The Authority for Advance Ruling, Tamil Nadu addressed the issue ...

GST Not Applicable on Goods Moved from Free Trade Zone to Bonded Warehouse Before Clearance.

June 1, 2024

Case Laws     GST     AAR

The Authority for Advance Ruling, Tamil Nadu addressed the issue of GST levy on the sale of goods warehoused in a third-party Free Trade Warehousing Zone (3P FTWZ) to a customer who clears them to a bonded warehouse under the MOOWR Scheme. The FTWZ is part of the SEZ scheme, a Customs bonded warehouse where imported goods are stored without payment of Customs duties until cleared for home consumption. The legal position, even before the amendment to Schedule III of the CGST Act, was that goods stored in a warehouse are not subject to Customs duty or integrated tax until cleared for home consumption. The amendment clarified that such transactions are not considered supplies under GST. Therefore, in this case, where goods are moved from a 3P FTWZ to a bonded warehouse under a sale to an OEM's MOOWR unit, GST is not leviable as it falls under the exemption for the supply of warehoused goods before clearance for home consumption.

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