Levy of GST — In the instant case, applicant is seeking an advance ruling in respect of the following question—
a) Whether the sale of goods, which are located outside India, would be liable to tax in India under section 7(5) (a) of Integrated Goods and Services Tax Act, 2017?
b) If answer to (a) is yes, then whether the recipient, to whom such goods are sold, be eligible to avail the input tax credit of such goods?
Held that— we find that there are two different transactions effected in present matter between the parties for the supply of same tools. One from foreign supplier to the applicant (in short T1) and second between applicants to customer within India (in short T2). The transaction covered by the present application is T2 transaction.
Applicant submits that the transaction of sale/supply of goods by the supplier in India should not be made liable to IGST under section 7(5) (a) of IGST Act, 2017
We find that the applicant would be purchasing from Schaeffer Germany, who is a manufacturer on principal to principal basis. The ownership of the said goods get transferred to the applicant without any physical movement of the goods from Germany to India. However the goods remain in the possession of Schaeffer Germany. Once the first transaction takes place applicant transfers the ownership of the goods to Indian customer by way of sale. In this case also the goods remain under the possession of Schaeffer Germany. In short, the order received by the applicant from their customer in India and the order placed by applicant On Schaeffer Germany is in the nature of back to back order.
From the harmonious reading of Section 7(2) and Section 7(5)(a) of the IGST Act, it is clear that the transaction referred to as T2 gets covered under the ambit of Interstate trade and commerce. And thus liable to tax as per Section 5 of the IGST Act.
As per Section 7(2) and 7(5) (a) of the [GST Act and proviso to Section 50) Of the IGST Act it is very clear that in respect of imported goods into the territory of India there is no levy and collection except in accordance with the provisions of Section 12 of the Customs Act, 1962 and Section 3 of the Custom Tariff Act, 1975. Section 12 of the Customs Act, 1962 provides that custom duties which include integrated tax in respect of imported goods would be levied only at the time of import or export of goods.
Thus in case of goads supplied on an out an out basis as is in the present case, there is no levy till the time of their customs clearance in compliance with Section 12 of the Customs Act and Section 3 of the Customs Tariff Act. In view of this the imported goods sold from and to a non-taxable territory, though they are clearly in the nature of inter-state supply would come in the category of “exempt supply” as no duty is leviable on them except in accordance with proviso to Section 5(1) of the IGST Act.
It is very clear that the goods sold in the subject transaction are non-taxable supply as no tax is leviable on them till the time of customs clearance in accordance with and compliance of Section 12 of the Customs Act, 1962 and Section 3 of the Customs Tariff act, 1975.
Ruling— (a) sale of goods, which are located outside India, would not be liable to tax in India under section 7(5) (a) of IGST Act, 2017.
(b) Not relevant in view of answer to Question No. 1 above. — INA Bearings India Private Limited, In Re…. [2018] 2 TAXLOK.COM 222 (AAR-MAHARASHTRA)