2024-VIL-41-AAAR
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SGST AAAR

GST – Tamil Nadu AAAR – Paragraph 8(a) of Schedule III of the CGST Act, 2017 - Transfer of title of goods stored in FTWZ to DTA - Whether the transfer of title of goods stored in FTWZ by the appellant to its customers in DTA or multiple transfers within the FTWZ, before the goods are actually cleared into DTA for home consumption is covered under paragraph 8(a) or under paragraph 8(b) of Schedule III of the CGST Act, 2017; (ii) whether IGST is payable on such supplies; and (iii) whether reversal of input tax credit is required on such supplies - HELD - FTWZ is akin to a customs bonded warehouse and the goods stored therein are "warehoused goods" within the meaning of the Customs Act, 1962. When the goods are imported and brought into a FTWZ unit, they are basically warehoused first and then traded or subjected to other authorized operations as the case may be - the appellant’s queries for advance ruling in the instant case is restricted to the first stage, i.e., when the imported goods are supplied to any person before they are cleared for home consumption, while they still remain warehoused - the provisions of 8(a) of Schedule III of the CGST Act, 2017, viz., “Supply of warehoused goods to any person before clearance for home consumption” applies to the instant case - The transfer of title of goods stored in FTWZ Unit by the Appellant to its customers in DTA or multiple transfers within the FTWZ is covered under paragraph 8(a) of Schedule III, i.e. "Supply of warehoused goods to any person before clearance for home consumption" – the ruling passed by the AAR is upheld on this issue – Ordered accordingly - Whether IGST is payable on such supplies - HELD - Agree with the AAR's observation that since the transfer of goods is covered under paragraph 8(a) of Schedule III, IGST would not be payable on such supplies, as they are treated as neither a supply of goods nor a supply of services - Whether reversal of input tax credit is required on such supplies - HELD - the AAR ruling is modified on this issue and it is held that reversal of proportionate input tax credit of common inputs/input services/capital goods is not warranted, as the amendment to Section 17(3) of the CGST Act read with Explanation 3 to Rule 43 of the CGST Rules, provides for reversal of ITC only in respect of supplies from Duty Free Shops at arrival terminals in international airports, and not for all transactions covered under paragraph 8(a) of Schedule III.
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