Last updated: December 17th, 2019 5:21 PM

GST – Goods Sent for Exhibition

Due to a lot of confusion prevailing in the trade and industry about, documentation and tax applicability of goods sent/taken out of India for exhibition or on a consignment basis for export promotion, recently vide circular no. 108/27/2019-GST dated 18^th July 2019, the Central Board of Indirect Taxes and Customs has come up with the clarification in the matter which is being explained in the current article.

Understanding the applicability of ‘supply’ and ‘zero-rated supply’

In the circular, the Central Board of Indirect Taxes and Customs (CBEC) clarified that any activity/transaction would be treated as ‘supply’ only if the following two conditions are satisfied:

• Such activity/transaction should be done for consideration; and
• Such activity/transaction should be done in the course or furtherance of the business.

When the goods are sent/taken out of India for exhibition or on the consignment basis for export promotion, the same would not come within the ambit of ‘supply’ in as much as there is no consideration involved at any point of time. With regard to the applicability of ‘zero-rated supply’, it has been clarified that only ‘supplies’ which are either export or are supply to Special Economic Zone unit/developer would qualify as zero-rated supply. Since the goods sent/taken out of India does not qualify as ‘supply’, consequently, the same would also not qualify as ‘zero-rated supply’.

Circumstances when the goods would be treated as supply

Provisions of section 31(7) require that the goods sent/taken out of India for exhibition should be either sold or brought back into India within a period of 6 months from the date of removal. However, if the goods are neither sold or brought back within the stipulated time period, then, it would be deemed that the supply has taken place. Further, if the goods are sold, fully or partially, within the time period of 6 months, then, the supply is actually affected, for the quantity sold, on the date of sale.

Specific records to be maintained by the supplier of goods

The suppliers of goods which are sent/taken out of India for exhibition or on the consignment basis for export promotion are required to maintain the record of such goods in the following format:

Folio No.	Description of specified goods	Quantity	Value per unit	Total value of the specified goods	Date of removal	Delivery challan no. & date	Shipping bill no. & date	Details of goods supplied but not brought back	Invoice No. & date	Details of specified goods brought back	Bill of entry no. and date

Please note the above format is provided at ‘Annexure’ to the above referred Circular.

Documentation

• When the specified goods are sent/taken out of India for exhibition or on a consignment basis for export promotion, it should be accompanied by the delivery challan. The delivery challan should be prepared in triplicate, and it should contain the following details:
  • Delivery challan should be serially numbered not exceeding 16 characters, in one or multiple series.
  • Date and number of delivery challan.
  • Name, address and GSTIN of the consigner, if registered.
  • Name, address and GSTIN of the consignee, if registered.
  • HSN code and description of goods.
  • Taxable value.
  • Tax rate and tax amount.
  • Place of supply, in case of inter-state movement.
• If the goods sent/taken out of India are sold, fully or partially, then, the sender/seller is required to issue a tax invoice as prescribed under GST law in respect of the quantity of goods sold.
• If the goods sent/taken out of India are neither sold nor bought back within the time period of 6 months, then, the sender/seller is required to issue a tax invoice for the quantity of goods not bought back on the date of completion of 6 months.

Refund Claim

Question of refund claim arises only in the following two cases:

• Goods sent out of India is not bought back within the stipulated time of 6 months; or
• Goods sent out of India are sold out.

As seen above, goods sent/taken out of India is not covered within the scope of ‘zero-rated supply’ and hence accordingly execution of a bond or LUT is not required. With regard to the refund claim it has been clarified that, even if the sender has not executed bond or LUT, he would be eligible for refund claim as per provisions of section 54(3) read with rule 89(4) of the CGST Rules. However, refund claim cannot be filed under rule 96 of the CGST Rules reason being the supply has taken place at a time after the goods have already been sent/taken out of India.

Summary

Situation	Treatment
Goods are neither sold nor bought back within a period of 6 months	Deemed to be supply. Accordingly, the sender is required to issue a tax invoice on the date of completion of 6 months.
Goods fully sold within a period of 6 months	Actual supply. Accordingly, the sender is required to issue a tax invoice on the date of sale.
Goods partially sold and partially not bought back within a period of 6 months	Actual supply for the quantity of goods sold and the sender is required to issue a tax invoice on the date of sale. Deemed supply for the quantity of goods not bought back and accordingly the sender is required to issue a tax invoice for the quantity of goods not bought back on the date of completion of 6 months.