Page 60 - GSTL_2nd July 2020 _Vol 38_Part 1

J34 GST LAW TIMES [ Vol. 38
queries for advance ruling. The first question was whether GST is payable on
goods procured from vendor located outside India in a context where the goods
purchased are not brought into India.
The second question was whether GST is payable on goods sold to cus-
tomers located outside India, where goods are shipped directly from the ven-
dor’s premises (located outside India) to the customer’s premises.
The applicant proposed to undertake transaction and supply of hard-
ware, commercially known as ‘Merchant Trade Transaction’, wherein the appli-
cant will receive an order from the customer located outside India and as per
their instruction, its vendor (also located overseas) would directly ship the goods
to the customer located outside India.
The vendor would issue an invoice on the applicant against which pay-
ment would be made in foreign currency and the applicant would raise invoice
on the customer and would receive consideration in foreign currency.
In the above transaction, goods would not physically come to India, but
would move between one place and another, both outside India.
After hearing all parties, the AAR observed 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 IGST Act.
Thus, it is very clear that the transaction undertaken by the applicant is
tantamount to supply and is an inter-State supply. It needs to be noted 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 according to law.
IGST law defines export as ‘With its grammatical variations and cognate
expressions, means taking goods out of India to a place outside India.’ In this
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 taking goods out
of India does not arise. Thus, the subject transaction does not qualify as export of
goods. Based on these facts, AAR ruled that such supplies will be subject to levy
of IGST. Also, it clarified that that GST is not payable on goods procured from
vendor located outside India, where the goods purchased are not brought into
India.
According to Tanushree Roy, Director (GST) at Nangia & Co., as the GST
is still evolving, it cannot be concluded with certainty from the provisions of the
GST legislation whether the supply of goods takes place from the place/State
from where the tax invoice is raised or from where the movement of goods starts.
“This judgment has provided clarity on this aspect by stating that in the
event that the supplier is located in India and the place of supply is outside In-
dia, such supplies would be treated as inter-State supplies and liable to GST in
India. Suppliers of goods should keep this aspect in mind while entering into
‘Merchant Trade Transactions’/back to back contracts,” she said.
[Source : Business Line, Chennai, dated 20-6-2020]

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GST LAW TIMES  2nd July 2020  60
( A34 )