Section 147 of GST – Deemed exports under GST Act
Statutory provision The Government may, on the recommendations of the Council, notify certain supplies of goods as deemed exports, where goods supplied do not leave India, and payment for such supplies is received either in Indian rupees or in convertible foreign exchange, if such goods are manufactured in India. Related provisions of the Statute:
Analysis and Updates
Introduction This section deals with notification of certain supplies of goods as deemed exports upon recommendation by the GST Council. Analysis The notified goods would be deemed to be exported, if such goods are manufactured in India although they do not leave India and payments are received in Indian rupees or convertible foreign exchange. This section authorizes the government to notify transactions which will be declared to be deemed exports. Interestingly, there is no section that authorizes deemed exports to enjoy zero rated benefit except inclusion of deemed exports within the machinery provisions for claiming refund under section 54 read with rule 89. It is remarkable that all other transactions where the funds are available such as, refunds to UIN-holders under section 55 of CGST Act, the refunds to exporters under section 16 of IGST Act, refunds in case of inverted tax-rate under section 54(3) of CGST Act, etc, are available. However, there is no section granting entitlement to refund in respect of deemed exports. The promise by the government alone provides the necessary entitlement. Comparative Review This is comparable to the concept of deemed exports in the Foreign Trade Policy and attendant export benefits/incentives are extended.
Supply to 100% EOU from DTA was treated as deemed exports under excise law but these are not treated as deemed exports under GST, resulting in denial of duty free imports of inputs under “advance authorisation” schemeEOU are like any other suppliers under GST and all the provisions of GST will apply to it but the benefit of BCD exemption on import will continue for EOU. Supplies from EOU are not exempted from GST except zero rated like exports or supply to SEZ
Related provisions Section 2(39) of the CGST Act, 2017 defines the term ‘deemed exports”. This would be relevant for extending refund benefit under section 54 of the CGST Act. Related Rules RRule 89 of CGST Rules is relevant for claiming refund in respect of deemed exports. This rule prescribes forms & procedures for claiming refund in case of supplies made to a special economic zone. Second proviso to Rule 89(1) says that “provided also that in respect of supplies regarded as deemed exports, the application shall be filled by recipient of deemed export supplies”. Documents Required For Refund Under Deemed Export
- Acknowledgment by the jurisdictional officer of the Advance Authorisation holder or Export Promotion Capital Goods Authorisation holder, as the case may be, that the said deemed export supplies have been received by the said Advance Authorisation or Export Promotion Capital Goods Authorisation holder, or a copy of the tax invoice under which such supplies have been made by the supplier, duly signed by the recipient Export Oriented Unit that said deemed export supplies have been received by it.
- An undertaking by the recipient of deemed export supplies, that no input tax credit on such supplies has been availed of by him.
- An undertaking by the recipient of deemed export supplies that he shall not claim the refund in respect of such supplies and the supplier may claim the refund. Reporting in Annual Return Deemed export transactions is to be reported in Table-4E of GSTR-9. For detailed discussion from Annual return and GST Audit perspective, please refer Technical Guide on Annual return and GST Audit. Recommended Articles –
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