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Circular No. 108/27/2019-GST
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CBEC-20/06/03/2019-GST
Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
***
New Delhi, Dated the 18th July, 2019
To,
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Central Tax (All)
The Principal Chief Commissioners / Chief Commissioners / Principal Commissioners /
Commissioners of Customs / Customs (Preventive) (All)
The Principal Director Generals / Director Generals (All)
Madam/Sir,
Subject: Clarification in respect of goods sent/taken out of India for exhibition or on
consignment basis for export promotion - reg.
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-
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(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: -
Circular No. 108/27/2019-GST
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Sl.No.
Issue
Clarification
1.
Whether any records are
required
to
be
maintained by registered
person for sending /
taking specified goods
out of India?
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 LUT, as required under section 16 of
the IGST 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-
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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
goods sent / taken out of
a) As clarified in para 5 above, the activity of
sending / taking specified goods out of India is not
a zero-rated supply. That being the case, the
sender of goods cannot prefer any refund claim
Circular No. 108/27/2019-GST
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India but not brought
back?
when the specified goods are sent / taken out of
India.
b) It has further been clarified in answer to question
no. 3 above that the supply would be deemed to
have taken place:
(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 India. 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
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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 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 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.
(Upender Gupta)
Principal Commissioner (GST)
Circular No. 108/27/2019-GST
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ANNEXURE
RECORD OF SPECIFIED GOODS SENT / TAKEN OUT OF INDIA AND BROUGHT BACK / SOLD ABROAD
Folio
No./Referen
ce No.
Descriptio
n of
specified
goods
Quantity unit
(Nos./grams/pie
ce etc.)
Valu
e per
unit
Total
value
of the
specifie
d goods
Date
of
remo
val
from
place
of
busin
ess
Delivery
Challan
No. &
date
Shipping
Bill no. &
Date
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
No. Dat
e
No Date
Quant
ity
Val
ue
No.
Date Qua
ntity
Valu
e
No. Date
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12) (13)
(14)
(15)
(16)
(17
)
(18)
