In re Jotun India Private Limited (GST AAR Maharashtra)
Q1. Whether the supply of goods which are moved from a place located outside taxable territory and are delivered at a place outside taxable territory, would be liable to tax in India under section 7(5)(a) of IGST Act?
Answer :- Answered in the negative.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, MAHARASHTRA
PROCEEDINGS
Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act,2017 the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by Jotun India Private Limited, the applicant, seeking an advance ruling in respect of the following issue:-
a) Whether the supply of goods which are moved from a place located outside taxable territory and are delivered at a place outside taxable territory, would be liable to tax in India under section 7(5)(a) of IGST Act?
b) If answer to (a) is yes, whether the recipient of the goods i.e. person liable to pay consideration, be eligible to avail the input tax credit of the said goods?
At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST Act / MGST Act would be mentioned as being under the “GST Act”.
02. FACTS AND CONTENTION – AS PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
STATEMENT OF THE RELEVANT FACTS HAVING A BEARING ON THE QUESTIONS AS PROVIDED IN
ANNEXURE 1
Brief Background of the Transaction:
> Jotun Group is a leading supplier of paints and powder coatings. The affiliates of the group has worldwide presence. The Applicant i.e. Jotun India Private Limited, being one of the Group entities, is a supplier, exporter and manufacturer of paints and powder coatings. The Applicant supplies paints and coatings that are specially designed for unique conditions to the various customers.
> Broadly, the paints supplied by the applicant can be categorized in Solvent based paints and Water based paints. One of the major supplies by Applicant are marine paints. Composition of such marine paint being manufactured by Applicant makes it suitable for ships during building stage and even during maintenance. Thus the applicant is involved in supplying the said goods for the vessel at the time of ship building (hereinafter referred to as New Building Supplies) and also as consumables on board of vessel for the purpose of maintenance purpose (hereinafter referred to as Dry Dock Supplies and Sea Dock Supplies)
> Applicant caters to paint and coating requirements for ships within India. It has been mutually agreed between all entities of the Group that any requirement of supply of goods (paints) within a Country where Jotun Group entity is present would be served by that particular entity. Consequently in case where the applicant gets an order from Indian customer to supply paints to ship located near Norway, entity of Jotun Group located in Norway would be serving the said order by supplying paints to that ship and thereafter raising an invoice on the Applicant in this regard.
> To elaborate, sequential flow of transactions under such situation is presented as under:
(a) A customer located in taxable territory (‘Cl’), places an order on applicant (JIPL’) to supply goods (paint) as a new building , dry dock supply or sea dock supply to its ship / vessel located near Norway i.e. a place outside taxable territory.
(b) Further basis the global group policy of Jotun, JIPL places back to back purchase order on Jotun’s entity located nearest to the location of such ship/ vessel i.e. Jotun Norway (Ji.). The said order would be meant for supplying desired goods at the ship of customer.
(c) Accordingly goods available at that location, would be moved to the destination i.e. place of vessel/skip.
(d) Thereafter, basis Jotun Norway would be raising an invoice on JIPL thereby transferring the ownership to JIPL and subsequently JIPL would be raising an invoice on C thereby ultimately transferring the ownership to the Customer.
>The diagrammatic representation of the transactions executed is as below:
