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III. GST Case Law:
1. M/s. Sterlite Technologies Ltd, Advance Ruling No. GUJ/GAAR/R/04/2020, Date: 17.03.2020
Facts of the case
1. M/s Sterlite Technologies Limited, a company Block 6, Magnet Corporate Park, Nr. Sola Flyover, Thaltej, Ahmedabad (hereinafter called the applicant) is a registered person under GST having GST Number -24AAECS8719B1ZI.
2. They are engaged in the Development and supply of software with respect to telecommunication qua wi fi service management platform. OSS/BSS alongside packet core with flexibility of modular and pre integrated offerings etc. and trading in hardware. They procure requisite hardware from the vendor located within India or outside India) on payment of applicable duties/taxes. Such hardware is sold as per the requirement of the customer on payment of GST, except in case of export.
3. The applicant proposed to undertake transaction and supply of hardware, commercially known as ‘Merchant Trade Transaction’, wherein the applicant will receive an order from the customer located outside India and as per their instruction, Vendor would directly ship the goods to customer located outside India. Vendor would issue invoice on applicant against which payment would be made in foreign currency and applicant would raise invoice on customer and would receive consideration in foreign currency. In the above transaction, goods would not physically come into India, but would move from place outside India to another place outside India.
4. The applicant has in their application dated 24.5.2018 raised the following issues for determination before the Authority:
- i) Whether GST is payable on goods procured from vendor located outside India in a context where the goods so purchased are not brought into India?
- ii) Whether GST is payable on goods sold to customer located outside India, where goods are shipped
HELD
In the event that the supplier is located in India and the place of supply is outside India, such supplies shall be treated as Inter-stated supplies. The place of supply in the instant case would be governed by the provisions of Sec. 10 (1) of the IGST Act, 2017 of which the relevant text reads as under:
The place of supply of goods, other than supply of goods imported into, or exported from India, shall be as under,––
a) where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient
In the instant case, it is an undisputed fact that the supply involves movement of goods and therefore the place of supply would be the termination for delivery to the recipient. The goods under consideration are supplied to overseas buyers as declared by the applicant and as such the place of supply will be a place outside India. Further, the supplier is the applicant who has declared the principal place of business within India and issues the invoices for sale of such goods.
The above indicates that the supplier is located in India and the place of supply is outside India and as such the same would be Inter-state supply in terms of the provisions of Sec. 7(5) of IGST Act, 2017. Thus, it is very clear that the transaction undertaken by the applicant tantamount to supply and is an Inter-state supply. Having travelled thus far, it is obvious that IGST will be leviable unless the goods are exempted or are zero-rated supplies which have been defined as export of goods or services in terms of the provisions of Sec. 16 of the IGST Act, 2017. In the instant case the applicant has not stated the nature of goods and has not declared that such goods are exempted under any notification issued under the powers of Sec. 11 of the CGST Act, 2017 and the corresponding State Act or Section 6 of the IGST Act. Thus, the only possibility of goods not subject to levy of IGST would be the circumstances where the goods are exported.
The term ‘export of goods’ has been defined under sub section 5 of Section 2 of IGST Act, 2017 which reads as under:
Export of goods would mean—‘taking goods out of India to a place outside India’.
The above definition indicates that the act of taking goods out of India to a place outside India qualifies as export. In the instant case, the goods have not crossed the Indian customs frontier and as such it is clear that the goods are not physically available in the Indian territory. When the goods are not available in the Indian territory, the question of takinggoods out of India does not arise. Thus, the subject transaction does not qualify as export of goods.
In view of the above, it appears that the transaction is covered under the ambit of Inter-state supply and is neither exempted nor covered under export of services. Thus, the theory of elimination takes us to the conclusion that such supplies will be subject to levy of IGST.
(Please click here for Order)
[ Contribution by CA. Vijay Gupta] |
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