Exhibitions Outside India –
Receipt of Consideration is Key for Classifying Goods as “Sale”
[Circular
No. 108/27/2019-GST dated 18 July 2019]
Subject: Clarification
in respect of goods sent/taken out of India for exhibition or on consignment
basis for export promotion.
Various representations have been received from the trade and industry regarding
procedure to be followed in respect of goods sent / taken out of India for exhibition
or on consignment basis for export promotion. Such goods sent / taken out of India
crystallise into exports, wholly or partly, only after
a gap of certain period from the date they were physically sent / taken out of India
2. The matter has been examined and in view of the difficulties being faced
by the trade and industry and to ensure uniformity in the implementation of the
provisions of the law across the field formations, the Board, in exercise of its
powers conferred under section 168(1) of the Central Goods and
Services Tax Act, 2017 (hereinafter referred to as the “CGST Act”) hereby
clarifies various issues in succeeding paragraphs.
3. As per section 7 of the CGST Act, for any activity or transaction to be
considered a supply, it must satisfy twin tests namely‑
(i) it should be for a
consideration by a person; and
(ii) it should be in the course or furtherance of
business.
4. The exceptions to the above are the activities enumerated in Schedule
I of the CGST Act which are treated as supply even if made without consideration.
Further, sub-section (21) of section 2 of the Integrated Goods
and Services Tax Act, 2017(hereinafter referred to as the “IGST Act”) defines
“supply”, wherein it is clearly stated that it shall have the same meaning as assigned
to it in section 7 of the CGST Act.
5. Section 16 of the IGST Act deals with “Zero rated supply”. The provisions
contained in the said section read as under:
16. (1) “zero rated supply” means any of the following supplies of goods
or services or both, namely:––
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special
Economic Zone developer or a Special Economic Zone unit.
Therefore, it can be concluded that only such ‘supplies’ which are either
‘export’ or are `supply to SEZ unit / developer would qualify as zero-rated supply.
6. It is, accordingly, clarified that the activity of sending / taking the
goods out of India for exhibition or on consignment basis for export promotion,
except when such activity satisfy the tests laid down in Schedule I of the CGST
Act (hereinafter referred to as the “specified goods”), do not constitute
supply as the said activity does not fall within the scope of section 7 of the CGST
Act as there is no consideration at that point in time. Since such activity
is not a supply, the same cannot be considered as ‘Zero rated supply’ as per the
provisions contained in section 16 of the IGST Act.
7. Since the activity of sending / taking specified goods out of India is
not a supply, doubts have been raised by the trade and industry on issues relating
to maintenance of records, issuance of delivery challan / tax invoice etc. These
issues have been examined and the clarification on each of these points is as
under: –
|
SI.
No. |
Issue |
Clarification |
|
1. |
Whether
any records are required to be maintained by registered person for sending / taking
specified goods |
The
registered person dealing in specified goods shall maintain a record of such goods
as per the format at Annexure to this Circular. |
|
2. |
What
is the documentation required for sending / taking the specified goods out of
India? |
a)
As clarified above, the activity of sending / taking specified goods out of India
is not a supply. b) The said
activity is in the nature of “sale on approval basis” wherein the goods are sent
/ taken outside India for the approval of the person located abroad and it is
only when the said goods are approved that the actual supply from the exporter
located in India to the importer located abroad takes place. The activity of sending
/ taking specified goods is covered under the provisions of sub-section (7) of
section 31 of the CGST Act read with rule 55 of Central Goods
& Services Tax Rules, 2017(hereinafter referred to as the
“CGST Rules”). c) The specified
goods shall be accompanied with a delivery challan issued in accordance with the
provisions contained in rule 55 of the CGST Rules. d) As clarified
in paragraph 6 above, the activity of sending / taking specified goods out of
India is not a zero-rated supply. That being the case, execution of a bond or
L UT, as required under section 16 of the I GST Act, is not required. |
|
3. |
When
is the supply of specified goods sent / taken out of India said to take place? |
a)
The specified goods sent / taken out of India are required to be either sold or
brought back within the stipulated period of six months from the date of removal
as per the provisions contained in sub‑ section (7) of section 31 of the
CGST Act. b) The supply
would be deemed to have taken place, on the expiry of six months from the date
of removal, if the specified goods are neither sold abroad nor brought back within
the said period. c) If the
specified goods are sold abroad, fully or partially, within the specified period
of six months, the supply is effected, in respect of quantity so sold, on the
date of such sale. |
|
4. |
Whether
invoice is required to be issued when the specified goods sent / taken out of
India are not brought back, either fully or partially, within the stipulated period? |
a)
When the specified goods sent / taken out of India have been sold fully or partially,
within the stipulated period of six months, as laid down in sub-section (7) of
section 31 of the CGST Act, the sender shall issue a tax invoice in respect of
such quantity of specified goods which has been sold abroad, in accordance with
the provisions contained in section 12 and section 31 of the CGST Act read with
rule 46 of the CGST Rules. b) When
the specified goods sent / taken out of India have neither been sold nor brought
back, either fully or partially, within the stipulated period of six months, as
laid down in sub-section (7) of section 31 of the CGST Act, the sender shall issue
a tax invoice on the date of expiry of six months from the date of removal, in
respect of such quantity of specified goods which have neither been sold nor brought
back, in accordance with the provisions contained in section 12 and section 31
of the CGST Act read with rule 46 of the CGST Rules. |
|
5. |
Whether
the refund claims can be preferred in respect of specified |
a)
As clarified in para 5 above, the activity of (i) on the date of expiry of six months from the date of removal,
if the specified goods are neither sold nor brought back within the said period;
or (ii) on
the date of sale, in respect of such quantity of specified goods which have been
sold abroad within the specified period of six months c) It is
clarified accordingly that the sender can prefer refund claim even when the specified
goods were sent / taken out of India without execution of a bond or LUT, if he
is otherwise eligible for refund as per the provisions contained in sub-section
(3) of section 54 the CGST Act read with sub-rule (4) of rule 89 of the CGST Rules,
in respect of zero rated supply of goods after he has issued the tax invoice on
the dates as has been clarified in answer to the question no. 4 above.
It is further clarified that refund claim cannot be preferred under rule 96 of
CGST Rules as supply is taking place at a time after the goods have already
been sent / taken out of India earlier. |
8. The above position is explained by way of illustrations below:
Illustrations:
i) M/s ABC sends 100 units of specified goods out of
The activity of merely sending / taking such specified
goods out of India is not a supply. No tax invoice is required to be issued in this
case but the specified goods shall be accompanied with a delivery challan issued
in accordance with the provisions contained in rule 55 of the CGST Rules. In case
the entire quantity of specified goods is brought back within the stipulated period
of six months from the date of removal, no tax invoice is required to be issued
as no supply has taken place in such a case. In case, however, the entire quantity
of specified goods is neither sold nor brought back within six months from the date
of removal, a tax invoice would be required to be issued for entire 100 units of
specified goods in accordance with the provisions contained in section 12 and section
31 of the CGST Act read with rule 46 of the CGST Rules within the time period stipulated
under sub-section (7) of section 31 of the CGST Act.
ii) M/s ABC sends 100 units of specified goods out of India. The activity
of sending / taking such specified goods out of India is not a supply. No tax invoice
is required to be issued in this case but the specified goods shall be accompanied
with a delivery challan issued in accordance with the provisions contained in rule
55 of the CGST Rules. If 10 units of specified goods are sold abroad say after one
month of sending / taking out and another 50 units are sold say after two months
of sending / taking out, a tax invoice would be required to be issued for 10 units
and 50 units, as the case may be, at the time of each of such sale in accordance
with the provisions contained in section 12 and section 31 of the CGST Act read
with rule 46 of the CGST Rules. If the remaining 40 units are not brought back within
the stipulated period of six months from the date of removal, a tax invoice would
be required to be issued for 40 units in accordance with the provisions contained
in section 12 and section 31 of the CGST Act read with rule 46 of the CGST Rules.
Further, M/s ABC may claim refund of accumulated input tax credit in accordance
with the provisions contained in subsection (3) of section 54 of the CGST Act read
with sub-rule (4) of rule 89 of the CGST Rules in respect of zero-rated supply of
60 units.
9. It is requested that suitable trade notices
may be issued to publicize the contents of this circular.
10. Difficulty, if any, in the implementation of
the above instructions may please be brought to the notice of the Board. Hindi version
would follow.
ANNEXURE
RECORD OF
SPECIFIED GOODS SENT / TAKEN OUT OF INDIA AND BROUGHT BACK / SOLD ABROAD
|
Folio
No./ Reference No. |
Description
of specified goods |
Quantity
unit (Nos./ grams /piece etc.) |
Value
per unit |
Total
value of the specified
goods |
Date
of removal from place of business |
Delivery
Challan No. & date |
Shipping
Bill no. & Date |
||
|
No. |
Date |
No. |
Date |
||||||
|
(1) |
(2) |
(3) |
(4) |
(5) |
(6) |
(7) |
(8) |
(9) |
(10) |
|
Details
of specified goods supplied (i.e. specified goods not brought back) |
Invoice
no. & date |
Details
of specified goods brought back |
Bill
of Entry No. & Date |
||||
|
Quantity |
Value |
No. |
Date |
Quantity |
Value |
No. |
Date |
|
(11) |
(12) |
(13) |
(14) |
(15) |
(16) |
(17) |
(18) |