Please find the article ‘Analysis of Notification 41/2017 of Integrated Tax (Rate)‘ . The Readers shall be benefited by this article which contains complete analysis about supply of goods at reduced rate of tax to the exporter.
The rate of GST has been reduced on all supplies with effect from with effect from 23-10-2017 by virtue of Notification 41/2017 of Integrated Tax (Rate) on supply of taxable goods by a registered supplier to a registered recipient of export. The rate shall be charged on such supply at the rate of 0.1% of IGST and if intra state supply rate shall be 0.05% of CGST and SGST each subject to fulfillment of conditions stated in the Notification. Thus rate of tax in general may be 28%, 18%, 12% etc.. but on the said supply rate shall be charged 0.1% subject to fulfillment of the conditions.
This is welcome scheme for the Exporter because fund of the exporter shall not be blocked in account of tax. For example if the exporter shall have to make purchase of Rs.50 lakh and rate of tax on such purchase is 18%, the amount Rs.9 lakh shall be blocked in account of tax till it is refunded. According to the said notification the tax amount Rs.5000.00 in place of Rs.9 lakh shall be blocked.
But on the other side, the supplier is not so beneficial by this Notification because:-
1. Nine conditions are to be fulfilled to maintain the said supply as valid supply.
2. If it has been established that the said supply was not done according to terms and conditions of Notification 41/2017, the liability to pay additional tax, interest and penalty on account of such invalid supply shall be assessed against the supplier.
3. The supplier’s input tax credit shall be blocked till it is refunded.
4. Refund procedure to be fulfilled which (refund) was not required prior to this notification.
Conditions as stated in Notification 41/2017
|1||Invoice||Tax Invoice shall be issued by the Registered Supplier to the Registered Recipient of Export.|
|2||Period of Export||90 days from the date of issue of tax invoice.|
|3||Bill of Entry or Bill of Export||The registered recipient shall indicate the Goods and Services Tax Identification Number (GSTIN) of the registered supplier and the tax invoice number issued by the registered supplier in respect of the said goods in the shipping bill or bill of export, as the case may be;|
|4||Who shall be Registered Recipient ?||The registered recipient shall be registered with an Export Promotion Council or a Commodity Board recognised by the Department of Commerce;|
|5||Purchase order shall be in writing||The registered recipient shall place an order on registered supplier for procuring goods at concessional rate.|
|6||Who is responsible to move the goods from the place of Supplier ?||The Registered Recipient|
|7||Where the goods shall be moved by the Registered Recipient ?||(a) directly to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported; or
(b) directly to a registered warehouse from where the said goods shall be move to the Port, Inland Container Deport, Airport or Land Customs Station from where the said goods are to be exported
|8||What is the procedure if goods procured from multiple suppliers and thereafter aggregate supplies made to export ?||If the registered recipient intends to aggregate supplies from multiple registered suppliers and then export, the goods from each registered supplier shall move to a registered warehouse and after aggregation, the registered recipient shall move goods to the Port, Inland Container Deport, Airport or Land Customs Station from where they shall be exported;|
|9||What are additional compliances if aggregate goods are exported out of India ?||The registered recipient shall endorse receipt of goods on the tax invoice and also obtain acknowledgement of receipt of goods in the registered warehouse from the warehouse operator and the endorsed tax invoice and the acknowledgment of the warehouse operator shall be provided to the registered supplier.|
|10||Which documents shall be provided to the Supplier, after exports, by the Recipient ?||1. Copy of shipping bill or bill of export containing details of GSTIN and tax invoice of the registered supplier;
2. Proof of export general manifest or export report.
|11||Which documents are to be provided to the jurisdictional tax officer of the Supplier by the Registered Recipient ?||1. Purchase Order
2. The endorsed tax invoice and the acknowledgment of the warehouse operator. ( Stated in para 9 herein )
3. Copy of shipping bill or bill of export containing details of GSTIN and tax invoice of the registered supplier; ( Stated in para 10 herein )
4. Proof of export general manifest or export report. ( Stated in para 10 herein )
Consequences if default in compliance of Notification 41/2017
|12||What will be happened if the export is not done within 90 days ?||The registered supplier shall not be eligible for the above mentioned exemption if the registered recipient fails to export the said goods within a period of ninety days from the date of issue of tax invoice.|
|13||What should be done by the Supplier if Export is not done or any compliance had not been fulfilled as required in Notification 41/2017 ?||The Supplier should issue Debit Note on account of difference between tax to be charged normally and tax charged according to the Notification 41/2017 and calculate interest amount. The same difference amount of tax and interest should be paid immediately and file the return 3B and amend the return GSTR 1 accordingly with debit note.|
|14||Which actions may be taken by the Proper Officer on such scenario ?||The Proper Officer may issue notice under section 73 or 74 according to facts of the case for short payment of tax and interest and may also issue notice for penalty for such short payment of tax.|
|15||Who can claim Refund ?||Both the Registered Supplier and Registered Recipient can claim refund.
The Registered Supplier can claim refund under section 54(3)(ii) and
The Registered Recipient can claim refund under section 54(3)(i) if the zero rated supplies made without payment of tax.
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