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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 ..... dvance Ruling, a reference to such a similar provision under the CGST or AP GST Act would be mentioned as being under the GST Act. 3. Brief Facts of the case: Halliburton Offshore Services Inc. (herein after referred to as 'HOSI') is a global service provider, engaged in providing various oilfield services to Exploration and Production companies across the globe. Presently, the Applicant has contracted to provide drill bits for drilling to ONGC at 12 different locations. The applicant had filed an application in form GST ARA-01, 08.11.2019, by paying required amount of fee for seeking Advance 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. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are stored in ONGC's storage space till the time the same is used / consumed / returned by ONGC. 6.3 In respect of the imported drill bits supplied by the Applicant to ONGC, the said drill bits are supplied on consignment basis i.e. sale on approval basis. The aforesaid position of sale on approval basis in the case of the Applicant is explained below: 6.3.1 Section 24 of the Sale of Goods Act, 1930 deals with "Goods sent on approval or 'on sale or return' " and reads as below:- "24. Goods sent on approval or "on sale or return"- When goods 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 sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act which is equivalent to saying in spite of those provisions, the particular clause would have full operation. A clause beginning with the expression "notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract" is more often than not appended to a section in the beginning with a hew to give the enacting part of the section, in case of conflict, an overriding effect over the provision 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 dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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." 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 bringin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods by the customs authorities on making the assessment of goods would amount to a sale in the course of import, as after the assessment is made and on filing of the bill of entry the goods aet mingled with the general mass of goods and merchandize of the country. The goods get the eligibility to be declared as local goods." (emphasis supplied) 6.14 From analysis of the aforesaid definitions and judicial precedents 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 transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ONGC's location; and If two supplies are involved in the abovementioned transaction then whether two Essentiality Certificates ('EC') are required to be issued for availing benefits with respect to concessional duties of IGST and CGST. 8.3 It is a self-asserted and admitted fact on record that the Applicant, under a contractual obligation, is required to import drill bits by themselves 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he description of which was given at column(3) of the table read with the List appended thereto, and falling under the tariff-item, sub-heading, heading or chapter - as the case may be) from so much of Central Tax as is in excess of the amount calculated at the rate specified in Column (4) of the table. The said notification had categorically and clearly spelt out that the said 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 Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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