Goods and Services Tax

Applicability of IGST on Sale of Warehoused Goods

Goods and Services Tax – GST – By: – CASanjay Kumawat – Dated:- 10-2-2018 – Introduction The facility of warehousing of imported goods in Customs Bonded Warehouses, without payment of Customs duty otherwise leviable on import, is permitted under the Customs Act, 1962. Apart from specific provisions in the said Act (specially under Chapter IX), certain Regulations have been also framed and provisions of Warehoused Goods (Removal) Regulations, 1963 and Manufacture and Other Operations in Warehoused Regulations, 1966 could be referred to in this regard. Basically, goods after landing are permitted to be removed to a warehouse without payment of duty and duty is collected at the time of clearance from the warehouse. Accordingly, Chapter IX of the Customs Act provides for deposit of goods into a customs bonded warehouse licensed under section 57 or 58 or 58A without payment of duty and the procedures to be followed with respect to the warehoused goods. Bonding of Import Goods Where bonding

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

eturns the bond executed as discharged in full. Clearance of imported goods The importer of any warehoused goods can clear the goods for home consumption by filing an ex-bond Bill of Entry and after payment of duties etc. in terms of section 68 of the Customs Act. Transfer of Bonded Goods or Transfer of ownership Section 59 (3) of the Customs Act, 1962 provides for the transfer of bonded goods to another person. The sale of the warehoused goods to holders of duty exemption or duty concession license for the goods is permitted under the law (Board s instructions issued from F. No. 473/43/94 dtd. 22.9.1994 refers in this regard). Accordingly, Sub-section (3) of section 59 provides that the importer is at liberty to transfer the ownership of such goods to another person while the goods remain deposited in the warehouse. Supply under GST The CBEC vide Circular No.46/2017-Customs, dated 24.11.2017 provides for the levy of IGST/GST. The transaction of sale / transfer etc. of the warehoused g

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ed warehouse, there is a possibility that certain cases may involve an additional taxable event, if a transfer of ownership of warehoused goods takes place between the importer and another person, before clearance of the goods, whether for home consumption or for export. In other words, when goods remain deposited in a customs bonded warehouse and are transferred by the importer to another person, the transaction will be subject to payment of IGST at the value determined as per section 20 of the IGST Act read with section 15 of the CGST Act, 2017 and the rules made thereunder and the tax liability shall be reckoned as per section 5 of the IGST Act, 2017. Section 5(1) of IGST ACT, 2017: Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods an

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

derstanding] . Rate of Duty/ Value for Assessment The value of imported goods, for purposes of charging customs duty, is determined as per section 14 of the Customs Act, 1962 at the time of import i.e. at the time of filing of the into-bond Bill of Entry. Any costs incurred after the import of goods, such as, port charges / port demurrage charges or costs for customs clearing or transporting the goods from the port to the customs bonded warehouse or costs of storage at the customs bonded warehouse, cannot be added to the value of the goods, for the purpose of levy of duties of customs at the stage of ex-bonding. Further, clause (b) of sub-section (1) of Section 15 of the Customs Act provides that the rate of duty or tariff valuation for an ex-bond Bill of Entry shall be the date on which it is filed. There is no provision to vary the assessable value of the goods at the ex-bond stage unless they are such goods on which tariff valuation applies. Therefore, duties of customs (BCD + IGST)

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

s per Section 16(2)(b) of CGST Act. B files an Ex-bond Bill of entry on 25th of September 2017 and pays ₹ 23.20 (the deferred duty, in addition to duty of ₹ 36 paid earlier as indicated in Point-C). The credit of IGST paid can be availed. Total duty paid: 23.20+36= ₹ 59.2 In this case, when A sells the goods to B , A becomes the supplier of the goods as per IGST Act and is therefore liable to pay IGST under section 5 of IGST Act, as explained in Point -C. B in turn becomes the importer and is therefore liable to pay the duties deferred as in Point-B, on ex-bonding, as explained in Point-D above. Illustration 2: Goods imported, bonded and cleared for home consumption and subsequent sale thereof: Goods imported by A on 2nd July 2017. Importer wants to deposit the goods in a bonded warehouse to defer duty. Importer files an into bond bill of entry and the goods are deposited in a Bonded Warehouse. BCD and IGST [Section 3(7) of Customs Tariff Act 1975] are deferred. Illus

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

2017 and charges GST. Value of goods= ₹ 300 GST (say 12 %) = ₹ 36. Credit of which can be availed. Total duty paid: 23.20+36= ₹ 59.2 Recovery of Duty on Bonded Goods Customs Officers may demand from the owner of bonded goods the full amount of duty chargeable on such goods, along with all penalties, rent, interest and other charges payable in the following cases: Where any warehoused goods are removed in contravention of the Customs Act, 1962; Where such goods have not been removed from a warehouse at the expiry of the period permitted under section 61; Where any warehoused goods have been taken under section 64 as samples without payment of duty; and Where any bonded goods have not been cleared for home consumption or exportation or are not duly accounted for to the satisfaction of the Customs. In case the owner fails to pay the amount as demanded above, Customs may detain and sell, after notice to the owner, such sufficient portion of the bonded goods as may be sele

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Leave a Reply