Procurement of supplies of goods from DTA by EoU / EHTP / STP & How to claim Deemed Export Benefits?

The Central Government, vide Circular No. 14/14/2017– GST dated 6^th November 2017, prescribes detailed procedure on procurement of supplies of goods from Domestic Tariff Area  by Export Oriented Unit (EOU) / Electronic Hardware Technology Park (EHTP) Unit / Software Technology Park (STP) Unit / Bio-Technology Parks (BTP) Unit under deemed export concept as provide in section 147 of CGST Act, 2017.

Export Oriented Unit

It is an inclusive definition and includes an Export Oriented Unit (EoU) or Electronic Hardware Technology Park Unit (EHTP) or Software Technology Park Unit (STP) or Bio-Technology Park Unit (BTP) approved in accordance with the provisions of Chapter 6 of the Foreign Trade Policy 2015-20.

Deemed Exports –

Section 147 of the Central Goods & Services Act, 2017, provides that, the Central 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.  

The Central Government, on the recommendations of the GST Council, notifies certain goods vide Notification No. 48/2017-Central Tax dated 18^th October 2017 as “Deemed Exports” namely – Supply of:

1. Goods by a registered person against Advance Authorization

2. Capital goods by a registered person against Export Promotion Capital Goods Authorization

3. Goods by a registered person to Export Oriented Unit

4. Gold by a bank or Public Sector Undertaking against Advance Authorization

Export Oriented Unit

Means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit approved in accordance with the provisions of the Foreign Trade Policy 2015-20.

Benefits for Deemed Exports

Deemed exports shall be eligible for any / all of following benefits in respect of manufacture and supply of goods, qualifying as deemed exports:

• Advance Authorization / Advance Authorization for annual requirement / DFIA.
• Deemed Export Drawback.
• Refund of terminal excise duty, if an exemption is not available. Refund of tax paid on Supplies
• Refund of tax paid on such supplies can be claimed either by the recipient or supplier of such supplies.

(Rule 89 of the CGST Rules, 2017 has been amended suitably vide Notification No. 47/2017- Central Tax dated 18.10.2017 to allow either the recipient or supplier of such supplies to claim the refund of tax paid thereon.)

Detailed Procedure to procure supplies from DTA by EoU / EHTP / STP/ BTP Units – How To Claim?

(As prescribed by Circular No. 14/14/2017- GST dated 6^th November 2017)

1. Prior Intimation

The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in Form–A with a running serial number containing goods, pre- approved by the Development Commissioner and the details of the supplier before such deemed export supplies are made.

The intimation shall be given to –

• The registered supplier;
• The jurisdictional GST officer in charge of such registered supplier; and
• It’s jurisdictional GST officer.

2. Supply of goods

The registered supplier shall supply goods on receipt of tax invoice to the recipient situated in EOU / EHTP / STP / BTP unit as the case may be.

3. Intimation by recipient of goods supplied

The recipient of goods in EOU / EHTP / STP / BTP unit shall validate the tax invoice and send a copy of the validated tax invoice to –

• The registered supplier;
• The jurisdictional GST officer in charge of such registered supplier; and
• It’s jurisdictional GST officer.

4. Proof of deemed export supplies

Validated copy of tax invoice will serve as a proof for supplies made by the registered person to EOU / EHTP / STP / BTP unit as the case may be.

5. Compliance & Records

The recipient in EOU / EHTP / STP / BTP unit shall maintain such records relating to deemed export supplies in digital form, as prescribed in Form-B.  Essential elements as prescribed in Form-B are in mandatory nature, however, the recipient units will be free to add any additional data fields, as per their requirements.

Details – In brief

• Data shall be entered accurately and immediately upon the goods received.
• Utilization or removal from the Units as the case may be.
• The digital records should be complete in all respects and made it available at all the times for verification.
• A soft copy of Form – B, completed in all respects, shall be field month wise with the concerned jurisdictional GST officer, by 10^th every month in a CD.

6. Other terms and conditions as provided in the Foreign Trade Policy 2015- 2020 – Excerpts

• Supplies shall be made directly to the designated Projects / Agencies / Units / Advance Authorization / EPCG Authorization holder.
• Subcontractors may, however, make supplies to the main contractor instead of supplying directly to designated Projects/ Agencies.
• Supply of domestically manufactured goods by an Indian Sub-contractor to any Indian or foreign main contractor, directly at the designated project’s/ Agency’s site, However, third-party supplies are not eligible for benefits/exemption.

The author is a budding Tax Law Professional and may be reached at [email protected]