Recently, Central Board of Indirect taxes & customs issued Circular No. 108/27/2019-GST dated 18th July 19, clarifies the various issues in respect of goods sent out of India for exhibition or on a consignment basis for export promotion.
The gist of the Circular is explained below:
(1) The trade and industry are in confusion and ambiguity that, what procedure to be followed in this respect to adhere to the GST compliance properly. Because of the difficulties and to ensure uniformity in the implementation of the provision of the law, CBIC need to issue these clarifications.
(2) It is clarified that the activity of sending the goods out of the India for Exhibition or on consignment basis for export promotion, except when such activity satisfies the test laid down in “Schedule I” of the CGST Act, do not constitute supply as the said activity does not fall within the scope of Section 7 of the CGST Act as there is no consideration at that point in time.
Since the activity is not a supply, the same cannot be considered as Zero-rated supply as per the provision of Section 16 of the IGST Act.
(3) The registered person dealing in specified goods shall maintain a record of such goods as per the format prescribed at Annexure to this circular.
(4) The specified goods shall be accompanied with a Delivery Challan issued per the provision contained in rule 55 of the CGST Rules.
As it is not covered under Zero-rated supply, execution of bond or LUT, as required under section 16 of the IGST Act, is not required.
(5) The specified goods sent out of India are required to be either sold or brought back within the stipulated period of six months from the date of removal as per the provisions contained in sub-section (7) of section 31 of the CGST Act.
(6) The supply would be deemed to have taken place, on expiry of the six months from the date of removal, if specified goods are neither sold abroad nor brought back within the said period.
(7) The sender shall issue a tax invoice in respect of such quantity of specified goods which have been sold abroad. He will also require to issue an Invoice in the expiry of 6 months if goods are neither sold nor brought back into India, under the provisions contained in section 12 and section 31 of the CGST Act read with rule 46 of the CGST Rules.
(8) The said activity is not a Zero-rated supply, so the sender of goods cannot prefer any refund claim when the specified goods are sent out of India.
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