Categories: Business

GST, advance ruling authority's decision to be given in India on goods bought and sold abroad

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Goods purchased, sold overseas liable to GST in India, says AAR

new Delhi. The Advance Ruling Authority (AAR) has said that if a domestic company buys goods from abroad and sells it to another country, it will have to pay GST for such deal in the country. Even if that product has not come within the limits of India. On the application of Sterlite Technology, the Gujarat bench of AAR has said that the matter of GST payment is made in the country, where the goods are taken from outside the country directly to the seller's premises. The applicant wanted to know whether GST is made on the commodity trading transaction (MTT).

The AAR has arranged that the deal appears to be within the scope of interstate supply and is neither in service exports nor exempt. Thus, we come to the conclusion that such a supply may attract an integrated GST (IGST) fee.

This decision of the Authority means that GST will be levied on MTT in cases where the applicant receives an order from a customer outside the country and as per the instructions the seller located outside the country delivers the goods directly to the customer. The seller will bill the applicant. The bill will be paid in foreign currency and the applicant will pay the bill to the customer and receive the amount in foreign currency. In this deal, the goods did not come to India but went from one place to another outside the country.

Rajat Mohan, Senior Partner, AMRG & Associate, said that MTT is not taxed anywhere in the host country globally and in the old system the same situation was in India. The GST Act also states that MMTT is outside the purview of GST. Mohan said, the Gujarat AAR decision needs to be considered under the provisions of Schedule-3 of the CGST Act. Not doing so would be a problem for the industry.

This post was published on June 19, 2020 12:14 pm

Content Team

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