To bring clarity to the provisions of GST and to reduce the ambiguity of the law, Advance Ruling Authority (AAR) was established. An Advance ruling is a written decision provided by the Authority or the Appellate Authority to an applicant on matters or questions relating to the supply of goods/services, etc. An advance tax ruling is applied, before starting the proposed activity.So, in line with the same here is an advance ruling case on the matter- whether registration is required in the state in which goods are imported when the principal place of business is in another state and whether ITC can be availed on the same imported goods when supplied directly from the custom ports to customers across India.

BRIEF FACTS

The applicant M/s. Euro flex Transmissions India Private Limited (hereinafter referred to as Euro flex, India)has its registered place of business in the state of Telangana. It wants to supply goods importeddirectly from the port of importation to the buyers located across different states in India without bringing such goods to the state of Telangana.

MATTER IN QUESTION

1. Whether the applicant is required to obtain registration in the state in which goods are imported if the said goods are directly sold from the port of importation to the buyers located across different states in India, without bringing such goods into Telangana?
2. Whether the applicant is entitled to avail Input Tax Credit (ITC) of IGST paid on import of goods if the said goods are sold directly from the port of importation to the buyers located across different states in India, without bringing such goods into Telangana?

DISCUSSION

• The liability for registration arises under Section 22 of the CGST Act, 2017 when the supplier makes taxable supplies and the aggregate turnover of which exceeds Rs. 20 Lakhs in a financial year. Such registration is required to be obtained in the State from which the taxable supply is made.It is observed that the applicant has already obtained registration with GSTIN: 36AAACE5313K1ZS. Therefore, this registration would be sufficient to cover all the transactions or supplies made in the similar nature discussed above.
• Further, in the case of a supply of goods made from a customs warehouse, such transaction is not treated as supply as per Schedule III to the CGST Act, 2017 if it is:

1. Supply of warehoused goods to any person before clearance for home consumption,
2. Supply of goods by the consignee to any other person, by the endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption in India.

It is observed from the supporting documents submitted by the applicant that after clearing the goods from the port, the applicant is making the inter-state supply of the imported goods from the customs warehouse without taking such goods to their business premises. This transaction is made by the applicant after getting them cleared from the customs port in their account, so it is concluded that this transaction is not covered under Schedule III of CGST Act, 2017.

Therefore, the subsequent supply when made by the applicant to the buyers within the State of Telangana, will be treated as an intrastate supply on which CGST & SGST will be levied and when such supply is made to the buyers in other states of India, it will be an inter-state supply on which IGST will be levied.

• As per Section 16 of the CGST Act, 2017 read with Section 20 of the IGST Act, the IGST paid on imports will be eligible to be availed as ITC by the applicant for both intrastate and inter-state supply.

TAKE AWAY

Case Law description by a diagram-

As per the aforementioned discussion, registration will not be required in the state in which goods are imported even if the said goods are directly sold from the port of importation to the buyers located across different states in India, without bringing such goods to the principal place of business.

And since the transaction is not covered under Schedule III of CGST Act, 2017; the applicant is entitled to avail ITC on IGST paid for both the intrastate (within Telangana) and inter-state supply (other than Telangana).

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Posted by:

CA Tarun Kapoor

AKGVG & Associates