Budget Proposals -2023 Series: Asking Questions and Finding Answers [Part VIII]
Sale of Custom Bonded warehoused goods and High Sea Sales [Sec 7(2)(a) read with Schedule III) and Section 17(3)
This blog is one of a series of topic-specific FAQs concerning Budget 2023 proposals. It addresses the practical issues raised due to proposed changes.
Vivek Laddha, Manish Gupta, Pooja Patwari
FAQ 1. What is the treatment of the following activities?
- Supply of warehoused goods to any person before clearance for home consumption [Para 8(a) of Sch III)]
- High Sea Sales [Para 8(b) of Sch III)]
Law Brothers’ View:
First: These are not treated as supply as per section 7(2)(a) r/w Schedule III of CGST Act.
Second: These are not required to be declared in GSTR 1 and GSTR 3B but these are declared in Table 5F of GSTR 9 under the table having the description ‘Non GST Supply (includes no supply)’.
Third: Para 8(a) is included in the value of exempt supply by virtue of amendment brought in vide Finance Bill, 2023 and consequently it becomes a reason of higher reversal of common credit.
FAQ 2. What is the intent of the amendment brought in respect of schedule III?
Law Brothers’ View: Para 7 and Para 8(a) and 8(b) were inserted vide Finance Act, 2018 but not with retrospective effect. Now lawmakers have come up to remove this anomaly by stating that these shall be deemed to be made effective from 01 July 2017.
FAQ 3. What is not fair with this amendment?
Law Brothers’ View: This amendment is a half-hearted step because it is stated in the Finance Bill, 2023 that no refund shall be made of all the tax which has been collected, but which would not have been so collected, had subsection (1) been in force at all material times.
In our view, the validity of this amendment may be tested in Court as per article 265, article 14 and article 19 of The Constitution of India.