GST- Deemed Exports & Obligation to furnish information return

Simplified GST Series -Section 147 –Deemed Exports/Section 150-Obligation to furnish information return

Section 147-The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Analysis- This section deals with notification of certain supplies of goods as deemed exports upon recommendation by the GST Council.

• The notified goods would be deemed to be exported, if such goods are manufactured in India although they do not leave India and payments are received in Indian rupees or convertible foreign exchange.
• Section 2(39) of the CGST Act, 2017 defines the term ‘deemed exports”. This would be relevant for extending refund benefit under section 54 of the CGST Act. 

Section 2(3)- “deemed exports” means such supplies of goods as may be notified under section 147;

Deemed exports are those supplies of goods that are notified as ‘deemed exports’ where:

(a) The goods supplied do not leave India;

(b) Payment for such supplies is received in Indian Rupees/ Convertible Foreign Exchange;

and

(c) Such goods are manufactured in India. 

The definition of ‘deemed exports’ under this Act is in line with the definition of ‘Deemed

Exports’ under Chapter 07.01 of the Foreign Trade Policy 2015-20. ‘Deemed Export’ under the FTP 2015-20 covers supply of goods to EOU/STP/EHTP/BTP, supply of goods under advance authorisation etc. and hence provides for refund, drawback and advance authorisation to the supplier of goods. On the other hand, the relevance of ‘deemed export’ under the GST laws is limited to the grant of refund of taxes on supply of goods as ‘deemed export’.  

> Interestingly, there is no section that authorizes deemed exports to enjoy zero rated benefit except inclusion of deemed exports within the machinery provisions for claiming refund under section 54 read with rule 89.

> Rule 89 of CGST Rules is relevant for claiming refund in respect of deemed exports. This rule prescribes forms & procedures for claiming refund in case of supplies made to a special economic zone.

> Second proviso to Rule 89(1) says that “provided also that in respect of supplies regarded as deemed exports, the application shall be filled by recipient of deemed export supplies”.

> Documents Required For Refund Under Deemed Export-

• • Acknowledgment by the jurisdictional officer of the Advance Authorization holder or Export Promotion Capital Goods Authorization holder, as the case may be, that the said deemed export supplies have been received by the said Advance Authorization or Export Promotion Capital Goods Authorization holder, or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient Export Oriented Unit that said deemed export supplies have been received by it.
  • An undertaking by the recipient of deemed export supplies, that no input tax credit on such supplies has been availed of by him.
  • An undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and the supplier may claim the refund.
• Deemed export transactions are to be reported in Table-4E of GSTR-9. 

Section 150- Obligation to furnish information return-

• A return called an ‘information return’ would be required to be filed by specified persons. It is expected that this would be used by the Government/s for exchange of information.
• Nature of persons who would be required to file the information return would be:

1. Taxable Person.

2. Local Authority, Other Public Body or Association.

3. Authority responsible for collecting VAT, Sales Tax, State Excise Duty,Central Excise Duty or Customs Duty.

4. Authority appointed under Income Tax

5. Banking Company

6. State Electricity Board

7. Registrar or Sub-Registrar of Registration Act, 1908

8. Registrar of Companies

9. Registering authority of Motor Vehicles

10. Collector

11. Recognised Stock Exchange

12. Depository of Shares

13. Officer of Reserve Bank of India

14. Goods & Service Tax Network

15. Person to whom Unique Identity Number (UIN) is granted.

16. Any other specified person on recommendation of the Council.

• If the above said persons are responsible for maintaining:
  • Records of registration
  • Statement of accounts
  • Periodic returns
  • Details of payment of tax
  • Any other details of transaction of goods or services
  • Transaction relating to bank account
  • Transaction relating to consumption of electricity
  • Transaction of purchase
  • Sales
  • Exchange of goods or property
  • Right or interest in a property

Implications of non-compliance

1. If the details filed are defective:

• • Defect should be intimated to the person who has furnished such information return.
  • Reasonable opportunity should be given to rectify the defect in the return.
  • Defect should be rectified within a period of 30 days from the date of such information or within such further period.
• If the defect in the return is not rectified within the time prescribed, the information return should be treated as not submitted and penalty of Rs.100/- per day for each day during which the failure continues, would be payable subject to a maximum of Rs. 5,000 in terms of section 123 of the CGST Act.

2. If no return is filed:

• Authority may serve a notice requiring him to furnish such information return.
• It should then be filed within a period not exceeding 90 days from the date of service of notice 

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