Whether the applicant can take credit of IGST paid on import of goods and whether applicant needs to obtain registration in the state where the port of clearance is located?

PJ/Case Law/2020-2021/3555

Kardex India Storage Solution Private Limited (GST AAR Karnataka)KAR/13/2020 dated 18.03.2020

Issue: Whether the applicant can take credit of IGST paid on import of goods and whether applicant needs to obtain registration in the state where the port of clearance is located?
Brief Facts: M/s. Kardex India Storage Solution Private Limited is the importer of storage solutions and vertical storage solutions (machines) from Germany and distributes the imported goods to Industrial customers all over India. The applicant intends to import the goods to the port nearest to the customer’s place and supply directly to customer’s location from the said port of import. However, the applicant intends to issue the bill/ tax invoice for the said transaction from the registered place of business.
Applicant’s Contention: The Applicant submitted that the place of supply, in case of import of goods, is the location of the importer, in terms of Section 11(a) of the IGST Act 2017. The location of the importer is the place of business of the importer and not the state in which the port of import is located unless the importer has some permanent establishment or business place in the port of import.
The applicant further submitted that in terms of section 7(2) of the IGST Act 2017, the supply of goods imported into the territory of India, till they cross the customs frontiers of India, shall be treated to be a supply of goods in the course of inter-state trade or commerce. The applicant submitted that imported goods can be supplied directly from the port of import to customer’s place without obtaining registration in the state where goods are imported.
The applicant has further relied on the rulings of the Advance ruling authority Maharashtra-
a) M/s Aarel Import Export Private Limited.
b) M/s Sonkamal Enterprises Private Limited.
Respondent’s Contention and reasoning of Judgement: The reason of Judgement was taken as “goods imported into the territory of India till they cross the customs frontiers of India”, shall be treated as supply of goods in the course of inter-State trade or commerce in terms of subsection (2) of section 7 of IGST Act 2017. The applicant being the importer of storage solutions and vertical storage solutions (machines) from Germany is liable to pay the integrated tax on goods imported into India in accordance with the provisions of section 3 of the Customs Tariff Act, 1975, on the value as determined under the aforesaid Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962, in terms of proviso to the subsection (1) of section 5 of the IGST Act, 2017. In view of the said provisions applicant is liable to pay IGST on the value of the goods imported into India on reverse charge basis.”
Further, “The place of supply in case of import of goods, is the location of the importer in terms of section 11(a) of the IGST Act 2017 and in the case of applicant the location of the importer is the state of Karnataka where the applicant has obtain the GST registration. Therefore, the applicant though import the goods to the port nearest to the location of the recipient, said imported goods are deemed to have been supplied to the location of the importer i.e., Karnataka and then further supplied to customer.
Hence imported goods supplied directly from the port of import to the customer located in other states or Union territories other than state of Karnataka, such transaction shall be treated as a supply of goods in the course of inter-State trade or commerce in terms of section 7(1) of the IGST Act, 2017 and is liable to issue IGST tax invoice in terms of section 20 of the IGST Act 2017 read with section 31 of the CGST Act 2017. Further, if the applicant supplies the goods to the customers within the state of Karnataka, such transaction shall be treated as intra-State supply in terms of section 8(1) of the CGST Act, 2017 and liable to issue the CGST and SGST tax invoice as per section 31 of the CGST Act 2017.”
The applicant is eligible to take credit on the IGST paid on import of goods and has to issue tax invoice as per Section 20 of IGST Act 2017 when the goods are directly dispatched from the port of import with invoicing done from the registered place of business. Further they need not obtain registration in the state where the port of clearance is located.

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PJ/Case Law/2020-2021/3555

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