Deemed Export in GST

As we all know about “Export” term used in the common business parlance. Export may be either of goods or services. In case goods when supplied leaves the India and payment received in convertible foreign exchange.

As per Section 2(39) of CGST Act 2017, “Deemed Export” means such supplies of goods as may be notified under section 147. Zero rated supplies are defined in IGST Act 2017 under Section 16(1) means any of the following supplies of goods or services or both namely: a) export of goods or services; or b) supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

It is clear from the above definition that deemed exports are not Zero rated supplies in GST. Therefore, all supplies will be subject to taxes. As per Section 147 of CGST Act 2017, The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India.

Central Government has issued Not No. 48/2017-Central Tax dated 18th October 2017 to notifies following supplies of goods as deemed exports;

For the purpose of above notification Export Oriented Unit means an Export Oriented Unit or Electronic Hardware Technology Park Unit or Software Technology Park Unit or Bio-Technology Park Unit.

(Link www.cbic.gov.in/htdocs-cbec/gst/notfctn-48-cgst-english.pdf)

Government issued circular no. 14/14 /2017 – GST dated 06th November 2017 which laid down the procedure in respect of supplies to EOU/EHTP/STP/BTP units.

1. The recipient i.e. EOU/EHTP/STP/BTP unit shall give prior intimation in “FORM A”.
2. The registered supplier thereafter will supply of goods under tax invoice to the EOU/EHTP/STP/BTP units.
3. On receipt of supplies, EOU/EHTP/STP/BTP units shall endorse the tax invoice and send a copy of the endorsed tax invoice to a) registered supplier b) the jurisdictional GST officer in charge of such registered supplier and c) its jurisdictional GST officer.
4. The endorsed tax invoice will be considered as proof of deemed export supplies by the registered person to EOU/EHTP/STP/BTP unit.
5. The recipient EOU / EHTP / STP / BTP unit shall maintain records of such deemed export supplies in digital form, based upon data elements contained in "Form-B". A digital copy of Form – B containing transactions for the month, shall be provided to the jurisdictional GST officer, each month (by the 10th of month) in a CD or Pen drive, as convenient to the said unit

(Link https://www.aces.gov.in/Documents/circularno14gst.pdf)

Refund:

As per Rule 89(1) of CGST Rules 2017 as amended by notification no. 47/2017-Central Tax dated 18th October which allows refund application to be filed either by recipient or supplier of goods.

We need to take into account the amendment made vide notification no. 75/2017-Central Tax dated 29th December 2017 in respect of (4A) In the case of supplies received on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated 18th October, 2017, refund of input tax credit, availed in respect of other inputs or input services used in making zero-rated supply of goods or services or both, shall be granted.

(Link http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-75-central-tax-english.pdf)

Further Rule 96(9) of CGST Rules 2017 as amended vide notification no. 75/2017-Central Tax dated 18th October 2017, recipient of deemed export supplies on which the supplier has availed the benefit of notification No. 48/2017-Central Tax dated 18th October, 2017 cannot export on payment of integrated tax

(Link http://www.cbic.gov.in/resources//htdocs-cbec/gst/notfctn-75-central-tax-english.pdf)

Time limit for filling refund claim

To apply for refund the recipient or supplier of deemed export supplies has to file an application in FORM GST RFD-01A through common portal before expiry of 2 years from the relevant date in such form and manner as may be prescribed- (Rule 54(1) of CGST Act 2017). Relevant date for is date when the return is furnished containing deemed export details. However, the taxpayer will still have the option to physically submit the refund application to the jurisdictional proper officer in FORM GST RFD-01A, along with supporting documents, if he so chooses. It may be noted that the documents/ undertakings/invoices to be submitted along with the refund application in FORM GST RFD-01A are the same as have been prescribed under the CGST Rules and various Circulars issued on the subject from time to time.

(Link http://www.cbic.gov.in/resources//htdocs-cbec/gst/Circular-No-79.pdf)