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'Advance authorisation is different from special advance authorisation'

The Indian company makes payment in foreign currency. Accordingly, does liability of payment of GST on RCM arise?

TNC Rajagopalan 

exports, imports, cargo

We received advance authorisation (AA) dated December 11, 2019, towards import of linen fabric under actual user condition. Will pre-import condition be applicable as per Appendix 4-J, S.No.11? Are special advance authorisation (SAA) and AA same? And do all terms and rules applicable to SAA also apply to AA?

Both AA and SAA allow duty-free import of inputs requited for export production. However, they are different in details. SAA is issued under Para 4.04A of FTP for duty-free import of fabric, subject to pre-import condition, for export of articles of apparel and clothing accessories covered under Chapter 61 and 62 of ITC(HS), as per Notification 45/2016-Cus dated August 13, 2016, subject to the specified terms and conditions. Drawback at AIR is available for exports under the SAA scheme.

What is the place of supply in case of import of (R&D) services carried out (performed outside India) by the supplier of services (a 100 per cent subsidiary of an Indian company engaged in the business of R&D in Germany), while the recipient of the services is the parent company in India? Invoice is raised by the foreign subsidiary on an arms' length basis. The Indian company makes payment in foreign currency. Accordingly, does liability of payment of GST on RCM arise?

As per Section 13(2) of the IGST Act, 2017 (relevant extracts), “the place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services”. R&D services are not covered under the said sub-sections (3) to (13). So, in the instant case, the place of supply is the taxable territory, where the recipient is located. As per S.No. 1 of the Table at notification 10/2017-IT (Rate) dated June 28, 2017, IGST has to be paid by the parent company located in India, as the recipient of the services.

We are exporting to Nepal/Bhutan in Indian rupees and getting paid in Indian rupees. Are we eligible to claim duty drawback on the same? If yes, then what are the relevant regulations and procedures? If not, then can we claim benefit if we get payment in foreign currency?

As per Section 76 (2) of the Customs Act, 1962 (relevant extracts), if the Central government is of opinion that goods of any specified description in respect of which drawback may be claimed under this chapter are likely to be smuggled back into India, it may, by notification in the Official Gazette, direct that drawback shall not be allowed in respect of such goods, or may be allowed subject to such restrictions and conditions as may be specified in the notification. The government has, accordingly, issued M.F.(D.R.) notification no. 208-Cus dated October 1, 1977, denying drawback on exports to Nepal and Bhutan (besides other countries). However, there are some exceptions mentioned in the notification, such as realisation of payment in freely convertible currency against irrevocable letter of credit. You may refer to the notification for details.

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First Published: Mon, December 16 2019. 21:15 IST