50 FAQ on Deemed Exports under GST

50 FAQ:

You will read 50 frequently asked questions and answers about deemed exports in the GST framework.

Q1: What are deemed exports under GST?

A1: Deemed exports refer to supplies of goods manufactured in India that are treated as exports, even though the goods do not physically leave the country.

Q2: Why are deemed exports important?

A2: Deemed exports allow domestic manufacturers to benefit from incentives and concessions similar to physical exports, promoting import substitution and reducing foreign exchange outflow.

Q3: What are the essential conditions for a supply to qualify as a deemed export?

A3: The goods must be manufactured in India, the payment must be received in Indian rupees or convertible foreign exchange, and the supply must be notified by the government as a deemed export.

Q4: Can services be considered deemed exports?

A4: No, deemed exports under GST apply only to the supply of goods, not services.

Q5: Do deemed exports attract GST?

A5: Yes, GST is applicable on deemed exports at the time of supply, but the tax paid can be claimed as a refund later.

Q6: Can deemed exports be made under a bond or letter of undertaking without paying tax?

A6: No, deemed exports cannot be made under a bond or letter of undertaking without paying tax upfront.

Q7: Who can claim a refund for GST paid on deemed exports?

A7: Either the supplier or the recipient can claim a refund, subject to certain conditions.

Q8: What is the time limit for claiming a refund on deemed exports?

A8: The refund application must be filed within two years from the date of filing the return related to the deemed export supplies.

Q9: What are the categories of supplies notified as deemed exports?

A9: Supplies against Advance Authorization, supplies of capital goods against EPCG Authorization, supplies to Export Oriented Units (EOUs), Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs), and Bio-Technology Parks (BTPs) are notified as deemed exports.

Q10: Can a supplier claim a refund if the recipient has already claimed input tax credit?

A10: No, if the recipient has claimed input tax credit, the supplier cannot claim a refund for the same supplies.

Q11: What documents are required for a supplier to claim a refund on deemed exports?

A11: The supplier must provide an invoice-wise statement of deemed export supplies, acknowledgment by the recipient, and undertakings from the recipient.

Q12: Can a recipient claim a refund on deemed exports?

A12: Yes, the recipient can claim a refund on deemed exports, provided they do not claim input tax credit for the same supplies.

Q13: What undertakings must the recipient provide if they claim a refund?

A13: The recipient must provide an undertaking stating that the refund is claimed only for specific invoices and that the supplier has not claimed a refund for the same supplies.

Q14: Are deemed exports under GST the same as deemed exports under the Foreign Trade Policy?

A14: No, the definition and scope of deemed exports under GST may differ from the Foreign Trade Policy.

Q15: What are the additional requirements for EOUs, EHTPs, STPs, and BTPs to claim deemed export benefits?

A15: These units must provide prior intimation to the supplier and jurisdictional GST officers, maintain specific forms, and endorse tax invoices.

Q16: What is the purpose of introducing the concept of deemed exports under GST?

A16: The purpose is to establish fair competition for domestic manufacturers in specific cases and promote import substitution and reduction of foreign exchange outflow.

Q17: Can a supplier claim a refund for unutilized input tax credit on deemed exports?

A17: Yes, suppliers can claim a refund for unutilized input tax credit accumulated during the provision of goods or services to eligible organizations for deemed exports.

Q18: Are deemed exports exempted from GST payment?

A18: No, deemed exports are not automatically exempted from GST payment. The tax must be paid at the time of supply, and a refund can be claimed later.

Q19: How do deemed exports contribute to import substitution?

A19: Deemed exports involve transactions where goods manufactured in India are supplied for designated projects or purposes, effectively acting as a substitution for imports and reducing foreign exchange outflow.

Q20: What are the benefits of deemed exports under the Foreign Trade Policy?

A20: Deemed exports receive benefits such as duty concessions under the Foreign Trade Policy, aligning with the goal of promoting the nation’s welfare.

Q21: Can a supplier issue a tax invoice explicitly stating that the supply is for deemed export?

A21: Yes, suppliers must issue a tax invoice explicitly stating that the supply is intended for deemed export and obtain a certificate from the recipient confirming the same.

Q22: What is the significance of deemed exports for eligible organizations?

A22: Eligible organizations can procure goods or services without incurring GST payments, resulting in substantial cost savings and enhancing their competitiveness in the global market.

Q23: Can a supplier claim a refund on deemed exports if the recipient has not claimed input tax credit?

A23: Yes, if the recipient does not claim input tax credit and provides an undertaking, the supplier can claim a refund on deemed exports.

Q24: What is the difference between physical exports and deemed exports?

A24: Physical exports involve goods leaving the country, while deemed exports involve goods remaining within the country but being treated as exports for specific purposes.

Q25: Are deemed exports zero-rated supplies under GST?

A25: No, deemed exports are not automatically classified as zero-rated supplies under GST.

Q26: Can a supplier make deemed exports under a bond or letter of undertaking?

A26: No, deemed exports cannot be made under a bond or letter of undertaking without paying tax upfront.

Q27: What is the purpose of the undertakings provided by the recipient in a deemed export refund claim?

A27: The undertakings ensure that the refund is claimed only for specific invoices and that there is no double claiming of refunds by both the supplier and the recipient.

Q28: Can a supplier claim a refund on deemed exports if the recipient has already claimed a refund?

A28: No, if the recipient has already claimed a refund on deemed exports, the supplier cannot claim a refund for the same supplies.

Q29: What is the significance of the Sandoz Pvt Ltd v. Union of India case regarding deemed exports?

A29: In this case, the Supreme Court clarified that supplies of intermediate goods are covered by a letter of undertaking, while supplies covered under Chapter 7 of the Foreign Trade Policy are considered deemed exports.

Q30: Can a supplier claim a refund on deemed exports if the investigation is still ongoing?

A30: Yes, the supplier can claim a refund on deemed exports even if the investigation is still ongoing, as long as the necessary documentation and conditions are met.

Q31: What is the role of the GST Council in determining deemed exports under GST?

A31: The GST Council makes recommendations to the government on which supplies of goods should be notified as deemed exports under Section 147 of the CGST/SGST Act.

Q32: Can a supplier claim a refund on deemed exports if the recipient is not registered under GST?

A32: No, for a supply to qualify as a deemed export, the recipient must be eligible for deemed export status, which typically requires GST registration.

Q33: What is the significance of the M/S Combitic Global Caplet Pvt. Ltd v. Union of India case regarding deemed exports?

A33: In this case, the Delhi High Court clarified that supplies from a Domestic Tariff Area (DTA) to EOUs, EHTPs, STPs, and BTPs will be regarded as deemed exports, and the DTA supplier shall be eligible for relevant entitlements under the Foreign Trade Policy.

Q34: Can a supplier claim a refund on deemed exports if the recipient has already claimed a refund under the Foreign Trade Policy?

A34: The GST refund on deemed exports is separate from any benefits claimed under the Foreign Trade Policy, so the supplier may still be eligible for a GST refund even if the recipient has claimed benefits under the FTP.

Q35: What is the purpose of maintaining Form A and Form B for EOUs, EHTPs, STPs, and BTPs in deemed exports?

A35: Form A is used to provide prior intimation to the supplier and jurisdictional GST officers, while Form B is used to maintain a record of goods received by these units for deemed exports.

Q36: Can a supplier claim a refund on deemed exports if the recipient is located in a Special Economic Zone (SEZ)?

A36: No, supplies to SEZs are not covered under the deemed exports notification under GST.

Q37: What is the significance of the CBIC clarification on refunds on deemed exports?

A37: The Central Board of Indirect Taxes and Customs (CBIC) has clarified various issues related to refunds on deemed exports, perquisites, and utilization of balances in electronic cash/credit ledgers.

Q38: Can a supplier claim a refund on deemed exports if the goods were manufactured outside India?

A38: No, for a supply to qualify as a deemed export under GST, the goods must be manufactured or produced in India.

Q39: What is the purpose of the endorsement requirement on tax invoices for EOUs, EHTPs, STPs, and BTPs?

A39: The endorsed copy of the tax invoice, along with the recipient’s endorsement, must be sent to the supplier and the jurisdictional GST officers to ensure proper documentation and compliance.

Q40: Can a supplier claim a refund on deemed exports if the payment was received in a currency other than Indian rupees or convertible foreign exchange?

A40: No, for a supply to qualify as a deemed export, the payment must be received in Indian rupees or convertible foreign exchange.

Q41: What is the significance of the Advance Authorization (AA) in deemed exports?

A41: Supplies made by a registered person against an Advance Authorization are notified as deemed exports under GST.

Q42: Can a supplier claim a refund on deemed exports if the recipient is a unit in a Free Trade Zone (FTZ)?

A42: No, supplies to units in Free Trade Zones are not covered under the deemed exports notification under GST.

Q43: What is the purpose of the Export Promotion Capital Goods (EPCG) Authorization in deemed exports?

A43: Supplies of capital goods by a registered person against an EPCG Authorization are notified as deemed exports under GST.

Q44: Can a supplier claim a refund on deemed exports if the goods were supplied to a domestic tariff area (DTA) unit?

A44: No, supplies to DTA units are not covered under the deemed exports notification under GST.

Q45: What is the significance of the Delhi High Court’s decision in M/S Combitic Global Caplet Pvt. Ltd v. Union of India regarding deemed exports?

A45: The court clarified that EOU/EHTP/STP/BTP units shall be eligible for obtaining entitlements specified in Chapter 8 of the Foreign Trade Policy on deemed exports, even if the DTA supplier does not claim the entitlements.

Q46: Can a supplier claim a refund on deemed exports if the goods were supplied to a unit in a Special Economic Zone (SEZ)?

A46: No, supplies to units in Special Economic Zones are not covered under the deemed exports notification under GST.

Q47: What is the purpose of the Directorate of Revenue Intelligence’s (DRI) involvement in deemed exports?

A47: The DRI may be involved in cases where gold bullions or other goods of foreign origin are recovered during investigations related to deemed exports.

Q48: Can a supplier claim a refund on deemed exports if the goods were supplied to a unit in a Domestic Tariff Area (DTA)?

A48: No, supplies to units in Domestic Tariff Areas are not covered under the deemed exports notification under GST.

Q49: What is the significance of the Gujarat High Court’s decision in Vimal Yashwantgiri Goswami v. State of Gujarat regarding deemed exports?

A49: The court granted bail to the petitioner accused of GST evasion on deemed exports, considering factors such as the maximum punishment and the compoundable nature of the offense.

Q50: Can a supplier claim a refund on deemed exports if the goods were supplied to a unit in a Free Trade Warehousing Zone (FTWZ)?

A50: No, supplies to units in Free Trade Warehousing Zones are not covered under the deemed exports notification under GST.

Key Takeaways:

1. Deemed exports apply only to the supply of goods, not services.

2. Goods must be manufactured or produced in India.

3. Payment can be received in Indian Rupees or convertible foreign exchange.

4. Supplies cannot be made under a Bond or Letter of Undertaking (LUT).

5. GST must be paid at the time of supply, and a refund can be claimed later.

6. Refunds can be claimed by either the supplier or the recipient, subject to conditions.

7. Deemed exports are eligible for benefits like duty concessions under the Foreign Trade Policy.

8. The concept aims to promote domestic manufacturing, import substitution, and reduce foreign exchange outflow.

9. Specific categories of supplies, such as those to Export Oriented Units (EOUs) and Advance Authorization holders, are notified as deemed exports.

10. Suppliers and recipients must follow additional procedures and maintain proper documentation for deemed exports involving EOUs, EHTPs, STPs, and BTPs.