Merchant Export is an activity of a trader (i.e. Merchant Exporter) who purchases the goods from the registered supplier and exports them outside of India. A Merchant Exporter does not have a manufacturing unit so he buys goods from a manufacturer/trader and then ships them to foreign customers.
According to the provisions of the CGST Act, a taxable supply under the Goods and Services Tax (GST) refers to the supply of goods or services or both that is subject to taxation as defined in Section 2(108). Similarly, in accordance with Section 7(5) of the IGST Act, if a supplier is situated in India but the place of supply is outside India, it is considered an inter-state supply.
From the sections above, it is clear that a Merchant Export is subject to GST registration as they are in India and making a supply at a location outside of India.
CONDITION AND PROCESS: –
Let us consider M/s ABC as a Merchant Exporter
1. The registered supplier (Supplier of M/s ABC) should be registered under GST. He should supply goods to merchant exporter (M/s ABC).
2. In order to be considered eligible, the registered recipient or merchant exporter (M/s ABC) must have registration under the Goods and Services Tax Identification Number (GSTIN) and be affiliated with an Export Promotion Council or Commodity Board that is officially recognized by the Department of Commerce.
3. The merchant exporter (M/s ABC) should place an order on the registered supplier (Supplier of M/s ABC) for procuring goods at a concessional rate indicating the supply further meant for export and a copy of the same shall be provided to the jurisdictional tax officer of the registered supplier.
4. The registered supplier (Supplier of M/s ABC) shall raise the tax invoice of goods with 0.1% IGST (or 0.05% of CGST plus 0.5% of SGST/UTGST).
5. The registered recipient (M/s ABC) shall move the same Goods from the place of the registered supplier (Supplier of M/s ABC) to the port, ICD, Airport of Land customs station from where the goods are to be exported or Goods can also be sent to a registered warehouse from where goods can be sent to port, ICD, or Airport of Land customs station from where goods are to be exported.
6. The goods can be aggregated at the registered warehouse and then sent to port, ICD, and Airport of Land customs station from where goods are to be exported. In such case, the registered recipient shall endorse receipt of goods on the tax invoice and also an acknowledgment of receipt of goods in the registered warehouse. These should be provided to the registered supplier as well as to the jurisdictional tax officer of such supplier.
7. The registered recipient (M/s ABC) is required to export the goods within 90 days from the date of issue of the tax invoice by the registered supplier (Supplier of M/s ABC). Otherwise, the exemption is not available and tax at full tax is required to be paid by the registered supplier along with interest.
8. The registered recipient (M/s ABC) shall indicate the GSTIN of the supplier (Supplier of M/s ABC) and tax invoice number of the registered supplier (Supplier of M/s ABC) in the shipping bill/bill of export.
9. After export, the registered recipient (M/s ABC) shall provide a copy of the Shipping Bill/Bill of export and export general manifest (EGM) or export report. The same shall be submitted to the Jurisdictional tax officer of the registered supplier (Supplier of M/s ABC)
ITC AVAILMENT:-
The Merchant Exporter (M/s ABC) can take ITC of 0.05 % / 0.1 % tax paid by the supplier (Supplier of M/s ABC).
REFUND CLAIM BY MERCHANT EXPORTER –
The merchant exporter (M/s ABC) can claim a refund of the Input Tax Credit as per rule 89(4B) of the CGST Rules’2017.
Reference Taken from:
Notification Nos. 40/2017-CT (Rate), 41/2017-IT (Rate), and 40/2017- UTT (rate) all dated 23-10-2017.
CBI&C circular No. 37/11/2018-GST, dated 15-3-2018 – ITC available to Merchant Exporter (Sl. No. 13)
FAQ on GST CBI&C on 15-12-2018- Chapter 14. Q 78 onward
CBI&C circular No. 94/13/2019-GST dated 28-3-2019– Export Refund Process
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