SME Times News Bureau | 22 Jul, 2019
The Finance Ministry on Monday gave clarification related
to goods that 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. 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 said an official release
The key points clarified in the Circular include, that
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.
In addition, 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.
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.
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.
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
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.
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 circular was issued on
July 18, said the Finance Ministry release.