'GST payable on composition fees and import licensing fees paid to JDGFT'

Q. Are we required to pay GST on fees for import licence and composition fees for regularisation of defaults that we pay to JDGFT?

In my opinion, “Yes”, if you are a business entity and the fee is more than Rs 5,000. The import licence fee that you pay is for processing your application that cannot be refunded even if your application is rejected. So, it is a service provided to a business entity. The composition fee is for the service of tolerating an act such as non-fulfilment of export obligation. 

Q. We operate an ICD (not CFS). Many exporters avail of our facilities and pay in Indian rupee for the services we render. Can these payments be construed as forex earnings, since they are made in the course of exports? If so, are we eligible for SEIS entitlements as per Chapter 3 of FTP?

As per Para 3.08 (e) of FTP, “payment in Indian Rupees for service charges earned on specified services, shall be treated as receipt in deemed foreign exchange as per guidelines of Reserve Bank of India. The list of such services is indicated in Appendix-3E.” The services you render are not listed in Appendix-3E. They are also not treated as receipt in foreign exchange as per RBI Guidelines. So, you are not entitled to SEIS on such services. 

Q. Our foreign buyer is visiting us next week. He is insisting that we accept either foreign currency or rupees in cash and hand over the material to his forwarding agent in India, who will ship the material to him. We understand that in this case, the shipping bill will be in our name only. We wish to know whether this is permitted as per FEMA.

The amount representing the full export value of the goods exported must be received through an AD Bank in foreign exchange in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2016. Payment may be received by debit to the credit card of the buyer where the reimbursement from the card issuing bank or organisation will be received in foreign exchange. The shipping bill must be filed in your name. The bank will mark off in the EDPMS only on receipt of funds in its Nostro account, or if it is not the credit card servicing bank, on production of a certificate by the exporter from the credit card servicing bank in India to the effect that it has received the equivalent amount in foreign exchange. 

Q. Where a manufacturer exports on behalf of the merchant exporter, whose name should be shown in the shipping bill and who is the beneficial owner as per section 2 (3A) of Customs Act 1962?

The shipping bill must be filed by the manufacturer on his own IEC number, indicating exporter as “manufacturer (name) on behalf of the merchant exporter (name)”.  If the ownership of the goods is with the manufacturer, the beneficial owner will be treated as the merchant exporter.