CBIC clears air on sales promotion offers under GST
The Central Board of Indirect Taxes and Customs (CBIC) has issued a useful circular clarifying various doubts regarding sales promotion schemes under goods and services tax (GST) regime. Another circular from its customs wing talks of introduction of next generation reform named ‘Turant Customs’ — a comprehensive package of various elements that would be implemented from time to time in the next few months.
The Director General of Foreign Trade (DGFT) has discontinued issue of physical copies of advance authorisations and EPCG (Export Promotion Capital Goods) authorisations. The Jawaharlal Nehru Customs House (JNCH) at Nhava Sheva has rationalised the procedures for reimport of exported goods. The Ministry of Textiles has announced an improved scheme called Scheme for Rebate of State and Central Taxes and Levies (RoSCTL) on export of garments and made-ups.
The CBIC clarifies that the goods or services or both which are supplied free of cost (without any consideration) shall not be treated as ‘supply’ under GST (except in case of activities mentioned in Schedule I of the Central GST Act, 2007). However, input tax credit (ITC) shall not be available to the supplier on the inputs, input services and capital goods to the extent they are used in relation to such supplies made without any consideration.
Its Circular (no. 92/11/2019- GST) says that under schemes such as ‘buy one – get one free’, a single price is being charged for the entire supply and so, must be treated as supplying two goods for the price of one. It also clarifies that credit note(s) can be issued as a commercial transaction between the two contracting parties but shall not be excluded while determining the value of supply. In its circular (no. 09/2019- Customs) on ‘ Turant Customs’, the CBIC mainly talks of incremental facilities by leveraging information technology to speed up imports and exports.
The DGFT Policy Circular (no.19/2018) says that applicants should apply for Advance/EPCG authorisations as per current practice on DGFT website (www.dgft.gov.in). The Regional Authorities (RA) will not issue any hard copy of authorisation to the applicants. Instead, in case of approval by the RA the applicant will get a suitable message on his mobile and email address. RA will continue to examine the application as per current practice and, after approval, send the authorisation details to other agencies/ departments, as usual.
The JNCH Public Notice (no.3/2019) asks importers to file advance or prior bill of entry in re-import cases and necessarily upload documentary evidence of surrender of export incentives and intimation to specified authorities. It says that where benefit of exemption is claimed, the ‘first check’ procedure need not be resorted to and identity of goods can be established under ‘second check’ procedure also.
Under the RoSCTL, the benefit to exporters shall be given by the DGFT in the form of Merchandise Exports from India Scheme (MEIS) type duty credit scrips. Till finalisation of procedural details, claims filed under the existing scheme-codes for the erstwhile RoSL (Refund of State Levies) scheme will be treated as claims filed under RoSCTL scheme.
Thus, the process of facilitating import-export trade is quietly proceeding as usual through a series of measures that may not individually amount to much but pursued diligently over a period of time, can collectively lead to reduction of transaction costs and improve the ease of doing business.