Authority for Advance Ruling- Gujarat Authority for Advance Ruling

Applicant Name- M/s Sterlite Technologies Ltd

Question in Ruling:

1. Whether GST is payable in respect of goods procured from outside India and such goods not brought to India?

2. Whether GST is payable in goods are shipped directly from the foreign vendor’s premises to customer’s premise (located outside India)?


Applicant was in business of development and supply of with respect to telecommunication. Inputs were procured within India as well as Outside India. Such goods are being supplied as per applicable rate of tax, except in case of Export. The applicant proposes to undertake “Merchandise Trade Transaction” where in goods were directly supplied to foreign customer from foreign vender. Both the transaction of payment as well receipt was in foreign currency. In this transaction goods were not brought to custom frontiers of India

Personal Hearing

In relation to first query, GST on procurement of goods from outside India without being bringing in to India then in such a case definition of Import of Goods is of Importance. As per Section 2(10) of the IGST Act, 2017, “Import of goods” means bringing goods into India from a place outside India. Further, we need to check whether the same is qualified as “Inter-state supply of services” or not?. In accordance of Section 7(2) of the IGST Act, 2017, “Supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-State trade or commerce.”

Now, its an case of Interstate supply, As per Section-5 of IGST provides that where the goods are imported in India from outside India, IGST shall be levied and collected in accodance of provisions of Section-3 of Customs Tariff Act, 1975, on the value determined under the said Act at the point when duties of customs are levied on the said goods. From a combined reading of the above provisions of the IGST Act, 2017, the Customs Tariff Act, 1975, and the Customs Act, 1962, it is evident that the integrated tax on goods imported into India shall be levied and collected at the point when duties of customs are levied on the said goods under Section 12 of the Customs Act, 1962 i.e.-on the date determined as per provisions of Section 15 of the Customs Act, 1962.

Bench has considered the ruling in case of M/s Synthite Industries Ltd., Ernakulam, Kerala. It was held that “the goods are liable to IGST when they are imported into India and the IGST is payable at the time of importation of goods into India; The applicant is neither liable to GST on the sale of goods procured from China and directly supplied to USA nor on the sale of goods stored in the warehouse in Netherlands, after being procured from China, to customers, in and around Netherlands as the goods are not imported into India at any point.”

Whereas Circular No-33/2017 has been issued while clarifying on “High Sea Sales” applicable in our case which states that Section-3(12) of Custom Tariff Act, 1975 specifies that all duties, taxes, cesses etc shall be collected at the time of Importation i.e. when the import declarations are filed before the customs authorities for the custom clearance purposes.

“Bill of Entry will not be filed as goods are not being imported into India, thus levy of IGST on such transaction shall not be applicable.

In relation to second query i.e. levy of GST on outward supply from place of vendor to customer, the applicant is selling goods for a consideration in the course or furtherance of business and as such the transaction tantamount to ‘supply’ in terms of the definition of ‘supply’

Further, ruling emphasis for provision of Section-10 & Section-12 of IGST Act, which provides for:

Where location of supplier & recipient is in different state and supply of goods/service being taken place then it shall be treated as Inter-state supply of goods/services [Section-10 of IGST Act, 2017]

Place of supply in case of goods shall be the “destination of goods” which is outside the state thus qualify as Interstate supply of goods. [Sec. 7(5) of IGST Act, 2017]

Now the question arises here for whether the supply is covered under the “exempted or zero rate supply of goods”

On the basis of understanding of nature of goods, there is no specific exemption available to applicant. Now, question arises here, “Whether the transaction is covered under the Export of goods”

As per Section-2(5) of IGST Act, 2017, “Export of goods” means taking goods out of India to a place outside India’.

In this case goods are not being taking out of India, This situation is not covered under the definition of Export of Goods, Concluding that the above transaction shall be subject to levy of IGST.

My Observation:

The authority has considered the definition of Supply under Section-7 of CGST Act, 2017 where as forgot to consider the provisions of Item No-7 of Schedule-III annexed to CGST Act, 2017, the extract of same is hereunder:

Schedule-III provides for the transaction that is neither supply of good nor supply of Services.

Item No 7-“Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.”

The above second query fairly covered under the Item No-7 of Schedule-III. In our opinion, no GST shall be leviable on both transactions.

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Qualification: CA in Practice
Company: M&A & Associates
Location: NEWDELHI, New Delhi, IN
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September 2021