9911796707
TMI Blog2021 (9) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... . The applicant is a wholly-owned subsidiary of M/s. Skechers USA, Inc. They are engaged in the business of import and distribution of footwear, apparel, and accessories in India. The footwear imported by the applicant is of two categories : footwear having transactional value not exceeding Rs. 1000 per pair and footwear having a transaction value exceeding Rs. 1000 per pair. The present application pertains to footwear having transaction value not exceeding Rs. 1000 per pair. As per proviso to Section 5(1) of the Integrated Goods and Services Tax Act, 2017, IGST on imported goods is to be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975. In terms of Section 3(7) of the Customs Tariff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment was made. Further, they have submitted a Circular bearing F. No. 332/2017-TRU, by which it was clarified that the sale value referred to in relevant entry for readymade garments, refers to the transaction value and not to the retail sale price. 3. In their CAAR-I application, the applicant has declared that they would import under the jurisdiction of Principal Commissioner/Commissioner of Customs, Mumbai (Zone II and Zone III). Accordingly, their application was forwarded to the jurisdictional customs authorities for comments. However, no reply has been received to date, though reminder have also been sent. 4. The applicant was heard on 21-8-2021 in virtual mode. The applicant was represented by S/Shri Himanshu Tiwari, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IGST Act, 2017 provides that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of the Customs Tariff Act, 1975 on the value as determined under the said Act and at the point when duties of customs are levied on the said goods under the Customs Act, 1962. Therefore, IGST is to be levied and collected as a duty of customs at the time of import. Further, the value of the goods for the purpose of levying the integrated tax shall be, assessable value plus customs duty levied under the Act, and any other duty chargeable on the said goods under any law for the time being in force. 6. The rate of IGST applicable on the supply of goods was initially prescribed by Notification No. 1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, provided that such retail sale price is indelibly marked or embossed on the footwear itself 19/2018-Integrated Tax (Rate), dated 26-7-2018 1st amendment 225 64 Footwear of sale value not exceeding Rs. 1000 per pair 25/2018-Integrated Tax (Rate), dated 31-12-2018 2nd amendment 7. As per the preceding table, the 1st amendment increased the threshold of the retail sale price to Rs. 1000 for attracting levy of IGST at 5%. Whereas, the 2nd amendment conditions to be fulfilled for levying IGST at a concessional rate and the base of calculation of tax was shifted from retail sale price to sale value. However, the term 'sale value' has not been defined either in the notifications or the parent statutes, i.e., IGST Act and Central ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pair. GST, however, will be payable on the transaction value. 8. To understand the concept of sale value better, we need to analyse the intention behind the amendments mentioned in Table 1. It is relevant to note that the GST rate on apparel and hotels was also based on price-based classification similar to footwear. However, the basis of taxation was sale value as compared to retail sale price for footwear. In the above-mentioned clarification, the transaction value is used as the basis for levying GST in both the cases, i.e., for retail sale price as well as for sale value. The transaction value in the context of sale value is the value of supply, whereas, it is the declared sale price in the context of the retail sale price. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on domestic goods. GST is a supply-based, value-added taxation system. The levy is triggered when the goods are supplied and is charged on the basis of transaction value i.e., the value of supply. As the goods move across the supply chain, taxes are levied on the basis of the actual value of the supply. The amendment made to Sr. No. 225 of Schedule-I brought price-based differential taxation on footwear in line with the principle of GST. Therefore, if the supply value is below Rs. 1000 per pair, IGST at 5% would be applicable and if supply value is above Rs. 1000, it would attract IGST at 12%. 11. Further, it is pertinent to note that the 45th GST Council Meeting was held on 17-9-2021. In the meeting, GST rate changes in order to co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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