Goods Sent For Exhibition Under GST

The Central Board of Indirect Taxes and Customs (CBIC) had issued a Circular on 18th July 2019 in order to clarify the procedure towards being followed relating to goods sent or taken out of India for exhibition or on consignment basis for export promotion.

In the circular, the Central Board of Indirect Taxes and Customs (CBEC) had clarified that any activity or transaction shall be treated as ‘supply’ only if the following two conditions are satisfied:

•    Such activity or transaction must be carried out for consideration.

•    Such activity or transaction must be carried out in the course or furtherance of the business.

Where the goods have been sent for display at an exhibition (which includes entailing inter-state movement) the same shall not constitute as ‘supply’ under the GST regime as that would be a supply made for a consideration. Regarding such movements:

1.    The consigner might issue a delivery challan in lieu of an invoice during the removal
of goods for transportation.

2.    As such movement is only under a delivery challan no legal responsibility arises as there is no
invoice or payment.

Relating to the applicability of ‘zero-rated supply’, it was clarified that only ‘supplies’ which are either export or are supply in the direction of Special Economic Zone unit/developer shall qualify as zero-rated supply. As the goods sent or taken out of India don’t qualify as ‘supply’, consequently, the same shall also not qualify as ‘zero-rated supply’.

Also regarding the return movement, whereas the GST framework does not suggest any mechanism, the goods might be moved under the same delivery challan. Though, the
delivery challan should clearly state that the goods covered thereunder are destined in order to come back after the exhibition.

Though, for an exhibition-cum-sale event, the dealer might qualify as ‘casual taxable individual as the dealer will undertake transactions involving supply of goods. For such a case the dealer shall be required to obtain a temporary registration in the State where the exhibition is held along with pay an advance tax towards the extent of his estimated tax
liability.

The provisions of section 31(7) necessitate that the goods sent or taken out of India for exhibition must be either sold or brought back into India in a period of 6 months from the date of removal. However, if the goods are neither sold nor brought back during the stipulated time period, then, it shall be deemed that the supply has taken place. Furthermore, if the goods are sold, fully or partially, during the time period of 6 months, then, the supply is actually affected, for the quantity sold, on the date of sale.

Required documents

When the stated goods are sent or taken out of India for exhibition or on a consignment basis regarding export promotion, it must be accompanied by the delivery challan. The delivery challan must be prepared in triplicate, and it shall comprise the following details:

•    Delivery challan must be serially numbered not more than 16 characters, in one or multiple series.

•    Date as well as a number of delivery challan.

•    Name, address as well as GSTIN of the consigner, if registered.

•    Name, address as well as GSTIN of the consignee, if registered.

•    HSN code and description of the goods.

•    Taxable value.

•    Tax rate and amount of tax.

•    Place of supply, for inter-state movement.

If the goods sent or taken out of India are sold, fully or partially, then, the sender or must issue a tax invoice as given under GST law regarding the quantity of goods sold.

If the goods sent or taken out of India are neither sold nor bought back within the time period of 6 months, then, the sender or the seller must issue a tax invoice for the quantity of goods not bought back on the date of completion of 6 months.

Claim for Refund

The queries of refund claim arise when the:

•    Goods are sent out of India is not bought back within the specified time of 6 months.

•    Goods are sent out of India are sold out.

However, the goods sent/taken out of India are not covered within the scope of ‘zero-rated supply’ and henceforth consequently the execution of a bond or LUT is not necessary.

Relating to the refund claim it was clarified that, even if the sender did not execute bond or LUT, he shall be eligible for refund claim in accordance with provisions of section 54(3) along with rule 89(4) of the Central Goods and Services Tax (CGST) Rules. Though, the refund claim could not be filed under rule 96 of the CGST Rules if the supply has taken place after the goods have already been sent or taken out of India.

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Author:

eStartIndia Team