Transfer/Sale of goods while being deposited in a custom bonded warehouse is the common trade practice wherein the importer files an into bond bill of entry and stores goods in a custom warehouse and thereafter supplies such goods to another person who then files the ex-bond bill of entry and clears such goods for home consumption.
As per Section7(2) of IGST Act,2017 the supply of goods imported into the territory of India, till they cross the custom frontiers of India is treated as a supply of goods in the course of Inter-state trade or commerce. Further proviso to section 5(1) of IGST Act, 2017 provides that the integrated tax on goods imported to India would be levied and collected in accordance with the proviso of Section 3 of Custom Tariffs Act, 1975.
Thus in case of supply of warehoused goods, the point of levy would be the point at which the duty is collected u/s 12 of Customs Act,1962 which is at the time of clearance of such goods u/s 68 of the Customs Act.
The point to be noted here is that section 3(8A) of Custom Tariffs Act, 1975 has been inserted vide Finance Act, 2018 w.e.f. 31.03.2018, So as to provide that the valuation for the purpose of IGST on imported goods at the time of clearance would be either transaction value or value as per section 3(8A) of Custom Tariffs Act,1975 which ever is higher.
Vide circular no-3/1/2018-IGST dated 25 May 2018 it has been clarified that IGST shall be levied and collected at the time of final clearance of warehoused goods (i.e. at the time of filing the ex-bond bill of entry and value addition accruing at each stage shall form part of value on which IGST would be payable at the time of clearance of warehoused goods for home consumption). It means the supply of goods before clearance from the warehouse would not be subject to IGST and same would be levied and collected only when the warehoused goods are cleared for home consumption from the custom bonded warehouse.