The Central Board of Indirect Taxes and Customs (CBIC) has released clarification over the procedure that needs to be followed when goods are taken out of India and are brought back unsold.
The Central Board of Indirect Taxes and Customs (CBIC) has released clarification over the procedure that needs to be followed when goods are taken out of India and are brought back unsold. Taking in view the problems faced by exporters, CBIC has said that “the activity of taking goods out of India on a consignment basis for the exhibition would not in itself constitute a supply under GST since there is no consideration received at this time.” Also, the exporters will now be required to move the goods accompanied by a delivery challan which is issued in “accordance with the provisions contained in rule 55 of the CGST Rules,” the CBIC statement said.
Other rules and guidelines
- The goods are not a zero-rate supply as taking the goods out of the country is not supplying. Therefore, execution of a bond or LUT is not required. (The same is required under section 16 of the IGST Act).
- Goods need to be brought back under six months of taking out. The goods will be considered supplied if not brought back within the stipulated time of six months or sold.
- In the case mentioned above, the sender is required to issue a tax invoice on the date of expiry of six months from the date of taking the goods out. This will contain details of quantity of goods which have neither been sold nor brought back.
- According to the CBIC notification, such supplies will not get the benefit of zero-rating, including refund.
- No tax invoice is needed to be issued for goods which are brought back to India within the period of six months.
- In case the goods are sold abroad, whether in full or partial, within the stipulated period “the supply shall be held to have been effected, in respect of the quantity so sold, on the date of such sale”.
- The sender is required to issue a tax invoice stating quantity of goods sold. “These supplies shall become zero-rated supplies at the time of issuance of invoice. However, refund in relation to such supplies shall be available only as refund of unutilized ITC and not as refund of IGST”.
Goods are taken out of India for the purposes of exhibition or on consignment basis for export promotion. While these goods are taken out for promotion, they only get sold when approval from the prospective customers abroad is received. The unsold goods are then brought back to the country. Industries like gems and jewellery industry widely indulge in this process. However, keeping in mind the problems faced by exporters, the CBIC brought a clarity over the procedure.