covered under the ambit of Authority for Advance Ruling. As the questions raised do not fall within the mandate of Authority for Advance Ruling, the application is therefore disposed of as such.

Summary

Issues involved:
1. Whether supply of components of Pneumatic Conveying system on High Sea Sales basis constitutes supply of goods or services as per Schedule III of CGST Act.

Analysis:
1. The applicant, engaged in design and supply of Pneumatic Conveying Systems (PCS), sought an advance ruling on the tax treatment of supplying components on High Sea Sales basis.
2. The applicant argued that the sale of imported components on High Sea Sales basis falls under Entry 8(b) of Schedule III of the CGST Act and is not considered a supply of goods or services under GST.
3. The Jurisdictional GST Officer supported the applicant's view, stating that High Sea Sales transactions are covered by Entry 8(b) of Schedule III, subject to the payment of import duties and IGST by the Indian customers.
4. The Authority for Advance Ruling clarified that questions falling under Section 97(2) of the CGST Act are eligible for advance ruling, and the issue of High Sea Sales does not fall within the purview of the Authority.
5. The ruling highlighted that the determination of import and High Sea Sales falls under Customs domain, governed by the Customs Tariff Act, 1975, and the decision of the GST council regarding the levy of IGST on High Sea Sales of imported goods.
6. Consequently, the Authority concluded that the application does not fall within the scope of Section 97 of the CGST Act and is not covered by the Authority for Advance Ruling, thereby disposing of the application.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved, the arguments presented by the applicant, the views of the Jurisdictional GST Officer, and the final ruling by the Authority for Advance Ruling, emphasizing the legal framework and provisions governing High Sea Sales transactions under the GST regime.