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TMI Blog2021 (9) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... demand to levy tax on transaction value and not on retail sale price so that when footwear was sold at a discount on the printed price, the tax would be charged on the transaction value. IGST is imposed on the imported goods to neutralise the impact of GST being levied 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%. Thus, the imported footwear of sale value of Rs. 1000 per pair are liable to Integrated Goods and Services Tax at the rate of 5%. - Ruling No. CAAR/Mum/ARC/37/2021 in Application No. CAAR/CUS/APPL/43/2021-O/o Commr-CAAR-MUMBAI - - - Dated:- 30-9-2021 - Shri M.R. Mohanty, Authority for Advance Rulings, Customs Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, IGST is leviable on the impugned goods at the rate of 5%. In support of this, the applicant has appended the recommendation of the fitment committee on the basis of which this 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, Mayuresh Jambhulkar and Abhinav Kapoor. No one appeared on behalf of the Principal Commissioner/Commissioner of Customs, Mumbai (Zone II and Zone III). During the hearing, the applicant reiterated the submissions made in the application. The applicant stated that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended multiple times. The applicant has referred to two amendments i.e. Notification No. 18/2018-Central Tax (Rate), dated 26-7-2018 and Notification No. 24/2018-Central Tax (Rate), dated 31-12-2018. However, these notifications pertain to the Central Tax Rate. The relevant notification to ascertain IGST rate on imported footwear are Notification No. 19/2018-Integrated Tax (Rate), dated 26-7-2018 and Notification No. 25/2018-Integrated Tax (Rate), dated 31-12-2018. Amendments to entry at Sr. No. 225 of Schedule I from the date of introduction of GST till date are summarised below : Table 1 : Summary of amendments to Sr. No. 225 of Schedule-I (IGST rate 5%) Sr. No. Chapter/ Heading/ Sub-heading/ Tariff item Description of Goods Notification No. Remarks 225 64 Footwear having a retail sale price not exceeding INR 500 per pair; provided that such retail sale price is indelibly marked or embossed on the footwear itself 1/2017-Integrated Tax (Rate), dated 28-6-2017 Original entry 225 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and is inclusive of all taxes. Thus, the retail sale price declared on the package is inclusive of GST. GST for footwear will be 5% if the RSP does not exceed Rs. 500 per pair. The GST rate will be 18% if the RSP exceeds Rs. 500 per 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. However, the differential GST rate on the basis of retail price failed to account for any discount offered by the supplier. In other words, even if the goods were sold at the price below the threshold due to a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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