Module_16_6_

GOODS AND
SEVICES TAX

CERTIFICATE COURSE

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DEVELOPED BY

MODULE - 6

GST ON EXPORT & IMPORT & INTER-
STATE SUPPLY

6.1 MEANING OF EXPORT & IMPORT OF GOODS ✓ The place of supply of service is in India

➢ Export of Goods - Section 2 (5) of IGST Act, ➢ Export of Services
2017
“Export of Goods”, with its grammatical “Export of Services” as defined under Section 2 (6) of
variations and cognate expressions, means IGST Act, 2017 means the supply of any service,
taking out of India to a place outside India. when –

➢ Import of Goods - Section 2 (10) of IGST Act, ✓ the supplier of service is located in India;
2017
“Import of goods” with its grammatical ✓ the recipient of service is located outside
variations and cognate expressions, means India;
bringing goods into India from a place outside
India. ✓ the place of supply of service is outside
India;
6.2 MEANING OF EXPORT & IMPORT OF
SERVICES ✓ the payment for such service has been
received by the supplier of service in
➢ Import of Services convertible foreign exchange; and
It means the supply of any service, when –
✓ the supplier of service and the recipient of
✓ The supplier of service is located outside service are not merely establishments of a
India. distinct person in accordance with
Explanation 1 in section 8;
✓ The recipient of service is located in India;
and Explanation 1 in Section 8

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Explanation 1 — For the purposes of this Act, where a services exported. Such aforementioned
person has, — refunds are subjected to the procedures,
safeguards and rules which may be as
✓ an establishment in India and any other prescribed.
establishment outside India;
6.3.2 Export of services at zero rated
✓ an establishment in a State or Union territory Zero rated supply under Section 16 of the IGST Act is
and any other establishment outside that defined asii -
State; or
➢ “zero rated supply” means any of the
✓ an establishment in a State or Union territory following supplies of goods or services or
and any other establishment being a business both,namely:––
vertical registered within that State or Union (a) export of goods or services or both; or
territory then such establishments shall be (b) supply of goods or services or both to a
treated as establishments of distinct persons. Special Economic Zone developer or a Special
Economic Zone unit.
6.3 EXPORTS UNDER GST
➢ Subject to the provisions of sub-section (5) of
6.3.1 Concept of exports under gst section 17 of the Central Goods and Services
According to the provisions of IGST, a registered Tax Act, credit of input tax may be availed for
taxable person who is exporting goods or/and making zero-rated supplies, notwithstanding
services is eligible to claim the refund as such exports that such supply may be an exempt supply.
under IGST law is considered to be as ‘zero rated
supplies’. Such refunds can be claimed in the ➢ A registered person making zero rated supply
following cases which are as followsi: shall be eligible to claim refund under either
of the following options, namely:––
➢ A taxable person can claim refund of (a) he may supply goods or services or both
unutilized input tax credit who has exported under bond or Letter of Undertaking, subject
under Letter of undertaking (LOU) or bond to such conditions, safeguards and procedure
without paying of Integrated Tax. as may be prescribed, without payment of
integrated tax and claim refund of unutilised
➢ A taxable person who has paid the Integrated input tax credit; or
Tax on the exports is eligible to claim for the
refund of such tax paid on the goods and

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(b) he may supply goods or services or both, Services such as BPO operation, software
subject to such conditions, safeguards and development, software support, software
procedure as may be prescribed, on payment consultancy etc or any other type of IT services or
of integrated tax and claim refund of such tax intermediary services or maintenance services may
paid on goods or services or both supplied, be covered under the default rule of place of supply.

in accordance with the provisions of section 54 of the There are a few exceptions as well to the above
Central Goods and Services Tax Act or the rules made mentioned rule which needs to be looked by the
thereunder. exporter. Thus, to determine that if the services
provided would be considered as zero rated or an
In case of zero rating of supplies, Exporters are export, two things shall be taken into consideration
allowed to claim Input tax credit as a refund on the which are-
good or services. However, in order to determine the
tax applicability on such services, place of supply ➢ Nature of services
rules have to evaluated.
➢ Place of supply.
S.NO TRANSACTION PLACE OF
1. EXPORT SUPPLY 6.3.3 Procedure of filing a refund of igst paid on
exports and export under bond scheme
2. IMPORT LOCATION
OUTSIDE As we’ve read under subsection (3) of Section 16 of
INDIA the IGST act that a exporter making zero rated supply
shall be eligible to claim refund under 2
LOCATION OF circumstances -
IMPORTER
Under GST regime exports would be considered as
Therefore, as per the default rule for place of supply zero-rated supply. Any person making zero rated
for export, it is crucial for exporters to ensure the supply (i.e. any exporter) shall be eligible to claim
establishment of the address of the person who is refund under either of the following options, namely:
receiving the services i.e., service recipient, on record ––
(a) he may supply goods or services or both under

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bond or Letter of Undertaking, subject to such ➢ Procedure to file refund in case of Section
conditions, safeguards and procedure as may be 16(3)(b) -
prescribed, without payment of integrated tax and
claim refund of unutilized input tax credit; or ✓ Exporter filing the shipping bill for refund
of integrated tax paid on the goods
(b) he may supply goods or services or both, subject exported out of India is suffice to treat it
to such conditions, safeguards and procedure as may as an application.
be prescribed, on payment of integrated tax and claim
refund of such tax paid on goods or services or both ✓ Such application shall be considered to
supplied, have been filed only when the person
who is in charge of the conveyance
in accordance with the provisions of section 54 of the carrying the export goods duly files an
Central Goods and Services Tax Act or the rules made export manifest or an export report
thereunder. casing the number and the date of
shipping bills or bills of export and has
GST laws provides us the provisions of refund rules furnished a valid return.
which seeks to clarify the steps in filling of refund.
6.3.4 Refund of input tax credit in case of export of
➢ Procedure to file refund in case of Section goods
16(3)(a) -
➢ Refund of ITC in case of zero rated
✓ An online application has to be filed by supplies made without payment of tax
the exporter through the common portal shall be available according the
to claim the refund of IGST. provisions under proviso (i) of Section
54(2) of CGST Act.
✓ All documentary evidences shall be
accompanied with the application as may ➢ Registered person can claim a refund of
prescribed in the rules. any unutilised Input Tax Credit but in
not cases other than exports including
✓ Exporter can file such a refund zero rated supplies in cases where the
application only after the export credit has accumulated on account of
manifest or when export report is rate tax on inputs being higher than the
delivered under section 41 of Customs
Act, 1962.

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rate of tax on output supplies, other Followings may considered as deemed exports:
than nil rated or fully exempt supplies. ✓ Supply of goods to nuclear projects through
competitive bidding
➢ No refund of unutilised input tax credit ✓ Supplies against EPCG authorization
shall be allowed in cases where the ✓ Supplies to projects with zero customs duty
goods exported out of India are ✓ Supply of goods to mega power projects
subjected to export duty. against International Competitive Bidding
✓ Supply of marine freight containers
➢ No refund of input tax credit shall be ✓ Supplies to UN Agencies
allowed, if the supplier of goods or ✓ Supplies to projects against international
services or both avails of drawback in competitive bidding etc.
respect of central tax or claims refund
of the integrated tax paid on such 6.4 IMPORTS UNDER GST
supplies.
There a few duties which are still operational and will
6.3.5 Deemed exports be levied even after the introduction of GST and they
may not be subsumed under GST. Such duties are as
“Deemed exports” means such supplies of goods as follows:
may be notified under section 147.
➢ Customs
The Government may, on the recommendations of ➢ Anti-Dumping
the Council, notify certain supplies of goods as ➢ Safeguard
deemed exports, where goods supplied do not leave
India, and payment for such supplies is received 6.4.1 Duties at the time of import
either in Indian rupees or in convertible foreign
exchange, if such goods are manufactured in India. In the GST regime, IGST and GST Compensation cess
will be levied on imports by virtue of subsections (7)
Indian service suppliers and manufacturers have to & (9) of Section 3 of the Customs Tariff Act, 1975.
face the competition from suppliers in foreign.
Customs duty is not considered while evaluating the
bids. For many prestigious projects, India gets an aid
in foreign currency by Asia Development Bank,
World Bank etc for which global tenders are invited.

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Goods falling within the First Schedule to the Schedule IV,
Customs Tariff Act, 1975 (51 of 1975) are exempted ➢ 3 per cent. in respect of goods specified in
from whole of Education Cess, when imported into
India, Cess which is leviable thereon under sub- Schedule V, and
sections (7) and (9) of section 3 of the Customs tariff ➢ 0.25 per cent. in respect of goods specified in
Act, 1975iii. Otherwise most of the imports would
attract levy of IGST, baring a few commodities such as Schedule VI
petroleum products, pan masala etc. Further, a few
products such as aerated waters, tobacco products, There are seven rates prescribed for IGST- Nil, 0.25%,
motor vehicles etc, would also attract levy of GST 3% 5%, 12%, 18% and 28%. Importer ought to
Compensation Cess, over and above IGST. IGST familiarize themselves with IGST and GST
andGST Compensation cess, wherever applicable, compensation cess rates, schedule and exemptions.
would be levied on cargo that would arrive on or after The actual rate applicable to an item would depend
1st July, 2017. on its classification and would be specified in
Schedules notified under section 5 of the IGST Act,
6.4.2 Duty calculation 2017.

In exercise of the powers conferred by sub-section (1) Likewise, different rates of tax have been notified for
of section 5 of the Integrated Goods and Services Tax goods attracting Compensation Cess which is
Act, 2017 (13 of 2017), the Central Government, on leviable on 55 item descriptions (of supply). These
the recommendations of the Council, hereby notifies rates are mostly ad valorem. But some also attract
the rate of the integrated tax of- either specific rates (e.g. coal) or mixed rates (ad
valorem + specific) as for cigarettes.
➢ 5 per cent. in respect of goods specified in
Schedule I, 6.4.3 Tax structure and itc in the case of imports

➢ 12 per cent. in respect of goods specified in In GST regime, the import of goods/services would be
Schedule II, deemed as the inter-state supply of goods and shall
be subjected to the levy of IGST. However in addition
➢ 18 per cent. in respect of goods specified in to IGST, the import of goods shall continue to attract
Schedule III, Basic Customs Duty (BCD). Importer shall be eligible
to offset IGST and GST Compensation Cess paid and
➢ 28 per cent. in respect of goods specified in later to the recipients in the supply chain.

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Nevertheless the credit of the basic customs duty state are the location for a supplier to supply
(BCD) won’t be available. his goods and/or services.
➢ When the supplier’s location of Supply of
For example - goods and/or services is in India and a foreign
land is the location of his supply, also known
‘A’ imported goods worth of INR 20,000/10,000 and as exports.
incurred some expenses to produce the final good. ➢ When a province of India is where the
Imported goods are charged with 10% customs duty, importing of Supply of goods takes place, till
and then manufactured goods are sold at INR 50,000 the time the customs border of India is
plus applicable GST. crossed by them.
➢ A region in India is where the Supply of
The cost of goods was 20,000/10,000, with additional services are imported into.
BCD of 10% of the cost which makes the cost of ➢ A SEZ unit or a SEZ developer are where and
imported goods as 22,000/11,000 and an additional by whom the supply of goods and/or services
charge of 5 % (1100) CGST and 7 %( 1540) SGST of take place.
the cost of imported goods including BCD makes it ➢ The supply of goods or/and services taking
INR 24,640. place from a state to a place and location to a
place in the EEZ/Continent and vice-versa, is
When these imported goods are in the states for not allowed in this case even if it’s a taxable
example 50,000 with CGST on the import of 5% territory as it is an intra-state supply and has
(2,500) and SGST on the import of 7% (3,500) not been covered above.
computes the sale value as INR 56,000.
6.5.2 Meaning of intra-state supply
6.5 INTER STATE SUPPLY UNDER GST
6.5.1 Meaning of inter-state supply When the State or an Union Territory is the same for
place of supply and the location of supplier, then the
The points given underneath include supplies that supply of goods and/or services can take place and is
are inter-State supplies under Section 7 of the IGST: termed as Intra-State supply under Section 8 of the

➢ When two different Union territories or a
Union territory; or two different States or a

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IGST Act. However, in the case of SEZ developer and ➢ Of goods and services in to India, also
unit where both supplier and recipient are situated in known as commerce.
the State, the rules are a bit different.
➢ A place in India and outside of it, where
The supply of goods and/or services to or by them the supply of Goods or Services will take
does not come under Intra-state supply. A SEZ unit or place is considered as Inter State trade or
developer need to acquire unalike registration for the commerce.
other units located outside the SEZ as a business
vertical distinct, Proviso to rule 8(1) of the CGST ➢ SEZ developer or SEZ unit is where the
Rules, which makes it compulsory for them. In spite of supply of goods and services take place
both the recipient and supplier being in the same shall be considered as Inter State trade or
state the supply of goods will not be considered as commerce.
intra-State where it’s been bought into India, till they
cross the customs border of India in the process of ➢ All the supply of goods or services are
import. Intra- State supply does not include the fact, termed as Inter State Trade or commerce
wherein a person who enters India for a stay (not a keeping one fact in mind, that the supply
resident of India) as a tourist for six months, is to should not come under Intra State supply
whom the supplies of goods are being made, only if he
takes those goods out of India. A special provision to 6.5.4 Provision of supply of goods and /or
authorize the tourist to claim refund of tax paid on services in the course of intra state trade or
such supply from the Central Government was made. commerce

6.5.3 Provision of supply of goods and /or When the supplier’s location and place of supply are
services in the course of interstate trade or in the same State, such a supply of goods is termed
commerce as Intra state supply of goods. It does not include:

➢ The supplier and recipient should be ➢ SEZ developer and SEZ Unit being the ones to
located in different states. whom or by whom the supply is being made.

➢ Inter State trade will include ➢ Supply of goods brought into India in the
process of import till they cross the custom
border of India.

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6.5.5 Place of supply of goods other than import and export [section-7]

Situation Place of Supply
1. Supplier or recipient monitoring the movement of goods.
Where the movement of goods
conclude for delivery to
recipient.

2. Shall be considered that the goods have been received by For such a person, place of
the third person, if the transfer of title is the way in which the business will be a primary place
goods are delivered to recipient or any person on the course
of third person.

3. Where the supplier or recipient have not created any motion At the time of delivery to
of goods recipient, locating the location
of such goods

4. Where the mustering and establishment of goods happens Shall be where the goods are
at site mustered or established

5. The board of vessel, aircraft, motor vehicle or train are some Shall be goods which can be
examples of a few transports on which the goods are taken on board
supplied
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6.5.6 Place of supply of goods import into and goods has been imported in India.
export from India ➢ Outside India shall be the location
➢ The location of importer will be defined
where the exporting of supply of goods
by the place in which the supply of take place.

i IGST Act, 2017, Section 16. iii Notification no. 54/2017- custom.
ii Ibid.

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