IGST Leviable only on Inter-state ‘Supply’ of Goods or Services or both u/s 5(1) of IGST Act: CESTAT [Read Order]

The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Integrated Goods and Service Tax (IGST) can be levied only on the inter-state supply of goods or services or both which is defined under section 5(1) of the Integrated Goods and Service Tax Act (IGST), 2017. 

Heeralal Chhaganlal Tank, the appellant assessee are jewelers holding Import and Export Code and the importer-assessee had filed 10 Bills of Entry for the re-import of goods exported earlier for participation in an exhibition or on a consignment basis. While re-importing these goods, the assessee-importer was exempted from Customs Duty, and the goods were exported either under claim of refund of IGST paid on export or under bond without payment of duty of IGST. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of Customs Duty amounting to Rs.1,20,17,423/- was proposed to be recovered from the assessee along with penalty and the goods imported by the said bill of entry were proposed to be confiscated. 

Rahul Lakhwani, the counsel for the assessee contended that the goods exported either under the Scheme of refund of integrated tax paid on export of goods or under bond without payment of integrated tax, on being re-imported, that too within six months of export, the same shall not amount to supply of goods. 

Also submitted that the goods are sent either for exhibition or on a consignment basis and re-imported are the ones which are not sold in the Exhibition or are not approved by the buyer and ownership of the goods does not transfer to the buyer/consignee to whom the goods i.e. assessee only takes the goods out of India and brings the same back after Exhibition. 

M.K.Chawda, the counsel for the department contended that the exported goods were not brought back within six months of the removal, the Exporter had to issue a tax invoice and the supply would be taken place and the department rightly raised the duty demand, and the assessee liable to pay the demand. 

The Bench observed that as per Section 5(1) of the IGST Act levy of the integrated tax was on inter-state supply of goods or services or both. Thus, for the levy of integrated tax, there must be a ‘supply’ of goods or services or both. 

The two-member bench comprising Rachana Gupta (Judicial) and Hemambika Priya (Technical) held that the assessee was not liable to pay the demand raised by the department. 

To Read the full text of the Order CLICK HERE

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