Deemed Export Under GST Act 2017 – GST Series Part 35
1. Deemed Exports means such supplies of goods as may be notified under section 147 of CGST Act.
2. STATUTORY PROVISIONS:
| Section 2(39) | Deemed exports” means such supplies of goods as may be notified under Section 147 |
| Section 147 | The Government may notify certain supplies of goods as deemed exports where goods supplied do not leave India & payment received either in Indian rupees or in convertible foreign exchange. If such goods are manufactured in India |
3. FEATURES OF DEEMED EXPORTS
(a) Deemed Export is not a ZERO RATED SUPPLY
(b) Applicable only for the supply of Goods (not applicable to the services)
(c) Goods are not required to be taken outside India.
(d) Such supply of goods must be notified by the Government as Deemed Export.
(e) Goods must be manufactured in India
(f) Payment received in Indian Rupee or in convertible foreign exchange
4. NOTIFIED CATEGORY The Government vides Notification No. 48/2017-CT dated 18-10-2017 has notified the following category of supply of goods as Deemed Export :
(a) Supply of goods by a registered person against Advance Authorization
(b) Supply of capital goods by a registered person against Export Promotion Capital Goods (EPCG) Authorization.
(c) Supply of goods by a registered person to Export Oriented Unit (EOU)
(d) Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June 2017 (as amended) against Advance Authorization
5. ADVANCE AUTHORIZATION: Advance Authorization means an authorization issued by the Director-General of Foreign Trade for import or domestic procurement for physical exports.
5.1 Till 15-1-2019, there was a condition of pre-import i.e. inputs were required to be procured or domestically procured before physical exports.
5.2 This condition has been omitted w.e.f. 15-1-2019. Now, the condition is that goods supplied against advanced authorization shall be used in the manufacture and supply of taxable goods (other than nil rated or fully exempted goods)
5.3 A certificate to this effect from a chartered accountant should be submitted to the jurisdictional GST commissioner within 6 months of such supply.
5.4 Such certificate shall not be required if input tax credit has not been availed on inputs used in the manufacture of export goods.
6. EXPORT PROMOTION CAPITAL GOODS AUTHORISATION (EPCG) Export Promotion Capital Goods Authorization means an authorization issued by the Director-General of Foreign Trade for import of capital goods for physical exports.
7. EXPORT ORIENTED UNITS (EOU) Export Oriented Unit (EOU) Scheme was introduced in the year 1981. Under EOU scheme, units registered as EOU are required to export their entire production of goods and services. However, a certain portion is allowed to be sold out in the domestic tariff area (DTA).
8. REFUND: Section 54 of CGST Act prescribes the provision for refund of tax on deemed exported goods
| Explanation 1 to Section 54 | ” Refund ” includes a refund of tax on supply of goods regarded as deemed exports |
| third proviso to Rule 89(1) | In respect of supplies regarded as deemed export, the refund application may be filed by
(a) the recipient of deemed export supplies or (b) the supplier of deemed export supplies. |
9. REFUND CLAIM BY THE SUPPLIER
| The supplier of Deemed Export can claim a refund where the recipient does not avail of input tax credit and furnishes an undertaking to the effect that the supplier may claim the refund | |
| The supplier of deemed export cannot opt LUT Mode for refund. He can pay IGST on deemed export and claim a refund thereof. | |
| Rule 89(4A)
Rule 96(10) |
If the supplier has claimed the benefit of deemed exports and the recipient of such supply makes the zero-rated supplies.
Such recipient is eligible to claim a refund of Input Tax Credit availed in respect of other input & input services. However, the export of goods on payment of IGST not permissible to such recipient. If still IGST is paid on export of goods or services, its input tax credit is not available |
9.1 ILLUSTRATION:
| Mr. X supplies the goods to | Mr. Y, who is in EOU / Authorized under AA Scheme |
| This supply is Deemed Export and not a ZERO Rated Supply | |
| GST must be paid at the time of supply – the supply can not be made under LUT/Bond | |
| The refund can be claimed either by Mr. X or by Mr. Y | |
| Mr. X claim the refunds and | Mr. Y makes the Zero Rated Supply |
| Mr. Y is eligible to claim a refund of ITC availed in respect of other input & Input services. | |
| Mr. Y shall export such goods under LUT/Bond
IGST Route is not permissible |
|
9.2 EVIDENCE REQUIRED FOR REFUND CLAIM BY SUPPLIER (MR X ): Following evidence is required to be produced while filing refund application in respect of ‘deemed exports’ as specified vide Notification No. 48/2017-CT dated 18-10-2017:-
(a) Acknowledgement by Jurisdictional Tax Officer of Mr. Y (AA holder) that deemed export supplies have been received or A copy of tax invoice by Mr. X duly signed by Mr. Y that such supply has received by him.
(b) Undertaking by Mr. Y that he has not availed ITC on such supply
(c) Undertaking by Mr. Y that he shall not claim the refund
9.3 REFUND CLAIM BY THE RECIPIENT If the recipient of deemed exports has paid the tax amount on inward supplies received which is qualified as deemed exports, he can claim a refund of the tax amount paid by providing a declaration that the supplier has neither claimed nor shall claim any refund for the said supplies.
10. RELEVANT DATE
| Explanation 2(b) to section 54 | “Relevant date” for filing refund in case of a supply of goods regarded as deemed export, is the date on which the return relating to such deemed exports is filed.
Thus refund claim is to be filed within two years of furnishing the return relating to such export. |
11. CLAIM FORM: The taxpayer shall file the refund application in Form RFD-01 on the GST portal.
12. Procedure to be followed for refund claim in case of deemed exports has been elaborated in the FAQ on GST Chapter 14 Q No. 76 issued by CBI&C on 15-12-2018.
The author can be approached at caanitabhadra@gmail.com
Author Bio
we are 100% EOU Unit & recipient under deemed export. can we filed deemed export refund of tax paid on capital goods
Dear Madam,
Can EOU claim refund of Capital goods also if GST is charged by the Supplier? If not, is there any way that EOU can avoid GST being charged on Capital goods?