GST UPDATE No 346 ON CIRCULAR ON PLACE OF SUPPLY FOR TRANSPORTATION OF GOODS OUTSIDE INDIA:-

The provisions regarding determination of place of supply with respect to transportation of goods outside India when the service provider and service recipient is located in India is governed by proviso to section 12(8) of IGST Act, 2017. This proviso had created ambiguity as regards levy of GST on the transaction where service provider is located in India and place of supply is outside India because the provision contained in section 7(5)(a) deemed such transactions as inter state supply. Resultantly, the service providers providing courier services located in India were charging IGST from the exporters even when the exporters were located in the same State as that of courier service provider. This provision was going contrary as even though the service provider and service receiver are located in same State but IGST was being levied. Moreover, as GST is consumption based taxation, if the place of supply is outside India, then no tax should be imposed. It appears that the government has realised this anomaly and GST Council has proposed to omit the proviso to section 12(8) of the IGST Act, 2017. Not only this, clarification has been issued with respect to various confusions appearing in the minds of assessees due to the absurd provision vide Circular No. 184/16/2022-GST dated 27.12.2022. The present update seeks to discuss the clarification issued vide the above mentioned circular.

It is clarified that the place of supply of services in case of transportation of goods including by mail or courier by a service provider located in India to recipient situated in India, where the transportation of goods is to a place outside India will be destination of goods, i.e., outside India. It is further clarified that the transaction will be treated as inter state supply of services as per the provision contained in section 7(5) of the IGST Act, 2017 and IGST would be leviable on the same.

Apart from this, there was confusion as regards the State Code that is required to be mentioned by the supplier of the service of transportation of goods, where transportation of goods is to a place outside India, while reporting the said supply in GSTR-1. It is clarified that the supplier of service shall report the place of supply of such service by selecting the State Code as “96-Foreign Country” from the list of codes in the drop down menu available on the portal in Form GSTR-1.

Lastly, the major point of concern was admissibility of input tax credit in respect of the said service by the recipient of service. It has been clarified that provisions contained in section 16 and 17 of the CGST Act, 2017 do not restrict availment of input tax credit by the recipient located in India, if the place of supply of the said input service is outside India. Thus, the recipient of service of transportation of goods shall be eligible to avail input tax credit in respect of the IGST so charged by the supplier, subject to the fulfilment of other conditions laid down in section 16 and 17 of the CGST Act. This has been prove to be a sigh of relief for the assessees as there was ambiguity as regards availment of input tax credit of IGST when the place of supply is outside India.

The above clarification was most awaited, specially by courier service providers as it put to rest all the doubts prevailing as regards the nature of transaction and the applicability of GST on the same along with availability of input tax credit to the recipient of services.

Comments

GST UPDATE No 346 ON CIRCULAR ON PLACE OF SUPPLY FOR TRANSPORTATION OF GOODS OUTSIDE INDIA:-

Post a Comment

Query