The Telangana Authority of Advance Ruling (AAR) in its recent ruling in the case of M/s. Euroflex Transmissions (India) Private Limited has ruled that Applicant is not required to obtain registration in the state in which goods are imported if the said goods are directly sold from the port of importation to the customers located across different states in India. Further, it was held that IGST paid on imports is eligible to be availed as an Input Tax Credit (ITC) both on intra-state and inter-state sales.
Facts of the Case:
The applicant M/s. Euroflex Transmissions (India) Private Limited wishes to supply some of the imported goods directly from the port of importation to the customers located across different states in India without bringing such goods to the Applicant’s registered premises located in the State of Telangana by raising tax invoice from Telangana location.
Issue on which ruling was sought:
Whether the Applicant is required to obtain registration in the state in which goods are imported if the said goods are directly sold from the port of importation to the customers located across different states in India.
Whether the Applicant is entitled to avail Input Tax Credit of IGST paid on import of goods if the said goods are sold directly from the port of importation to the customers located across different states in India, without bringing such goods into Telangana?
Order of AAR: Deliberation and Ruling
The AAR observed that transactions made by the applicant after clearing goods from customs in their own account are subsequent sales and not sales in the course of import, where customs clearance will be made by the purchaser, in which case the transactions will be covered under Entry 8 of Schedule III to the CGST Act, 2017.
Further, the AAR also stated that the subsequent sale, when made to a customer within the State of Telangana, will be an intra-state sale liable to CGST and SGST, and when such a sale is made to a customer in other states of the country, it will be an inter-state sale liable to IGST. Being a taxable sale, the person making such taxable sales is liable to register under the CGST Act, 2017. It is seen that the applicant has already obtained a registration. Therefore, the registration is sufficient to cover the transactions or supplies of the nature described by the applicant.
Further AAR also held that under Section 16 of the CGST Act, 2017 read with Section 20 of IGST Act, the IGST paid on imports is eligible to be availed as Input Tax Credit (ITC) both on intra-state and inter-state
sales.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
