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TMI Blog2021 (1) TMI 376X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable to IGST when they are imported into India and the IGST is payable at the time of importation of goods into India; The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China, to customers, in and around Netherlands as the goods are not imported into India at any point. Circular No. 33/2017 Customs dated August 1, 2017 issued in the context of High Sea Sales , wherein it has been clarified that sub section (12) of section 3 of the Customs Tariff Act, 1975 specifies that all duties, taxes, cesses etc shall be collected at the time of importation i.e. when the import declarations are filed before the customs authorities for the custom clearance purposes - the circular is applicable in the present case. Similarly, it is found that, where, Bill of Entry/import declarations are not being filed with respect to the goods so procured, GST would not be leviable. Further, as far as the leviability of GST on outward supply from place of vendor to customer is concerned, it is to mention that the thumb-rule for determining the taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia) for such transactions effected upto 31.01.2019. However, no IGST is payable on such transactions effected from 01.02.2019 onwards. - GUJ/GAAR/R/102/2020 - - - Dated:- 14-10-2020 - SHRI SANJAY SAXENA AND SHRI MOHIT AGRAWAL MEMBER Present for the applicant : Shri Amal P.Dave. BRIEF FACTS The applicant M/s. SPX Flow Technology (India) Pvt. Ltd. located at Survey No.275, Odhav road, Ahmedabad-382415 is a company engaged in the business of manufacture of goods like pumps designed for handling water, single and multi-stage pumps designed for handling water, single and multistage pumps, dairy machine etc. falling under Chapter 84 and other such products which are classifiable under Chapter 84 of the GST Tariff. The applicant also carries out business of trading in such goods. 2. The applicant has further stated that the present application is in respect of trading by the applicant in foreign countries and that trading business is undertaken in the following manner: (1) The applicant s parent company located in Poland is engaged in shipping goods such as spare parts of dairy machinery to recipient customer company located in Bangladesh. The transaction inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts referred to hereinabove are specimen purchase orders between the parties; that VAT invoice and commercial invoice issued by the concerned parties and such documents shows the method of the transaction between three parties involved; that the applicant purchases the goods from SPX Flow Technology, Poland and resells such goods to the customer of Bangladesh but such purchase and resale are made without bringing the goods to India; that in the present case, the invoice is raised by SPX Flow Technology, Poland to the applicant, however the goods are never brought into India and such goods do not cross the customs frontiers of India but are always directly exported from Poland to Bangladesh and therefore the present transaction is not a transaction of import of goods in India; that what is import of goods has been laid down in Section 2(10) of the IGST Act, 2017, which defines import of goods as under: 2(10) Import of goods with its grammatical variations and cognate expressions, means bringing goods into India from a place outside India. 4. The applicant has further submitted that as per the definition of import laid down in the IGST Act, 2017, the transaction undertake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f value of such article fixed under sub-section (2) of that section, as the case may be; and. (b) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section (9). (12) The provisions of the Customs Act, 1962 and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to the duties leviable under that Act. 5. The applicant has submitted that the Customs Act, 1962 lays down the provisions when imported goods are to be considered as dutiable goods under the Act for levy of IGST and has reproduced Section 12 of the Customs Act as under: 12. Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of M/s. GVK Industries ltd. v/s Income Tax Officer reported at 2017 (48) STR 177 = 2011 (3) TMI 1 - SUPREME COURT has held that the parliament has the right to make laws which extend beyond India and cover activities which are beyond the territory of India; that the Apex Court has also observed that the parliament has to exercise such power and has to frame laws explicitly as regards covering transactions which are taking place beyond the taxable territory of India and that such application of the act cannot be made by any delegated legislation or by way of mere interpretation; that in the present case, the parliament has in its wisdom made it clear that the application of the CGST Act, 2017 and IGST Act, 2017 is limited to the activities taking place within the territory of India and that these acts are only applicable to events that take place within the territory of India. 8. The applicant has further submitted that the question whether the applicant is a supplier of goods, is required to be determined in order to see whether the IGST Act or the CGST Act, 2017 would have any application, and whether the present transaction is within the territory of India and exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y covers that person who physically supplies the goods as the supplier; that in other words the person who causes actual movement of the goods is the supplier and in the present case M/s. SPX Flow Technology, Poland is the supplier of these goods in as much as the goods are supplied directly from Poland by M/s. SPX Flow Technology, Poland and the movement directly terminates at Bangladesh; that therefore since in the present case, M/s. SPX Flow Technology, Poland is the supplier of such goods and M/s. BRAC Dairy and Food Project, Bangladesh is indeed the recipient of the goods, the place of supply is beyond the territory of India. 11. The applicant has further submitted that both the supplier and the recipient are located in the non taxable territory, beyond India; that the principle in respect of extraterritorial jurisdiction for taxation as laid down by the Hon ble Apex Court in case of GVK Industries ltd. shows that the supplier should be located in India i.e. in the taxable territory; that the present one is an out and out transaction which has nothing to do with land mass of India and therefore, the CGST Act, 2017 and IGST, 2017 have no application in the facts of the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the supply of goods or services or both, and that activities specified in Schedule 3 are not subjected to levy of GST by virtue of Section 7(2)(a);that Section 9 of the CGST Act provides that there shall be levied a tax called Central Goods and Service Tax on all inter-state supply of goods or services or both; that similarly, Section 5 of the IGST Act, 2017 lays down that there shall be levied a tax called Integrated Tax and Service Tax on all interstate supplies of goods or services or both; that the charging event is thus supply under both the enactments and section 2(21) of the IGST Act provides that supply shall have the meaning as assigned to it in Section 7 of the CGST Act; that therefore transactions which are neither a supply of goods nor services under Section 7 of the CGST Act are not within the scope of levy and collection of tax under the IGST Act, 2017; that the provisions of the CGST Act, 2017 as regards the scope of supply and the schedules thereof are applicable to the IGST Act, 2017 also by virtue of Section 20 of the IGST Act, 2017 and that therefore it is submitted that the transaction in question falls within Entry No.7 in Schedule 3 of the CGST Act, 2017 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. The applicant has asked the following questions seeking Advance Ruling on the same: (1) Whether the activity undertaken by the applicant is covered by Entry No.7 in Schedule 3 of the CGST Act, 2017? (2) Whether the applicant is liable to pay IGST on out and out transactions taking place beyond the Customs frontiers of India? DISCUSSION FINDINGS: 15. We have considered the submissions made by the applicant in their application for advance ruling as well as the arguments/discussions made by their representative Shri Amal P. Dave at the time of personal hearing. We have also considered the issues involved on which Advance Ruling is sought by the applicant. 16. At the outset, we would like to state that the provisions of both the Central Goods and Services Tax Act, 2017 and the Gujarat Goods and Services Tax Act, 2017 are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to similar provisions of the GGST Act. However, looking to the present application submitted by the applicant and the issue in hand, we will also be required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set of invoice to M/s. BRAC Dairy and Food Project, Bangladesh. 18. The applicant has asked the following questions seeking Advance Ruling on the same: (1) Whether the activity undertaken by the applicant is covered by Entry No.7 in Schedule 3 of the CGST Act, 2017? (2) Whether the applicant is liable to pay IGST on out and out transactions taking place beyond the Customs frontiers of India? 19. On going through the submissions of the applicant as well as the questions raised by them seeking Advance ruling on the same, we find that the main issue to be examined is whether the aforementioned activity carried out by the applicant in which goods are shipped directly from the vendor located outside India (in the instant case M/s. SPX Flow Technology, Poland) to the customer located outside India (in the instant case M/s. BRAC Dairy and Food Project, Bangladesh) would be covered under the scope of GST or otherwise for which we will required to refer to the relevant sections of the IGST Act, 2017, the CGST Act, 2017, the Customs Tariff Act, 1975 as well as the Customs Act, 1962. 20. As per Section 2(10) of the Integrated Goods and Services Tax Act, 2017, impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a) the value of the imported article determined under sub-section (1) of section 14 of the Customs Act, 1962 or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and . (b) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but does not include the tax referred to in sub-section (7) or the cess referred to in sub-section (9). (12) The provisions of the Customs Act, 1962 and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be, apply to the duty or tax or cess, as the case may be, chargeable under this section as they apply in relation to the duties leviable under that Act. 22. Further, the relevant provisions of the Customs Act, 1962 are reproduced below: SECTION 12: Dutiable goods. - (1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rehouse in Netherlands, after being procured from China, to customers, in and around Netherlands as the goods are not imported into India at any point. 24. Here, we would also like to refer to Circular No. 33/2017 Customs dated August 1, 2017 issued in the context of High Sea Sales , wherein it has been clarified that sub section (12) of section 3 of the Customs Tariff Act, 1975 specifies that all duties, taxes, cesses etc shall be collected at the time of importation i.e. when the import declarations are filed before the customs authorities for the custom clearance purposes. The relevant portion of the Circular is reproduced below: 4. GST council has deliberated 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 the time of importation i.e. when the import declarations are filed before the Customs authorities for the customs clearance purposes for the first time. Further, value addition accruing in each such high sea sale shall form part of the value on which IGST is collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied; 26. On going through the above definitions and comparing the same to the transactions involved in the issue on hand, we find that the applicant, who is the third party in the transaction involved in the instant case, is acting as an agent on behalf of the supplier i.e. SPX Flow Technology, Poland and is therefore covered under the definition of supplier as mentioned in Section2(105) of the CGST Act, 2017. We also find that the applicant who is the supplier in the instant case, is selling goods for a consideration in the course or furtherance of business and such transaction tantamount to supply in terms of the definition of supply . 27. Once the test of supply is met with, the next step is to determine whether the same is an Intra-state supply or inter-state supply. In this regard it is pertinent to examine the provisions of Section 7 of the IGST Act, 2017 which reads as under: 7. (1) Subject to the provisions of section 10, supply of goods, where the location of the supplier and the place of supply are in (a) two different States; (b) two different Union territories; or (c) a State and a Union territory, shall be treated as a supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the invoices for sale of such goods. 29. The above indicates that the supplier is located in India and the place of supply is outside India and as such the same would be Inter-state supply in terms of the provisions of Section 7(5) of IGST Act, 2017. Thus, it is very clear that the transaction undertaken by the applicant tantamount to supply and is an Inter-state supply. Having travelled thus far, it is obvious that IGST will be leviable unless the goods are exempted or are zero-rated supplies which have been defined as export of goods or services in terms of the provisions of Section 16 of the IGST Act, 2017. In the instant case, the applicant has not stated the nature of goods and has not declared that such goods are exempted under any notification issued under the powers of Section 11 of the CGST Act, 2017 and the corresponding State Act or Section 6 of the IGST Act. Thus, the only possibility of goods not subject to levy of IGST would be the circumstances where the goods are exported. 30. The term export of goods has been defined under sub section 5 of Section 2 of IGST Act, 2017 which reads as under: Export of goods would mean- With its grammatical varia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ritory without such goods entering into India shall be treated neither as a supply of goods nor a supply of services with effect from 01.02.2019. Since in the instant case, the supply of goods takes place from Poland (which is a non-taxable territory) directly to Bangladesh (which is also a non-taxable territory) without the said goods entering into India, the transactions mentioned in the instant case are similar to that as mentioned in Entry No.7 of Schedule-III of the CGST Act, 2017. Therefore, in view of the facts mentioned above, we conclude that no GST is leviable on such type of transactions which have taken place with effect from 01.02.2019 and onwards. 33. We also find that the applicant has relied on two orders issued by the Advance Ruling Authorities of Kerala and Maharashtra respectively i.e. (i) Order No.CT/2275/18-C3 dated 26.03.2018 issued by the Advance Ruling Authority of Kerala in the case of M/s. Synthite Industries ltd., Ernakulam, Kerala = 2018 (4) TMI 583 - AUTHORITY FOR ADVANCE RULING - KERALA and (ii) Order No.GST-ARA-53/2018-19/B-127-Mumbai dated 10.10.2018 issued by the Advance Ruling Authority of Maharashtra in the case of M/s. Enmarol Petroleum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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