Central Board of Indirect Taxes and Customs (CBIC) has issued a Circular No. 108/26/2019-GST dated 18th July, 2019 to clarify the procedure to be followed in respect of goods sent / taken out of India for exhibition or on consignment basis for export promotion.
Key Points of the Circular are:
- CBIC clarifies 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 conditions laid down in Schedule I of the CGST Act, 2017 (hereinafter referred to as the “specified goods”), do not constitute supply as the said activity does not fall within the scope of Supply as mentioned in Section 7 of the CGST Act, 2017 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, 2017.
- CBIC has further clarified the issues relating to maintenance of records, issuance of delivery challan / tax invoice etc. for goods sent / taken out of India for exhibition or on consignment basis for export promotion which are as follows:
- The registered person dealing in specified goods are required to maintain a record of goods sent / taken specified goods out of India as per the format attached as Annexure to this Circular.
- The activity of sending / taking specified goods out of India 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 Section 31(7) of the CGST Act, 2017 read with Rule 55 of CGST Rules, 2017. Hence, the specified goods shall be accompanied with a delivery challan.
- Further, the activity of sending / taking specified goods out of India is not a zero-rated supply hence execution of a bond or LUT is not required.
- 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. 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. 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.
- When the specified goods sent / taken out of India have been sold fully or partially, within the stipulated period of six months, the sender shall issue a tax invoice in respect of such quantity of specified goods which has been sold abroad. 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, 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.
- It is clarified 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 of Section 54 the CGST Act read with 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 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.
For further details please refer the attached document.
Source: Central Board of Indirect Taxes & Customs
