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Determination of GST liability on supply from Warehouse to customer both located in non-taxable territory

The Karnataka Authority of Advance Ruling in case of M/s Guitar Head Publishing LLP [Advance Ruling No. KAR ADRG 23/2021, dated 16th April 2021] on application field by applicant under section 97 of CGST Act, 2017, in Form GST ARA-01 passed his ruling after considering the issues involved, on which advance rulings are sought by the applicant, relevant facts and interpretation of law.

Fact:

Application is filed by M/S GUITAR HEAD PUBLISHING LLP for advance ruling. 

  • The applicant is in receipt of the service of printing of the books where the content is supplied by the applicant and also moving the books so printed to the warehouse at non-taxable territory; and shipping of the books by the person (agent of the applicant) located in non-taxable territory, on behalf of the applicant to the customer in non-taxable territory by the respective service providers.

Issues:

  • Whether the supply of goods from the warehouse located in non-taxable territory to the customers located in non-taxable territory without such goods entering into India by the applicant are treated as supply under GST?
  • Whether GST is leviable on the shipping charges collected by the applicant from the customers located in non-taxable territory for the delivery of books from the warehouse located in non-taxable territory?
  • Whether printing charges for printing of books charged by the Printer located in non-taxable territory is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant?
  • Whether the services received by the applicant from Foreign Service provider such as warehousing of printed books located in non-taxable territory is taxable under Reverse Charge Mechanism under GST? 
  • Whether input tax credit can be availed, to the extent of inputs and input service on the transactions covered in Question 1 above?

Interpretations of Law:

  •  In terms of clause 7 of Schedule III of section 7 of the CGST Act, it is specifies that 
  • “Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India” shall be treated neither as a supply of goods nor a supply of services
  •  In terms of section 13(2) of the IGST Act 2017 where the location of the supplier providing services is outside India, the recipient of the said service is within India and the place of supply is in India. Thus the impugned service squarely qualifies to be an import of service, in terms of Section 2(11) of the IGST Act 2017.
  •  In terms of section 13(2) of the IGST Act 2017 where the location of the supplier services is outside India, the recipient of the said service is within India and the place of supply is in India. Thus the impugned service squarely qualifies to be an import of service, in terms of Section 2(11) of the IGST Act 2017.
  •  In terms of section 13(4) of the IGST Act 2017 where the location of the supplier services is outside India, the recipient of the said service is within India and the place of supply is outside India. Thus the impugned service is not covered under import of service and hence is not exigible under Reverse Charge Mechanism under GST, in terms of Section 2(11) of the IGST Act 2017.
  • The instant question is subject to the answer to the first question. The recipient will not be entitled to take Input tax credit on inputs and input service on transactions covered in schedule III of section 7 of CGST Act 2017.

Held:

  • Supply of goods from the warehouse located in non-taxable territory to the customers located in non-taxable territory without such goods entering into India does not amount to supply under GST, in terms of clause 7 of Schedule III of the CGST Act
  • Hence, the amount paid by the applicant towards the said shipment service is exigible to GST, under Reverse Charge Mechanism
  •  Hence, the printing charges for printing of books charged by the Printer located in non-taxable territory is taxable under Reverse Charge Mechanism under GST, where only content is supplied by the applicant 
  • Hence, the warehousing charges of printed books is not taxable under Reverse Charge Mechanism under GST.
  • The applicant is not entitled to avail input tax credit on inputs and input services as the transaction does not amount to supply under GST

 

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