No separate GST Registration is required in the State where imported goods are cleared for sale to customer in the context of Kardex India Storage Solution (P) Ltd.
Separate GST Registration in State where imported goods are cleared for sale to customer?
A. Brief Fact of the case:
M/s Kardex India Storage Solution (P) Ltd, the applicant is following the procedure of transporting the imported goods from the port of import to their registered place of business at Bangalore and then supplying the same to their customers place. During these procedures, the applicant came across substantial logistical problems and incurred huge amount of logistic costs. In view of this, the applicant intends to import the goods to the port nearest to the location of the customer and supply directly to the location of customer from the port of importation.
B. Questions raised before the advance ruling-
1. Whether applicant can take credit of IGST paid on import of goods?
2. Whether applicant can issue tax invoice with IGST to the customer?
3. Whether the applicant needs to take separate registration in the State where port of clearance is located?
C. Analysis of the ruling of advance authority-
The applicant intends to import goods nearest to the customer place and supply it directly to customer. The relevant tax invoice intends to be issued from their registered place at Bangalore. As per definition under IGST Act, 2017 import means bringing goods into India from a place outside of India. The meaning of the import is identical to Customs law. Further as per explanation to article 269A of the Constitution of India, import of goods or services or both shall be deemed to be inter-state trade or commerce. Hence, supply of goods imported into territory of India shall be deemed to be inter-state trade or commerce. Further, as per the provision of section 7(2) of IGST Act it will be Inter- State supply of goods and IGST will be applicable accordingly. IGST on goods imported will be levied and collected as per the provisions of section 3 of the Customs Tariff Act, 1975. It is clear that import of goods is an activity of inter-state trade or commerce and IGST will be applicable. Applicant will be liable to pay IGST at the same time duties of customs is payable (i.e. filing of Bill of Entry).
Further, as per section 11(a) of IGST Act the place of supply in case of imported goods is the place of the importer. In GST law the definition of location of recipient of services is given but location of recipient of goods is absent. So by applying the general principle we may say that location of recipient of goods would be the location of the buyer of the goods. Here the buyer is registered at Bangalore.
Place of supply is the location of importer who is registered at Bangalore in the State of Karnataka. In the given case though the goods are physically imported to the port nearest to the location of the subsequent customer, the said imported goods are deemed to have been supplied (place of supply) to the place of importer, i.e. Bangalore in the State of Karnataka.
Although, the goods are physically imported nearest to the port of the customer but by fiction of section 11(a) of IGST Act it is deemed that the place of supply in case of imported goods is the place of importer. The applicant is registered at Bangalore which is the place of supply of imported goods and applicant can again raise invoice from its Bangalore office.
Question No 1:
Whether input tax credit is available on IGST paid on imported goods-
The eligibility of input tax credit is based on the provisions of section 16 of CGST Act and its relevant rules. Here, the applicant, after import, will subsequently supply to their customer located nearest to the port of import. This is merely a reselling of goods. However at the time of filing of Bill of Entry (BoE) the applicant needs to mention their Bangalore GSTN Number as the registered place of business. One of the conditions of section 16 is the receipts of goods, but as per section 11(a) of IGST Act the place of supply is at Bangalore and the applicant has deemed to have received the goods at Bangalore.
“Request CBIC to bring out an explanation of deemed receipts of goods in such scenario or carryout necessary amendment to the explanation to section 16(2)(b) of CGST Act”. The applicant is entitled for input tax credit.
Whether applicant can issue tax invoices with IGST to the customer –
The applicant will further supply of goods to their customer and a tax invoice is required to be issued. Now the moot question is whether IGST will be applicable. Here in the given transaction there are two parts one is importation of goods and the second one is subsequent supply to the customer.
First part of the events of importation is completed once Bill of Entry for home consumption is filed and the goods become land mass of India. First part is inter-state trade and IGST will be levied. Bangalore office is the importer of goods and Bangalore office is the place of import.
Now we have to look at the provision of section 7(1) of IGST Act. Here the supplier is Bangalore office and place of supply is the customer address in other States. So, IGST will be levied on the tax invoice issued from Bangalore office.
Whether applicant needs to take registration where the port of clearance is located –
Section 22 of CGST Act read with section 20 of IGST Act, the person liable to take registration in the State from where he makes taxable supply. Registration is required only that State “FROM WHERE” supply is made. “Origin” of supplying State is basic criteria of determination of registration. Here, the applicant has deemed to be received the goods at the location of Bangalore by fiction of section 11(a) of IGST Act. The applicant does not have any establishment in that State where the port of clearance is located. Applicant has no physical establishment in other States. Applicant uses their Karnataka GSTN in Bill of Entry and pay customs duty accordingly. There is no need for separate registration in the State where port of clearance is located. There is no need for separate registration in the State other than Bangalore.
In the given case the applicant has no registration in the State other than Karnataka. If in the given case the applicant has another registration in the State where port of clearance is located, whether they can raise invoice from their Karnataka address also and flow the same procedure.
In this context we may refer another ruling of advance authority in the case of Gandhar Oil Refinery (India) Ltd where the authority has passed a ruling that the applicant can raise invoice from their Head office at Mumbai. The following important points are to be considered to raise subsequent invoice:
1. GSTN incorporated in Bill of Entry;
2. Address details at Bill of Lading;
3. In Bill of Lading it may insert that “this goods after import will be supply to …… (customer name) in…. (address)”;
4. Importing State address must be mentioned in IEC code;
5. Place of import must be mentioned in purchase order place to foreign supply.
These precautions must be taken care to avoid unnecessary harassment from the department.