GST Update on Supply of EXIM scrips under GST

Government has framed a number of schemes for promoting exports of goods and services from India. These schemes include Services Exports from India (SEIS), Status Holder Incentive Scheme (SHIS), etc. Under these schemes, the exporters are entitled to credit scrip calculated on a specified percentage of FOB value of the exports made by them. These scrips can be utilized for payment of duty at the time of import of specified goods. Alternatively, these can be sold in open market against a consideration.

Earlier there was dispute whether the sale of these scrips would amount to sale of goods or not. This dispute was resolved by the hon’ble Supreme Court of India in the case of Yasha Overseas v. Commissioner of Sales Tax [2008-TIOL-97-SC-CT]. This decision was given in context of DEPB Scrip and it was held that these scrips have an intrinsic value that makes it a marketable commodity. Due to this, it qualifies to be 'Goods' within the meaning of sales tax laws and its sale would be liable to sales tax. The State governments have also prescribed the rates at which the tax would be payable by the dealers of such goods. For example, Entry 34 of Third Schedule to the Karnataka VAT Act, 2003 list down the goods which are leviable to KVAT @ 5%, covers the EXIM Scrips.

While transitioning to the GST regime, the decision given by Supreme Court in the case of Yasha Overseas will hold good as no contrary provision/clarification has been given on the issue. Thus, the supply of EXIM scrips will be treated as supply of goods in GST regime also in absence of any contrary provision. Further, the rate schedules of goods as announced on 18.05.2017, 22.05.2017, 03.06.2017 and 11.06.2017 do not specifically cover the EXIM scrips anywhere. Also, there is no residual entry in any of these schedules. Since no rate is prescribed, can it be assumed that no tax would be payable on sale of EXIM scrips? Yes, since rate is not available and there is no provision specified for treatment of such cases, we can say that there is no mechanism for levying the tax on sale of EXIM scrips. Thus, as of now, till any further clarification, it will be assumed that the sale of EXIM scrips will not attract any tax in GST regime.

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GST Update on Supply of EXIM scrips under GST

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