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whether gst is applicable in case of drop shipment business ??

rajesh khatri (student) (23 Points)

06 February 2019

suppose X in India gets order from Y in US, X gives order to Z in China to direct supply of goods to Y in US. Goods do not enter in custom barriers of India neither goes out side India. How gst registration or gst liability to be fulfilled??

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2 Replies

prasad Nilugal ( GST Practitioner & Accounts ) (14916 Points)
Replied 06 February 2019

Above transaction has been included in Schedule III of the CGST amendment Act 2018 W.E.F 1/2/2019 ." Transaction neither supply of Goods nor service " . I think you have take registration under GST , please confirm regarding registration .

Afreen Fatima (Aricle Assisstant (Final Year)) (129 Points)
Replied 06 February 2019

1. In my view schedule III will attract when the goods supplied from China to US belongs to X.

2. In case X is working on commission basis he will fall under definition of Intermediary. (Refer sec. 2(13) of IGST Act 2017 for intermediary definition.)

3. As per sec. 13(8) of IGST Act 2017 place of supply in case of intermediary service is location of supplier. so this translation will not be treated as export and CGST and SGST payable on the transaction.

4. In case turnover of X exceeds 20 lakh, registartion under GST is mandatory. (Sec. 22 of CGST Act 2017.)

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