The Telangana Authority of Advance Ruling (AAR) held that no IGST payable on supply of imported goods on High Sea sale basis or supply of goods to Indian customers.
The applicant, M/s. AIE Fiber Resource and Trading (India) Private Limited are intending to Supply of imported goods to Indian customers on High Sea Sale (HSS) basis and supply imported goods to Indian customers from Free Trade Warehousing Zone (FTWZ).
The applicant sells the imported goods before goods cross the customs frontier of India i.e., prior to clearance of goods from the customs to pre-identified customers. The invoice will be raised by the applicant from the office located in the State of Telangana.
The applicant has sought the advance ruling on the issue whether in the facts and circumstances of the case, supply of imported goods on High Sea sale basis or supply of goods from FTWZ facilities by the Applicant to the Indian customers would be subject to IGST.
The coram of S.V.Kashi Vishweswara Rao and B.Raghu Kiran noted that the applicant imports goods and stores them in a FTWZ till he finds a local customer who will purchase the goods and such purchaser clears the goods under the Customs Act.
“The transactions proposed to be made by the applicant are covered by Entry 8 of Schedule III of CGST/SGST Acts inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019, i.e., supply of goods by the consignee to any other person, by endorsement of document of title of the goods, after the goods have been dispatched from the port of origin located outside India but before the clearance for home consumption; or supply of warehoused goods to any person before clearance for home consumption. And such transactions by virtue of Entry 8 of Schedule III do not attract tax under CGST or SGST or IGST Acts,” the AAR said.
Further, according to the explanation to section 17(3) of CGST Act inserted vide CGST (Amendment) Act 2018, w.e.f. 1-2-2019 all transactions falling under Schedule III except Entry 5 will not be considered as ‘value of exempted supply for purpose of reversal of ITC of common input services. Therefore the value of the transaction referred above will not form part of value of the exempt supply.
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