GST - Procurement of Goods on Concessional Rate of Tax
In the pre-GST regime, exporters are allowed to procure goods without duty/ taxes or at concessional rate of duty/taxes. In excise, benefit was provided vide Central Excise (Removal of goods at concessional rate of duty) Rules, 2001. Under these rules, manufacturer had to file an application in quadruplicate (supplier wise) to its jurisdiction officer along with the bond and security. Assistant Commissioner shall certify the copies of the application and provide 2 copies of the same to the manufacturer. Out of the 2 copies, one copy will be sent to the supplier on the basis of which it will provide the goods on concessional rate of duty to the exporter.
In VAT/CST Act, as per section 5(3) of the CST Act, the exporter has to get Form-H from the department for the procurement of goods at concessional or no duty/taxes and give them to the supplier. Form H will be a proof for the supplier that he has supplied the goods to the exporter and will be provided to the jurisdictional officer by the supplier during his assessment.
Now in GST regime also, Central Government vide Notification No. 41/2017-IT (Rate) & Notification No. 40/2017-CT (Rate) has provided the similar type of benefit to procure the goods at a concessional rate of duty i.e. 0.1% IGST in case of Interstate Transaction or 0.5% each CGST & SGST in case of intrastate supply of goods.
There are certain conditions that must be fulfilled to avail this benefit and the same are as follows:-
- Both the Supplier and Recipient (i.e. exporter of goods) should be registered;
- The exporter must be a merchant exporter as this benefit is only for merchant exporter and the manufacturer Exporter is not allowed to procure goods at concessional rate;
- An shall be placed to supplier to supply the goods at concessional rate and the copy of the same shall also be provided to the jurisdictional officer of the supplier;
- Goods shall be supplied by the supplier on a tax invoice;
- Goods shall be supplied directly to the custom port, sea port, land custom station or airport or to the registered warehouse i.e. custom bonded warehouse.
- In case the goods are sent to the registered warehouse then the exporter shall endorse the copy of the supplier’s invoice in favour of the custodian of the warehouse and an acknowledgement of the receipt of goods shall be taken from the warehouse keeper.
- Copy of the endorsement and acknowledgement signed by the warehouse keeper shall be sent back to the supplier and to the jurisdictional officer of the supplier;
- Exporter shall export the said goods within a period of 90 days from the date of tax invoice issued by the registered supplier;
- Exporter shall indicate GSTIN and Invoice number provided by the supplier on the Shipping bill or Bill of export;
- The exporter shall be registered with an Export Promotion Council or a commodity board recognised by the Department of commerce. There are various export promotion councils and commodity boards recognised by the Department of commerce;
- The registered recipient shall provide the copy of shipping bill or bill of export along with the copy of the export general manifest or export report to the registered supplier & its jurisdictional tax officer.
- If exporter defaults in exporting the goods within 90 days, then the supplier shall not be eligible for the exemption.