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Goods bought, sold overseas by domestic firms liable to GST in India: AAR

A domestic company buying goods from abroad and selling to another country will have to pay GST on such transactions even if the said products are not entering the Indian territory, the Authority for Advance Ruling (AAR) has said.

On an application filed by Sterlite Technologies, the Gujarat-bench of AAR has ruled that GST is payable on goods sold to customer located outside India, where goods are shipped directly from the vendor’s premises (located outside India) to the customer’s premises.

The applicant had sought to know whether the goods and services tax (GST) would be levied on merchant trade transactions (MTT).

“It appears that the transaction is covered under the ambit of inter-state supply and is neither exempted nor covered under export of services. Thus, the theory of elimination takes us to the conclusion that such supplies will be subject to levy of IGST (integrated GST),” the AAR has ruled.

The AAR verdict means that GST would be levied on MTT where applicant will receive an order from the customer located outside India and as per their instruction, the vendor would directly ship the goods to customer located outside India.

Vendor would issue invoice on applicant against which payment would be made in foreign currency and applicant would raise invoice on customer and would receive consideration in foreign currency.

In the above transaction, goods would not physically come into India, but would move from place outside India to another place outside India.

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TaxClue Teamhttp://taxclue.in
Taxclue is an online news portal for reporting all news, articles, judgments, Circulars, orders, and notifications relating to various corporate and tax laws in India. We use the tagline ‘Simplifying Laws’. Our mission is to Simplify the Laws and make people aware of their rights and duties in relation to tax matters in order to equip them to participate in nation-building.

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