In re Rangasamy Saravankumar (Arjun Knit Wear) (GST AAR Tamilnadu)
The Authority for Advance Ruling (AAR), Tamil Nadu, examined an application filed by a registered manufacturer-exporter engaged in export of goods under Delivered Duty Paid (DDP) terms. The applicant sought clarification on two issues: (i) whether reimbursed expenses such as ocean freight, insurance, foreign import duties, delivery charges, and other costs incurred abroad until goods reach the destination should be included in the transaction value for the purpose of payment of IGST on exports, and (ii) whether IGST paid on such expenses is eligible for refund.
The applicant stated that under DDP terms, it bears all costs and risks associated with delivering goods to the buyer’s location, including expenses incurred outside India. These expenses are included in the invoice value. It further contended that, under Section 15 of the CGST Act, 2017, the value of supply is the transaction value, which includes incidental expenses and any amount charged for activities performed up to the point of delivery. The applicant also clarified that it does not act as a “pure agent,” since the invoices for such expenses are in its own name and it assumes full responsibility for delivery, including import duties at the destination.
