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2023 (8) TMI 1299 - AAR - GSTBonded warehouse transaction covered under Schedule III of the CGST Act, 2017 r/w CGST Amendment Act, 2018 or not - transfer of title of goods by the Applicant to its customers or multiple transfers within the FTWZ - applicability of Integrated Tax (IGST) Circular No. 3/1/2018 dated 25.05.2018. HELD THAT - Free Trade Warehousing Zone is a Special Economic Zone wherein mainly trading and warehousing and other activities related thereto are carried on. It is a deemed foreign territory within the geography of India for the purpose of tariff and trade. The Special Economic Zones Act, 2005 and the Special Economic Zones Rules, 2006 are the legal framework for FTWZ. Instructions are also issued by the Ministry of Commerce Industries from time to time to clarify various operational aspects of FTWZ - paragraph 8(a) in the Schedule III is specific to the warehoused goods lying in the warehouses licensed under Customs Act, 1962. Whereas the transactions narrated in the application are in FTWG, which are warehouses governed under the provisions of SEZ Act, 2005 and not licensed under Customs Act, 1962. Therefore, the transactions in the FTWG will not be covered under Schedule III of CGST Act, 2017 read with CGST Amendment Act, 2018. Whether the Integrated Tax (IGST) Circular No. 3/1/2018 dated 25.05.2018 is applicable to the present factual situation? - HELD THAT - Circular No. 03/01/2018 - IGST, dated 25th May 2018 has been rescinded vide Circular No. 04/01/2019 -IGST, dated 01.02.2019, in view of the amendment made in Schedule III of the CGST TNGST Act, 2017, by inserting Paragraph No. 8(a), so as to provide that the supply of warehoused goods to any person before clearance for home consumption shall be neither a supply of goods nor a supply of service.
Issues Involved:
1. Whether the transfer of title of goods within the FTWZ constitutes a bonded warehouse transaction under Schedule III of the CGST Act, 2017. 2. Applicability of Integrated Tax (IGST) Circular No. 3/1/2018 to the present factual situation. Issue 1: Transfer of Title of Goods within FTWZ The applicant sought to determine if the transfer of title of goods to customers or multiple transfers within the Free Trade Warehousing Zone (FTWZ) would result in a bonded warehouse transaction covered under Schedule III of the CGST Act, 2017 r/w CGST Amendment Act, 2018. The applicant argued that FTWZ is a special category of Special Economic Zone (SEZ) and is equivalent to a bonded warehouse under the Customs Act, 1962. They contended that transfers within FTWZ before clearance for home consumption should fall under Schedule III of the CGST Act, 2017, thereby not attracting GST. The Central Jurisdiction Officer countered that FTWZ is not a warehouse licensed under the Customs Act, 1962. Therefore, the transactions within FTWZ are not covered under Schedule III of the CGST Act, 2017. Upon review, the Authority concluded that FTWZ is governed by the SEZ Act, 2005, and not licensed under the Customs Act, 1962. Consequently, transactions within FTWZ are not covered under Schedule III of the CGST Act, 2017. Ruling: The transfer of title of goods within the FTWZ is not covered under Schedule III of the CGST Act, 2017 r/w CGST Amendment Act, 2018. Issue 2: Applicability of Integrated Tax (IGST) Circular No. 3/1/2018The applicant sought to determine if Circular No. 3/1/2018 dated 25.05.2018 is applicable to the present situation. The applicant argued that the circular clarifies the applicability of IGST on goods supplied while being deposited in customs bonded warehouses, and hence should apply to FTWZ transactions. The Central Jurisdiction Officer stated that the circular is not applicable to FTWZ, as it is not a warehouse defined under the Customs Act, 1962. Upon review, the Authority noted that Circular No. 3/1/2018 was rescinded by Circular No. 04/01/2019 following amendments to Schedule III of the CGST Act, 2017. Ruling: As discussed in para 7.5.1, Circular No. 3/1/2018 is not applicable to the present factual situation.
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