GST leviable on delivery of goods from an Overseas Vendor to an Overseas Customer under ‘Bill to Ship to’ model – AAR Gujarat
by ReinHeads Team | Jun 24, 2020
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AAR Gujarat*- GST leviable on delivery of goods from an Overseas Vendor to an Overseas Customer under ‘Bill to Ship to’ model
| Facts |
- Sterlite Technologies Limited (‘the Applicant’) is engaged in development and supply of software with respect to telecommunication qua wifi service management platform alongwith supply of IT hardware
- The Applicant proposed to undertake a transaction entailing supply of hardware (commercially known as ‘Merchant Trade Transaction’), wherein the transaction mechanics would be as under:
- The Applicant will receive an order from the Customer located outside India (‘the Overseas Customer’)
- Back to back order would be placed by the Applicant to the Vendor located outside India (‘the Overseas Vendor’) with directions to directly ship the goods to the Overseas Customer
- The Overseas Vendor would issue an invoice on the Applicant against which payment would be made in foreign currency
- The Applicant would raise an invoice on the Overseas Customer and receive consideration in foreign currency
- Goods would not physically come into India and movement would be from a place outside India to another place outside India
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| Issue before the AAR |
- Whether GST is payable on goods procured from the Overseas Vendor in a context where the goods so purchased are not brought into India?
- Whether GST is payable on goods sold to the Overseas Customer, where the goods are shipped directly from the Overseas Vendor’s premises to the Overseas Customer’s premises?
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| Discussion and Findings of the AAR |
- Since bill of entry/ import declarations are not being filed with respect to the goods so procured, GST would not be leviable on goods procured from the Overseas Vendor, on account of following:
- As per the Integrated Goods and Service Tax Act, 2017 (‘the IGST Act’), the Customs Tariff Act, 1975 (‘the Customs Tariff Act ’), and the Customs Act,1962 (‘the Customs Act’), the IGST on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act
- Circular No. 33/2017 Customs dated August 1, 2017 clarifies that Section 3(12) of the Customs Tariff Act 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 Applicant is liable to pay GST on goods sold to the Overseas Customer, where goods are shipped directly from the Overseas Vendor’s premises to the Overseas Customer’s premises on account of the following:
- The Applicant is selling goods for a consideration in the course/ furtherance of business and the same tantamounts to ‘supply’
- Place of supply of such goods would be the termination of movement for delivery to the recipient i.e., outside India
- Supplier (i.e., the Applicant) is located in India and the place of supply is outside India, therefore, the same would qualify as an Inter-state supply in terms of the Section 7(5) of IGST Act
- Transaction does not qualify as ‘export of goods’ as goods are not physically available in the Indian territory
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*Advance Ruling No. GUJ/GAAR/R/04/2020 dated 17 March 2020 (The Authority for Advance Ruling, Gujarat) |
