CHAPTER XXV

Deemed Exports in GST

Introduction

“Deemed Exports” refers to supplies of goods manufactured in India (and not
services) which are notified as deemed exports under Section 147 of the
CGST/SGST Act, 2017. The supplies do not leave India. The
payment for such supplies is received either in Indian rupees or in
convertible foreign exchange.

Deemed exports are not zero rated supplies by default, unlike the regular
exports. Hence all supplies notified as supply for deemed export will be
subject to levy of taxes i.e. such supplies can be made on payment of tax
and cannot be supplied under a Bond/LUT. However, the refund of tax paid on
the supply regarded as Deemed export is admissible to either the supplier
or the recipient. The application for refund has to be filed by the
supplier or recipient (subject to certain conditions) of deemed export
supplies, as the case may be.

Categories of supply of goods notified as Deemed Exports

In exercise of powers conferred under Section 147 of the CGST
Act, the Central Government has issued Notification no.
48/2017-Central Tax dated 18.10.2017 wherein the following
categories of supply of goods has been declared as Deemed Exports: –

Sr. No.	Description of Supply
1	Supply of goods by a registered person against Advance Authorisation
2	Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation
3	Supply of goods by a registered person to Export Oriented Unit
4	Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorisation

For the purposes of the above notification, –

1. “Advance Authorisation” means an authorisation issued by the Director
   General of Foreign Trade under Chapter 4 of the Foreign Trade Policy
   2015- 20 for import or domestic procurement of inputs on pre-import
   basis for physical exports.

2. Export Promotion Capital Goods Authorisation means an authorisation
   issued by the Director General of Foreign Trade under Chapter 5 of the
   Foreign Trade Policy 2015-20 for import of capital goods for physical
   exports.

3. “Export Oriented Unit” means an Export Oriented Unit or Electronic
   Hardware Technology Park Unit or Software Technology Park Unit or Bio
   Technology
   Park Unit approved in accordance with the provisions of Chapter 6 of
   the Foreign Trade Policy 2015-20.

It may be noted that Notification no. 49/2017-Central tax
dated 18.10.2017 also lays down the list of evidences which
are required to be produced by the supplier of deemed
export supplies for claiming refund.

Procedure to be followed in case of Deemed Export supplies

Rule 89 of the CGST Rules, 2017 as amended vide
Notification No. 47/2017- Central Tax dated 18.10.2017
allows either the recipient or supplier of such supplies to claim refund of
tax paid thereon.

As mentioned earlier, certain supplies of goods have been notified as
deemed export supplies vide Notification No. 48/2017-Central Tax dated
18.10.2017. Circular no.14/14/2017-GST dated
06.11.2017 provides for the following procedure and
safeguards in respect of supplies to EOU / EHTP / STP / BTP units-

i. The recipient EOU / EHTP / STP / BTP unit shall give prior intimation in
a prescribed

proforma in “Form–A” (appended herewith) bearing a
running serial number containing the goods to be procured, as pre-approved
by the Development Commissioner and the details of the supplier before such
deemed export supplies are made. The said intimation shall be given to –

a) the registered supplier;

b) the jurisdictional GST officer in charge of such regis-
tered supplier; and

c) its jurisdictional GST officer.

ii. The registered supplier thereafter will supply goods under tax invoice
to the recipient EOU / EHTP / STP / BTP unit.

iii. On receipt of such supplies, the EOU / EHTP / STP / BTP unit shall
endorse the tax invoice and send a copy of the endorsed tax invoice to –

a) the registered supplier;

b) the jurisdictional GST officer in charge of such regis-
tered supplier; and

c) its jurisdictional GST officer.

iv. The endorsed tax invoice will be considered as proof of deemed export
supplies by the registered person to EOU / EHTP / STP / BTP unit.

v. The recipient EOU / EHTP / STP / BTP unit shall maintain records of such
deemed export supplies in digital form, based upon data elements contained
in “Form-B” (appended herewith). The software for maintenance of digital
records shall incorporate the feature of audit trail. While the data
elements con- tained in the Form-B are mandatory, the recipient units will
be free to add or continue with any additional data fields, as per
their commercial requirements. All recipient units are required to enter
data accurately and immediately upon the goods being received in, utilized
by or removed from the said unit. The digital records should be kept
updated, ac- curate, complete and available at the said unit at all times
for verification by the proper officer, whenev- er required. A digital copy
of Form – B containing transactions for the month, shall be provided to the
jurisdictional GST officer, each month (by the 10th of month) in a CD or
Pen drive, as convenient to the said unit.

The above procedure and safeguards are in addition to the terms and
conditions to be adhered to by a EOU / EHTP / STP / BTP unit in terms of
the Foreign Trade Policy, 2015-20 and the duty exemption notification being
availed by such unit.

Form – A

(Intimation for procurement of supplies from the registered person by
Export Oriented Unit (EOU)/Electronic Hardware Technology Park (EHTP) Unit/
Software Technology Park (STP) unit/ Bio-Technology Parks (BTP) Unit under
deemed export benefits under section 147 of CGST
Act,2017 read with Notification No.48/2017-
Central Tax dated 18.10.2017

(as per Circular ——- dated ———-)

Running Sr. No. of intimation and Date____

LOP No. ———- and valid up to ——.

GSTIN ———————-

We the, M/s …………….(Name of EOU/EHTP/ STP/BTP unit and address)
wish to procure the Goods namely(Tariff description, Quantity and value)
——— —————-, as allowed under Foreign Trade Policy and
Handbook of Procedures 2015-2020, and approved by Development Commissioner
from M/s —————— —- (Name of supplier, address and Goods &
Services Tax Identification Number(GSTIN)). Such supplies on receipt would
be used in manufacturing of goods or rendering services by us. We would
also abide by procedure set out in Circular no. —— dated —-.

                 Signatures of the owner of
                  EOU/EHTP/STP/BTP unit or
                   His Authorised officer

To:

1. The GST officer having Jurisdiction over the EOU/ EHTP/STP/BTP unit.

2. The GST officer having Jurisdiction over the registered person intending
   to supply the goods.

3. The registered person intending to supply goods to EOU/EHTP/STP/BTP
   unit.

FORM – B

Form to be maintained by EOU/EHTP/STP/BTP unit for the receipt, use and
removal of goods re- ceived under deemed export benefit under section 147
of CGST Act, 2017 read with Notification No. 48/2017-Central
Tax dated 18.10.2017

Name of EOU/EHTP/STP/BTP unit and address

GSTIN No.

Address of Jurisdiction GST Officer

Who can file refund application in case of Deemed Exports supplies

As per 3 rd proviso to Rule 89(1) of CGST Rules,
2017, application for refund in case of
deemed exports can either be filed by the recipient of deemed export
supplies. Alternatively, the supplier of such deemed exports supplies can
also file the refund application, in cases where the recipient does not
avail of input tax credit on such supplies and furnishes an undertaking to
the effect that the supplier may claim the refund.

It may be noted that rule 89(4A) of the CGST Rules,
2017 as amended vide Notification no.
75/2017-Central Tax dated 29.12.2017
(w.e.f 23.10.2017), the recipient of deemed export supplies can claim
refund of input tax credit availed in respect of other inputs or input
services used in making zero-rated supply of goods or services or both, in
case of deemed export supplies on which the supplier has availed the
benefit of notification No. 48/2017-Central Tax dated
18.10.2017.

Further Rule 96(9) of the CGST Rules,
2017 as amended vide Notification no.
75/2017-Central Tax dated 29.12.2017
(w.e.f 23.10.2017) also provides that the recipient of deemed export
supplies on which the supplier has availed the benefit of notification No.
48/2017-Central Tax dated 18.10.2017
cannot export on payment of integrated tax.

Time Limit for filing refund claim

For obtaining refund the recipient or supplier of deemed export supplies
has to file an application in FORM GST RFD-01 through the Common Portal,
either directly or through a Facilitation Centre notified by the
Commissioner before the expiry of two years from, the date on which the
return relating to such deemed export supplies is to be furnished
electronically. The application has to be accompanied by a statement
containing the number and date of invoices along with such other evidences
as may be notified in this behalf.

Manual filing and processing of refund claims on account of deemed export supplies

Due to the non-availability of the refund module on the common portal, it
has been decided by the competent authority, that the
applications/documents/forms pertaining to refund claims on account of
deemed export supplies shall be filed and processed manually till further
orders. Circular No. 17/17/2017-GST dated
15.11.2017 and Circular no.
24/24/2017-GST dated 21.12.2017
prescribing the detailed procedure have been issued in this regard.