CBIC Clarification of GST
for Exhibition or on Consignment Basis for Export Promotion – Six Situations and Six Solutions Highlighted in Circular of
18.07.2019
[Min of Finance Press Release dated 22 July 2019]
Several goods are taken out of India on consignment
basis for exhibitions or other export promotion events. These goods are sold only
when approved by the prospective customers abroad. The unsold goods are then brought
back to India. This is a widespread practice in various sectors, including the gems
and jewellery industry. Exporters of these items were
facing problems due to the lack of clarity on the procedure to be followed under
GST at the time of taking these goods out of India and at the time of their subsequent
sale or return to India. Taking cognizance of these problems and in order to help
exporters, the Central Board of Indirect Taxes and Customs (CBIC) has now issued
a comprehensive clarification in this regard vide Circular No. 108/27/2019-GST dated
18.07.2019. The key points clarified in the Circular are the following:
a.
The activity of taking goods
out of India on consignment basis for exhibition would not in itself constitute
a supply under GST since there is no consideration received at this time.
b.
The movement of these goods
out of India shall be accompanied by a delivery challan issued in accordance with
the provisions contained in rule 55 of the CGST Rules.
c.
Since taking such goods out
of India is not a supply, it necessarily follows that it is also not a zero-rated
supply. Therefore, execution of a bond or LUT, as required under section 16 of the
IGST Act, is not required.
d.
The goods taken out of India
in this manner are required to be either sold or brought back within a period of
six months from the date of removal.
e.
The supply would be deemed
to have taken place if the goods are neither sold abroad nor brought back within
the period of six months. In this case, the sender shall issue a tax invoice on
the date of expiry of six months from the date of removal, in respect of the quantity
of goods which have neither been sold nor brought back. The benefit of zero-rating,
including refund, shall not be available in respect of such supplies.
f.
If the specified goods are sold abroad, fully or partially, within the period of six
months, the supply shall be held to have been effected, in respect of the quantity
so sold, on the date of such sale. In this case, the sender shall issue a tax invoice
in respect of such quantity of goods which has been sold. These supplies shall become
zero-rated supplies at the time of issuance of invoice. However, refund in relation
to such supplies shall be available only as refund of unutilized ITC and not as
refund of IGST.
g.
No tax invoice is required
to be issued in respect of goods which are brought back to India within the period
of six months.
The above points are informative in nature and
have been presented in this release in simple language for benefit of all stakeholders.
The Circular issued in this regard, i.e. Circular No. 108/27/2019-GST dated 18.07.2019,
may be referred which alone shall have the force of law.