Page 49 - GSTL_2nd April 2020_Vol 35_Part 1

2020 ] TAXING EXPORTS UNDER GST J15
Explanation therein would not have covered import of goods or services within its
ambit? Thus export of goods or export of services would not be deemed to be a
supply in the course of inter-State trade or commerce coming under Article 269A
of the Constitution.
At this juncture it would not be out of context to note Article 286 of Con-
stitution which States that no law of State shall impose or authorise imposition of
tax on supply of goods or services when such supply takes place in the course of
import of goods or services into or export of goods or services out of the territory
of India. The objective of this Article has been explained by the Supreme Court as
under -
 “to exempt Sales by export and purchases by import from sales tax”
[see State of Travancore - Cochin v. Bombay Co. Ltd. - (1952) 3 STC 434
(SC)]
 “the foreign trade of this country enjoys immunity from double tax
burden and suffers only one tax, namely the export or import duty
as the case may be” [See State of Travancore-Cochin v. Shanmugha Vi-
las Cashewnut Factory - (1953) 4 STC 205 (SC).
The amendment made to Article 286 by Constitution (One Hundred and First
Amendment) Act, 2016 viz., replacing the words “sale or purchase of goods” with
“supply of goods or services” would not take away the exemption/immunity from
levy of value added taxation provided to foreign trade by the said article as ob-
served by the Supreme Court in above cases. In order to uphold this immunity
from taxation even under the GST regime, it appears, the proviso to Section 5(1) of
IGST Act has specifically excluded from the scope of its charging powers the levy
of tax on imported goods. But for this exclusion, the imported goods would have
been subjected to double taxation - one being import duty under the Customs laws
and other being GST under IGST Act. Further no similar exclusion from the scope
of levy of IGST under the charging Section 5 of the IGST Act has been provided in
respect of export of goods. The reason being since export of goods were not falling
within the scope of the charging Section 5 of the IGST Act, there was no need to
exclude the same therefrom to avoid double taxation.
All the above reasons indicate that Article 269A(1) empowers the Central
Government to levy tax only on inter-State supplies (between two States) and
supply in the course of import of goods or import of services into the territory of
India. IGST Act cannot impose or levy tax on supply made in the course of ex-
port of goods or export of services out of the territory of India. The Legislature in
wisdom has consciously excluded export of goods or export of services from the
ambit of GST so that the cardinal rule of not exporting taxes is complied.
In this background the Limited objective or role of Section 7(5)(a) of IGST
Act it appears is to -
 classify such supply (i.e. when location of supplier is in India and
place of supply is outside India) as inter-State supply so that no
State shall impose a tax on such supply of goods or services; and
 in case where registered persons opts for claiming refund of the tax-
es borne or paid by him under either of the options given under
Section 16(3) of the IGST Act, to specify that the administering au-
thority is the Central Government and also to specify that the na-
ture of tax to be paid is IGST and not CGST + SGST.
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GST LAW TIMES  2nd April 2020  113