GST Implication for Goods taken/Sent out of India for Exhibition or on a consignment basis for Export Promotion

CS Payal Kataria

Exporters community was facing problem to know correct GST implications for the Goods taken/ sent out of India for Exhibition or sale on approval basis. In this matter, main ambiguity was with respect to concept of Supply, time of Supply, Issue of Invoice, Refund etc. To clarify all these issues CBIC issued clarification vide Circular No. 108/27/2019-GST dated 18th July 2019

As there is no consideration at the time when goods are taken/sent out of India for Exhibition or on consignment basis for Export Promotion, Supply does not take place except when such activity satisfy the test laid down in Schedule I of CGST Act and same cannot be considered as Zero Rated Supply. Therefore this activity/transaction is neither supply nor Export at this stage and here termed as specified goods. Now question arise, what is the procedure to take/send goods out of India for Exhibition or consignment basis for Export Promotion?

Let’s understand various aspect of this transaction:

Stage 1

Registered person dealing in such Goods, will send/take such goods out of India on Delivery Challan and maintain records for such transactions as per annexure appended with Circular No 108/27/2019-GST dated 18th July 2019. As there is not any export at this stage so there is not any requirement to execute LUT for this transaction. At this stage there does not arise question of refund as there is no export.

Important NoteThe 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.

Stage 2

Scenario 1: If the specified goods are neither sold abroad nor brought back within 6 months from the date of removal the supply would be deemed to have taken place. 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

Scenario 2: 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. 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. Goods sold abroad, will be considered as Export and registered person may claim refund of accumulated input tax credit in accordance with the provisions contained in sub-section (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.

Example

Mr. A registered person, sent 1000 units of Goods for exhibition in Singapore on delivery challan     1st July 2019 and sold 600 goods on 30th July 2019. On 30th July 2019, he will issue tax Invoice and supply of these 600 goods will be considered as Export and he mayclaim refund of accumulated input tax credit in accordance with the provisions contained in sub-section (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 600 units. On Ist August 2019, he came back to India and also took rest 400 units along with him. There will be no supply of rest 400 units in this scenario as goods are taken back before the expiry of 6months from the date of removal.

Hope! Now, no more confusion

Smoothly and without any burden take your goods for exhibition abroad

Of course! Don’t forget to read and follow circular No. 108/27/2019-GST dated 18th July 2019

Source: cbic website

Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.
Readers are advised to consult the professional for understanding the applicability of this writeup in the respective scenarios. While due care has been taken in preparing this writeup, the existence of mistakes and omissions herein is not ruled out. No part of this writeup should be distributed or copied (except for personal, non-commercial use) without our written permission.

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