9911796707
TMI Blog2018 (12) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... s similar to selling of goods on High Seas Sale since in both the cases the goods purchased do not cross the customs frontiers of India. The supply of goods imported into the territory of India till they cross the customs frontier shall be treated as supply of goods in the course of inter-state trade or commerce - there is no doubt that the goods of the applicant would be imported goods if they are brought from outside the country into India and it is clear that when the said goods are delivered/supplied from a place outside India to a place outside India, these goods have not crossed the customs frontiers of India Thus clearly the transaction in these goods are in the nature of inter-state supply as per Section 7(2) of the IGST Act. The subject transaction in question is in the nature of inter-state sales, the liability to tax in respect of these goods would be as per Section 5 of the IGST Act - the integrated tax on goods imported into India is to be levied and collected in accordance with Section 3 of the Customs Tariff Act, 1975 and Section 12 of the Customs Act, 1962 and the same is to be levied and collected at the time of import into India. The goods are considered to be imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the "GST Act". 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS AS PROVIDED IN ANNEXURE 1 Brief Background of the Transaction: * Jotun Group is a leading supplier of paints and powder coatings. The affiliates of the group has worldwide presence. The Applicant i.e. Jotun India Private Limited, being one of the Group entities, is a supplier, exporter and manufacturer of paints and powder coatings. The Applicant supplies paints and coatings that are specially designed for unique conditions to the various customers. * Broadly, the paints supplied by the applicant can be categorized in Solvent based paints and Water based paints. One of the major supplies by Applicant are marine paints. Composition of such marine paint being manufactured by Applicant makes it suitable for ships during building stage and even during maintenance. Thus the applicant is involved in supplying the said goods for the vessel at the time o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to deliberate on the question being sought, it is pertinent to analyse applicability of provisions of IGST Act, 2017 in terms of nature of the transaction. A2. Section 7 of IGST Act, 2017, makes provision to treat the transactions as 'interstate supply'. In this regard, the Applicant hereby wishes to submit following provision of IGST Act, 2017 which would be relevant in analysing the needful: Section 7(5) of IGST Act, 2017 which reads as under: (5) Supply of goods or services or both, - (a) when the supplier is located in India and the place of supply is outside India; (b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or (c) in the taxable territory, not being an intra-State Supply and not covered elsewhere in this section, shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce.' ...(Emphasis provided A3. Basis the above emphasis, supply of any goods or services where * The supplier located in India and * Place of such supply is outside India would be considered as inter-state supply. In this regard, it would be very crucial to evaluate meaning of the terms 'Supplier' as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place of supply in such case would be location at which goods are taken on board i.e. place outside India. A7. Consequently it appears that the above transaction would be considered as 'inter-state supply' in terms of section 7(5)(a) where supplier is located in India and place of supply is outside India. A8. However, the Applicant intends to draw your kind attention to section 1(2) of IGST Act which determines the extent of applicability of IGST Act. As per the said section IGST Act extends to whole of India except State of Jammu and Kashmir. Further 'India' has been defined in section 2(56) of CGST Act read with section 2(24) of IGST Act to mean 'the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and sub-soil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976, and the air space above its territory and territorial waters;' A9. Hence, Applicant wishes to contend that scope of IGST Act is limited to territorial jurisdiction to which it extends. Thus, IGST levy can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation.-For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2)…………………….. (3)…………………….. (4)…………………….. (5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. B3. On plain reading of the above provisions, it can be seen that, (a) Basis clause (5) of article 269-A, the Parliament may, by law, formulate the principles for determining the place of supply and when a supply of goods or of services or both takes place in the course of inter-state trade or commerce. The power given is to formulate principles to decide 'when a supply takes place in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and extent of its applicability to determine levy. Merely because a transaction gets covered under section 7(5)(a) would not empower Central Government to levy and collect IGST on the said transaction, unless there is express provision to that extent and unless it is covered under territorial jurisdiction of IGST Act. C3. Applicant wishes to draw your kind attention to proviso to section 8 which states that following supply of goods shall not be treated as intra-State supply - (i) Supply of goods to or by a Special Economic Zone developer or a Special Economic Zone unit; (ii) Goods imported into territory of India till they cross the Customs frontiers of India; (iii) Supplies made to a tourist referred to in section 15 The above mentioned list has been excluded from ambit of 'intra-State supply' so that administrative and jurisdictional powers would vest with Central Government and not State Government. C4. In view of above submission, Applicant contends that section 7(5)(a) should be read only to exclude such transactions from the purview of State Government and said section should not be considered as piece of legislation which is empowering Central Government to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the goods are consumed/ used outside India. D9. Under erstwhile Service Tax legislation, if the place of provision of service was outside India but other conditions of 'Export' were not getting fulfilled then the export linked benefits were not made available to such services. However, at the same time, they would still not be liable to service tax. Accordingly, Applicant pleads that even if transaction in question may not be considered as 'Export of goods', the same should be considered as not liable to IGST even though any benefits of 'Zero rated supply may not be granted. E. Place of supply of Service specifically covers case where recipient is located outside India, unlike Place of supply of Goods E1. Applicant submits that Section 12 and Section 13 of IGST Act delineates place of supply of service in cases where location of both supplier and recipient is in India as well as cases where either of the party is located outside India. However in case of goods, place of supply is to be determined in terms of section 10 or 11 of IGST Act which provides for determining place of Supply separately for domestic supplies and for export/ import transactions. E2. Your kind atten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of goods is outside India the levy should not arise in India in the absence of specific provision in this regard. F. Circular issued for High Sea Sales will be applicable to the transaction under consideration F1. Under Circular No 33/2017 - Customs dated August 01, 2017, a clarity was provided as regards tax implications on High Seas Sales. Based on the same, it was decided that levy of IGST on High Seas transactions of imported goods, shall be only at the time of importation i.e. when import declarations are filed before Customs authorities for clearance purposes. Accordingly, IGST liability arising on such transactions would be disposed of only once, by the ultimate importer who clears the goods for home consumption. Consequently first leg of High Seas Sales, where goods are supplied out of India, would be exempted from payment of IGST. F2. The relevant para of the circular is reproduced below: 4. GST Council has deliberated on the levy of Integrated Goods and Services Tax on high sea sales in the case of imported goods. The council has decided that IGST on high sea sale (s) transactions of imported goods, whether one or multiple, shall be levied and collected only at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven if the transaction is made taxable in GST, the place of supply, in accordance with section or 10(1)(e) of IGST Act, 2017, is outside India. There is no mechanism in the GST returns to report the transaction in GSTR-1 mentioning the place of supply to be a place outside India while levying IGST on the same. G3. Accordingly, the collection mechanism of such IGST is unclear and consequently it is unclear as to whether only Central Government or both Central and State Government would receive this revenue. G4. In the absence of ambiguity around collection mechanism and revenue Sharing of Such GST, it appears that intention of legislatures was never to levy and collect IGST on such type of transaction. H. The transaction was not taxable under erstwhile indirect tax laws and hence, the same should not be liable to GST H1. GST has been introduced with a view to subsume majority of indirect taxes applicable in India like service tax, central excise, entry tax, VAT, GST etc. The intention of the legislator has not been to tax the transactions which were not taxed under existing laws but to have a uniform tax regime throughout the country. H2. For the transaction under consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to tax under GST regime. I. The said transaction is kept outside the purview of United Kingdom VAT Legislation I1. Value Added Tax (VAT) was introduced in the UK on April 1, 1973. Although Value Added Tax Act 1994 (VATA) provides the main framework of the tax, the detailed interpretation of the same are found in statutory instruments either in the form of orders made by Treasury or Regulations made by Her Majesty's Revenue and Customs (HNIRC). HMRC has published several Notices and Leaflets affecting law. Though these Notices are not part of the law but they clarify HMRCs interpretation of the law. I2. The Applicant would like to draw your attention to the VAT provisions laid in United Kingdom as regards out to out supplies. Following is the extract of such germane provisions: Section 4(1) of VATA: Scope of VAT on taxable supplies VAT shall be charged on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. Section 7(2) of VATA: Place of supply Subject to the following provisions of this section, if the supply of any goods does not involve their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or instalments, the registered person shall be entitled to take credit upon receipt of the last lot or instalment: Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Limited = 2018 (7) TMI 53 - AUTHORITY FOR ADVANCE RULING - MAHARASHTRA (Annexure 1), it was observed that the goods which are sold on high seas sale basis are non-taxable supply as no tax is leviable on them till the time of customs clearance in accordance with and compliance of section 12 of the Customs Act, 1962 and section 3 of Customs Tariff Act, 1975. Further the authorities were of the view that the tax position on the said transaction was also confirmed under circular no 3/1/2018 - IGST dated 25.5.2018 issued by Central Board of indirect Taxes and Customs (Annexure 2). A.2. Under the said circular, a clarity was provided as regards to tax implication on clearance of warehouse goods for home consumption. Based on the same, it was clarified that integrated tax shall be levied and collected at the time of final clearance of the warehoused goods for home consumption i.e., at the time of filing the ex-bond bill of entry. Accordingly, IGST liability would be levied and collected only once, i.e at the time when the warehoused goods are cleared from the customs bonded warehouse. A.3. The relevant para of the circular is reproduced below - 6. It is therefore, clarified that inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislation. He has quoted Section 7(5) of IGST Act, 2017.Emphasis in this provision is given on supplier located in India and place of such supply is outside of India would be considered as interstate supply. The applicant has taken the reference of term Supplier'. But if we go through the Section 20 of IGST Act, 2017 it doesn't covers definition of Supplier. The applicant has taken the reference of Section 10 of IGST Act, 2017. In the specific type of transaction mentioned in the application the applicant is challenging the jurisdiction of levy of IGST by taking reference of Section 2(56) of CGST Act, 2017 read with Section 2(24) IGST Act, 201% The applicant contends that the provisions of GST are travelling beyond it power by stating that for the transaction under question where the goods are laying out side of India i.e. in Norway. The place of supply shall be outside India. But Section 7(5) (a) of IGST Act, 2017 is self-explanatory an IGST on this transaction will be applicable. The applicant has also taken several references of constitutional provisions. The applicant says that interstate sale is not defined in constitution so natural meaning should be taken but in the IGST A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly for business purposes. 3) Input Tax Credit can be claimed on taxable & zero-rated supplies (exports). 4) If the constitution of registered taxable person changes due to sale, merger or transfer of business, then unused ITC shall be transferred to the sold, merged or transferred business. 5) To claim ITC, you need supporting documents like tax invoice, debit note, supplementary invoice, etc. 6) You can claim Input Tax Credit if you have actually received some goods & services. 7) To claim ITC the Input Tax must be paid through electronic cash ledger or electronic credit ledger. 8) It is mandatory to file all the applicable GST returns. 9) For goods which are received in lots, you can claim ITC only after you have received the final lot. 04. HEARING The case was scheduled for 27.06.2018 for Preliminary hearing but At the request of Sh. Nitin S. Shah, Advocate , Who was having another hearing on 26.06.2018 the Preliminary hearing was preponed and held on dt. 26.06.2018 With respect to admission or rejection of present application and Sh. Nitin S. Shah, Advocate duly authorized appeared and requested for admission of application as per details in their appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. iii. The provisions of section 7(5)(a) of the IGST Act, 2018, are ultra vires the Constitution of India law (reasons mentioned in their submissions). We do not feel the need to discuss the above aspects (i) to (iii) since the same is not within the purview and scope of Advance Ruling as per the provisions of the CGST Act, 2018 and the SGST Act, 2018. In view of the submissions made by the applicant we find that it is clear that the applicant would be purchasing goods from Jotun Norway on the bas1S of purchase orders received from their customer in India and the said goods would be delivered by JN from their Norway place to the ship/vessel of the customer which is also in non-taxable territory i.e. outside India. The order received by the applicant from their customer in India and the order placed to Jotun, Norway are back to back orders. Thus it is seen that the goods are delivered by JN from a place outside the taxable territory of India to the customer's vessel which is also the taxable territory of India. This transaction is similar to selling of goods on High Seas Sale since in both the cases the goods purchased do not cross the customs frontiers of India. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 7(2) of the IGST Act. Now when we are clear that the subject transaction in question is in the nature of inter-state sales, the liability to tax in respect of these goods would be as per Section 5 of the IGST Act which reads as under: CHAPTER III LEVY AND COLLECTION OF TAX Levy and collection 5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-state supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person: provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962. (2) …&h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from tax under section 11, or under section 6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply". Further we find that Section 2(78) of the CGST Act defines non-taxable supply which is as under:- "As per Section 2(78) of the Central Goods and Services Tax (CGST) Act, 2017, "non-taxable supply" means a supply of goods or services or both which is not leviable to tax under this Act or under the Integrated Goods and Services Tax Act". Thus it is very clear that the goods sold in the subject transaction are non-taxable supply as no tax is leviable on them till the time of customs clearance in accordance with and compliance of Section 12 of the Customs Act, 1962 and Section 3 of the Customs Tariff act, 1975. We find that the above legal position is further reiterated and confirmed by Circular No. 3/1/ 2018-IGST dated 25.05.2018 issued by the Central Board of Indirect Taxes and Customs, GST Policy Wing. 05.In view Of the extensive deliberations as held hereinabove, we pass an order as follows : ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA- 24/2018-19/B-75 Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
