The Synthetic & Rayon Textiles Export Promotion Council

Applicability of IGST / GST on goods transferred / sold while being deposited in a warehouse

Circular No.ES/ 244/2017-18                                                             November 29, 2017

To: Members of the Council

Sub: Applicability of IGST / GST on goods transferred / sold while being deposited in a warehouse

Dear Member,

We would like to inform you that the Central Board of Excise and Customs (CBEC) has issued clarification vide Circular No. 46/2017 dated 24th November, 2017 on applicability of GST on goods transferred / sold while being deposited in a warehouse under the new Goods and Service Tax (GST) regime.

It may be noted that as per the IGST Act –

  • Any supply of imported goods which takes place before they cross the customs frontiers of India, shall be treated as an inter-State supply for which IGST is applicable.
  • Thus, such a transaction of sale/transfer will be subject to IGST Act.
  • The value of such supply shall be determined in terms of Section 15 of the CGST Act read with section 20 of the IGST Act and the rules made thereunder, without prejudice to the fact that customs duty (which includes BCD and applicable IGST payable under the Customs Tariff Act) will be levied and collected at the ex-bond stage.

However, in respect of goods stored in a customs bonded warehouse, there is a possibility that certain cases may involve an additional taxable event, if a transfer of ownership of warehoused goods takes place between the importer and another person, before clearance of the goods, whether for home consumption or for export.

                                                                                                                     
The Board has now clarified that –

  • So long as such goods remain deposited in the warehouse the customs duty to be collected shall remain deferred.
  • It is only when such goods are ex-bonded under section 68, shall the deferred duty be collected, at the value as had been determined under section 14 of the Customs Act, 1962 in addition to IGST leviable, as indicated at Para 5.1 above.

An illustrative chart on in bond sales and clearance thereof is attached as “Annexure” in the above Circular.

Members may please make a note of the above.

Thanking You,

S. BALARAJU
EXECUTIVE DIRECTOR