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TMI Blog2020 (7) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Services Tax Act, 2017, the supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. As per Section 2(4) of the Integrated Goods and Services Tax (IGST) Act, 2017, read with Section 2(11) of the Customs Act, 1962, customs frontiers of India means the limits of a customs area viz. the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities - It is a settled legal proposition that once the goods imported are cleared by the Customs authorities, all the provisions of the Customs Law (relates to imported goods) ceases to be applicable or extendable to such goods. It is therefore, clear that the activity of import of drill bits by the Applicant is a distinct activity of supply of goods in the course of inter-state trade or commerce. The post import activity of the Applicant is therefore, clearly falls within the scope of inclusive portion of expression supply under Section-7(a) of the Central Goods and Services Act, 2017. Depending upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Ruling on the following issues, as mentioned below. 4. Question raised before the Authority: The applicant filed the present application seeking a ruling from this Authority on the following issues:- a. Whether the import of drill bits for supply to ONGC at its location in India on consumption basis involves two supplies namely, - Import into India of drill bits; and - Indigenous movement from the port of import to ONGC s location. b. If two supplies are involved in the abovementioned transaction then whether two Essentiality Certificates ( EC ) are required to be issued i.e. - one for import of drill bits into India under serial no. 404 of Notification No. 50/2017-Customs, dated 30th June 2017; and - another for indigenous movement under Notification No. 3/2017-Central Tax (Rate), dated 28th June 2017 respectively. c. If answer to (a) above is no then whether the supply of drill bits to ONGC in India will be covered by serial no. 404 of Notification No. 50/2017-Customs dated 30th June 2017 (i.e. under single EC) and no two separate ECs are required. On Verification of basic information of the applicant, it is observed that the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are delivered to the buyer on approval or on sale or return or other similar terms, the property therein passes to the buyer,- (a) when he signifies his approval or acceptance to the seller or does anu other act adopting the transaction : (b) if he does not signify his approval or acceptance to the seller but retains the goods without giving notice of rejection , then, if a time has been fixed for the return of the goods, on the expiration of such time, and, if no time has been fixed, on the expiration of a reasonable time. 6.3.2 In view of the above provision, it is submitted that in case of a sale on approval basis, there is no sale until the buyer has either signified his approval (either expressly or by dealing with the goods as owner) or kept the goods until the lapse of prescribed time or reasonable time. In the instant case, the Applicant delivers the drill bits at ONGC s location and such drill bits are stored at ONGC s location after inspecting the same. Further, the invoicing and payment is done when the said goods are consumed which signifies that property in the goods has passed. When consumption is not done, payment can be released if the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Act or the contract mentioned in the non-obstante clause. This means, in spite of any other provision of the Act or any other specific Act mentioned in the non-obstante clause or any contract or document mentioned, the enactment following it will have its full operation or that the provisions embraced in the non-obstante clause would not be an impediment for an operation of the enactment. [Ref: Chandavarkar Sita Ratna Rao Vs Ashalata.S.Guram [1987 AIR 117 SC = 1986 (9) TMI 405 - SUPREME COURT ] 6.4.4 Accordingly, as Section 31(7) would clearly override the default provisions in relation to invoicing where there is a sale on approval or return, it would be pertinent to determine what constitutes Goods sent on approval or on sale or return as that would be relevant to determine the time of supply of drill bits, and hence the point of time when liability to pay tax arises. 6.5 In view of the above, it is submitted that the applicant raises an invoice at the time of consumption of drill bits or on expiry of 6 months from the date of removal, whichever is earlier, in terms of Section 31 of CGST Act. Given the above background and analysis of the positions adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. 6.7 In terms of the foregoing, it is submitted that apart from the levy of GST on intrastate and inter-State supplies of goods within India, in relation to imports of goods into India, the taxing event is that of import , and the IGST thereon is levied and collected in terms of the Customs Tariff Act, 1975. 6.8 Section 2(23) of the Customs Act, 1962 ( Customs Act ) defines import as:- (23) import , with its grammatical variations and cognate expressions, means bringing into India from a place outside India; This definition is also reflected at Section 2(10) of the IGST Act. 6.9 The term India has been defined in Section 2(27) of Customs Act as: (27) India includes the territorial waters of India; Thus, as per Section (27) of the Customs Act, India would include the territorial waters of India for the purpose of the Customs Act. 6.10 In view of the above definition, it is submitted that the term imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dents under Customs law and Sales Tax law, the following points emerge:- a. Import , as defined under the Customs Act, means bringing goods into India i.e. into the territorial waters of India; b. The import is completed when the goods become part of the mass of goods within the country. I Ref: Garden Silk Mills (supra)]; c. Once the goods get mingled with the general mass of goods and merchandize of the country, they lose the character of imported goods and are eligible to be declared as local goods. [Ref: Minerals Metal Trading Corporation (supra)]. 6.15 In view of the above, it is submitted that any transaction in relation to the imported goods, which takes place after the goods become part of the general mass of goods within India, is an independent transaction, and is liable to be separately taxed to GST. Thus, there are two supplied involved in the transaction of import of drill bits for supply to ONGC s location on consumption basis. 7.0 In light of the above, it is submitted that the Customs Notification and EC dated 19 July 2016 is qua the importer and imported goods only. Even the subject of the EC reads as Essentiality Certificate for import of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an importer and undertake to supply drill bits to the delivery location of ONGC on consignment basis i.e. sale on approval basis. For the following reasons and the legal proposition, activity of import and subsequent supply of drill bits by the Applicant to ONGC does not qualify as one single supply. 8.4 In terms of Section 7(2) of the Integrated Goods and Services Tax Act, 2017, the supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. As per Section 2(4) of the Integrated Goods and Services Tax (IGST) Act, 2017, read with Section 2(11) of the Customs Act, 1962, customs frontiers of India means the limits of a customs area viz. the area of a customs station or a warehouse and includes any area in which imported goods or export goods are ordinarily kept before clearance by Customs Authorities. Till clearance by the Customs Authorities i.e. issuance of Out of Charge, the supply of goods imported shall be treated to be Inter-state supplies and in terms of proviso to Section 5 of the IGST Act, 2017, the integrated tax on goods imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption is subject to the relevant conditions annexed to the notification, as specified in the corresponding entry in column (5) of the Table . It is evident that the exemption granted under Notification No. 3/2017-Central Tax (Rate) dated 28.06.2017 is a conditional one. It is a settled law that the benefits or exemption of a Notification (a conditional in nature) is available or eligible to the goods, only if the conditions specified therein are fulfilled or complied with. 8.7 In view of the above, we accordingly ruled that the entitlement or eligibility or applicability of exemption from central tax under Notification No. 03/2017-Central Tax (Rate), dated 28.06.2017 to the supply of goods (drill bits) to the delivery stations of ONGC is only upon fulfilment of conditions specified in the said Notification - including the one of: producing to the Deputy Commissioner of Central Tax or the Assistant Commissioner of Central Tax or the Deputy Commissioner of State Tax or the Assistant Commissioner of State Tax, as the case may be, (having jurisdiction over the supplier of goods, at the time of outward supply of goods), a certificate from a duly authorized officer of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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