In re Haworth India Private Limited (GST AAR Tamilnadu)
Tamil Nadu Authority for Advance Ruling (AAR) ruled on a GST matter involving Haworth India Private Limited, which sought clarity on the taxability of transactions conducted in a Free Trade Warehousing Zone (FTWZ). The company, engaged in manufacturing and sales of office furniture, planned to operate an import and resale model through FTWZ for operational efficiency. It sought an advance ruling on whether transferring the title of goods within the FTWZ would be considered a bonded warehouse transaction under Schedule III of the CGST Act, 2017, and whether ITC reversal would be required.
The AAR ruled that such transactions fall under paragraph 8(a) of Schedule III of the CGST Act, 2017, which covers activities that do not constitute a supply of goods or services and are therefore non-taxable under GST. Since ownership transfers occur without physical movement of goods, and goods remain within the FTWZ until final clearance, the ruling confirmed that multiple title transfers within FTWZ do not attract GST. This decision aligns with prior interpretations of bonded warehouse transactions under the CGST Amendment Act, 2018.
The ruling also addressed the input tax credit (ITC) implications, stating that ITC reversal is not required for such transactions. The AAR clarified that paragraph 8(a) of Schedule III does not mandate ITC reversal because the only exempt supplies under this provision relate to duty-free shops at international airports. This means businesses operating within FTWZ can continue claiming ITC on common inputs, input services, and capital goods without restrictions arising from these title transfers.
