Complexity of determining the applicable tax on the supply of goods to a person located outside India for delivery to a person location within India.
As per the definition under Section 2(5) of the IGST Act, the supply in question does not qualify as an export because the goods are not being taken out of India to a place outside India; instead, they are being delivered within India.
Inter-State vs. Intra-State Supply:
For goods that are supplied and involve movement, as stated in Section 10(1)(a), the place of supply is determined by where the movement of goods ends for delivery to the recipient. Since the delivery is occurring within India, this section is applicable.
Moreover, Section 10(1)(ca) indicates that if the recipient is unregistered the place of delivery could be the address noted on the invoice. Further, the circular No.209/3/2024-GST dated 26 June, 2024 clarified the applicability of clause 1 0(1)(ca) of section 10 of IGST Act, that in such cases involving supply of goods to an unregistered person, where the billing address and delivery address are different, the supplier may record the delivery address as the address of the recipient on the invoice for the purpose of determination of place of supply of the said supply of goods. Since the delivery is occurring within India, this section is also applicable.
The analysis of section 10(1)(b) reinforces that if a third party directed delivery while not being a registered entity, it does not facilitate the passing of tax to the location where goods are actually consumed by the recipient of goods and the principal of destination-based consumption of taxation is not adhered to. Therefore, it conclude that section 10(1)(b) will not applicable.
Import of Goods: As established, the goods being supplied are neither being imported into India (as defined under Section 2(10)) hence, supplied in consideration is not the inter-state trade (Section 7(2)).
Conclusion: Thus, based on the applicable laws and provisions, the supply of goods to an unregistered person located outside India but delivered to person located within India, should be classified as an intra-state or interstate supply according to section 10(1)(a) or 10(1)(ca) and triggering the applicable taxes accordingly.
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