Page 31 - Chap24Computation of GST

the supply of goods of like kind and quality by the recipient to his unrelated customer, where the

goods are intended for further supply by the said recipient.
Ü In the given case, since open market value is not available, value of the goods supplied to M/s.
Dhara Enterprises will be₹ 88,200 [90% of ₹ 98,000].
Ü Thus, value of supply of Bangalore unit is ₹ 6,88,500 and of Retail Showroom at Ahmedabad
is ₹ 88,200.

CCP 24.01.10.00
An international trade exhibition is going to be held in United States of America in January. Aayaat
Niryat Export House (ANEH) has participated in it. It intends to send 100 units of taxable goods

manufactured by it to USA for display in the said exhibition. ANEH is of the view that the activity of
sending the goods out of India for exhibition is a zero-rated supply. However, its tax advisor does not
concur with its view. Examine whether the view of ANEH is correct.
Assuming that ANEH could not sell any goods at the exhibition and brings back entire 100 units to

India
(i) in February,
(ii) in August.
Discuss the requirement to issue invoice, if any, in each of the above independent cases.

Would your answer be different if ANEH sells an aggregate of 65 units of the taxable goods in USA
exhibition on different dates in January and remaining 35 units are brought back on 31st January. The
tax advisor of ANEH advises ANEH that the export of 65 units qualify as zero-rated supply and it
should apply for refund of the unutilized ITC in respect of the same. Examine the technical veracity of

the tax advisor's advice. [CA Final RTP May 2020]
Answer :-
1. The view of ANEH is correct or not:-
Ü No, the view of ANEH that the activity of sending the goods out of India for exhibition is a zero-rated

supply, is not correct.
Ü As per section 7 of CGST Act, for any activity or transaction to be considered as a supply, it should be for
a consideration by a person and it should be in the course or furtherance of business. The exceptions to
the above are the activities enumerated in Schedule I of CGST Act which are treated as supply even if

made without consideration.
Ü Further, IGST Act states that supply shall have same meaning as assigned in section 7 of CGST Act.
Ü Section 16 of IGST Act defines “zero rated supply” as:-
a) export of goods or services or both or

b) supply of goods or services or both to a SEZ developer or a SEZ unit.
Thus, only such “supplies” which are either “export” or are “supply to SEZ unit/ developer” would
qualify as zero-rated supply.
Ü Thus, as per CBIC clarification, the activity of sending/ taking the goods out of India for exhibition or on
consignment basis for export promotion, except when such activity satisfy the tests laid down in

Schedule I of CGST Act, do not constitute supply as the said activity does not fall within the scope of
section 7 of CGST Act as there is no consideration at that point in time.
Ü Since such activity is not a supply, the same cannot be considered as “zero rated supply” as per section

16 of IGST Act.

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