Page 150 - GSTL_20th August 2020_Vol 39_Part 3

364 GST LAW TIMES [ Vol. 39
of inter-State trade or commerce. As per Section 2(4) of the Integrated Goods and
Services Tax (IGST) Act, 2017, read with Section 2(11) of the Customs Act, 1962,
“customs frontiers of India” means the limits of a customs area viz. the area of a cus-
toms station or a warehouse and includes any area in which imported goods or export
goods are ordinarily kept before clearance by Customs Authorities. Till clearance by the
Customs Authorities i.e. issuance of Out of Charge, the supply of goods import-
ed shall be treated to be ‘inter-State supplies’ and in terms of proviso to Section 5
of the IGST Act, 2017, the integrated tax on goods imported shall be levied and
collected in accordance with the provisions of Section 3 of the Customs Tariff
Act, 1975. The levy and collection of Customs duties including the conces-
sions/exemptions etc are as per the Customs Law, the Customs Tariff Act and
the Notifications issued thereunder. It is a settled legal proposition that once the
goods imported are cleared by the Customs authorities, all the provisions of the
Customs Law (relates to imported goods) ceases to be applicable or extendable to
such goods. It is therefore, clear that the activity of import of drill bits by the ap-
plicant is a distinct activity of supply of goods in the course of inter-State trade or
commerce.
8.5 The applicant further undertakes to supply drill bits to the delivery
location of ONGC on consignment basis i.e. sale on approval basis. In such sup-
ply or delivery of drill bits, the applicant is responsible for transportation and
insurance of drill bits till deliver at ONGC locations. This activity involves issu-
ance of invoice and a consideration or payment - as per terms and conditions of
the contract. The post import activity of the applicant is therefore, clearly falls
within the scope of inclusive portion of expression “supply” under Section 7(a)
of the Central Goods and Services [Tax] Act, 2017. Depending upon the nature of
supply, such supply of drill bits done by the applicant are taxable services and is
leviable or chargeable to CGST or IGST under CGST Act, 2017 or IGST Act, 2017,
as the case may be. Any exemption from the whole or part of the tax, either abso-
lutely or subject to conditions as may be specified, is only through a Notification
issued by the Government by virtue of power vested in Section 11 of the CGST
Act, 2017 or Section 6 of the IGST Act, 2017, as the case may be.
8.6 In exercise of the powers conferred by sub-section (1) of Section 11
of the CGST Act, 2017, the Government had issued a Notification No. 3/2017-
Central Tax (Rate), dated 28-6-2017 exempts the intra-State supply of goods (the
description of which was given at column (3) of the table read with the List appended
thereto, and falling under the tariff-item, sub-heading, heading or chapter - as the case
may be) from so much of Central Tax as is in excess of the amount calculated at
the rate specified in Column (4) of the table. The said notification had categorical-
ly and clearly spelt out that the said exemption is subject to the relevant conditions
annexed to the notification, as specified in the corresponding entry in column (5) of the
Table. It is evident that the exemption granted under Notification No. 3/2017-
Central Tax (Rate), dated 28-6-2017 is a conditional one. It is a settled law that the
benefits or exemption of a Notification (a conditional in nature) is available or
eligible to the goods, only if the conditions specified therein are fulfilled or com-
plied with.
8.7 In view of the above, we accordingly ruled that the entitlement or
eligibility or applicability of exemption from central tax under Notification No.
3/2017-Central Tax (Rate), dated 28-6-2017 to the supply of goods (drill bits) to
the delivery stations of ONGC is only upon fulfilment of conditions specified in
the said Notification - including the one of :
“producing to the Deputy Commissioner of Central Tax or the Assistant
Commissioner of Central Tax or the Deputy Commissioner of State Tax or
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