In a recent missive, the Central Board of Excise and Customs (CBEC) clarified the issues on applicability of GST on goods transferred / sold while being deposited in a warehouse under the new Goods and Service Tax (GST) regime.
As per the present GST law, supply of imported goods which takes place before they cross the customs frontiers of India, shall be treated as an inter-State supply for which IGST is applicable. The value of such supply shall be determined in terms of Section 15 of the CGST Act read with section 20 of the IGST Act and the rules made thereunder, without prejudice to the fact that customs duty (which includes BCD and applicable IGST payable under the Customs Tariff Act) will be levied and collected at the ex-bond stage.
However, in respect of goods stored in a customs bonded warehouse, there is a possibility that certain cases may involve an additional taxable event, if a transfer of ownership of warehoused goods takes place between the importer and another person, before clearance of the goods, whether for home consumption or for export.
Addressing the issue, the Board in its circular issued on Friday clarified that “so long as such goods remain deposited in the warehouse the customs duty to be collected shall remain deferred. Further, it is only when such goods are ex-bonded under section 68, shall the deferred duty be collected, at the value as had been determined under section 14 of the Customs Act, 1962 in addition to IGST leviable, as indicated at Para 5.1 above. An illustrative chart on in bond sales and clearance thereof is attached as Annexure.”