Sub-section (5) of section 7 of the Integrated Goods and Services Tax Act, 2017 (hereinafter referred to as the IGST Act) runs as follows:
"(5) Supply of goods or services or both,—
(a) when the supplier is located in India and the place of supply is outside India;
(b) to or by a Special Economic Zone developer or a Special Economic Zone unit; or
(c) in the taxable territory, not being an intra-State supply and not covered elsewhere in this section,
shall be treated to be a supply of goods or services or both in the course of inter-State trade or commerce."
As per clause (b) of section 11 of the IGST Act, the place of supply of goods exported from India shall be the location outside India. Section 11 runs as follows:
11. The place of supply of goods,—
(a) imported into India shall be the location of the importer;
(b) exported from India shall be the location outside India.
Again, clause (2) of article 286 of the Constitution of India requires the Parliament, by law, to formulate principles for determining when a supply of goods or services or both takes place -
(i) outside the State;
(ii) in the course of export out of the territory of India; and
(iii) in the course of import into the territory of India.
Article 286 prohibits States from levying tax on transactions referred to above. In clause (5) of article 269A, the Parliament has also been required, by law, to formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.’’. The Parliament has formulated principles for the purpose of determining place of supply and supply of goods or services or both in the course of inter-State trade or commerce but unfortunately, while formulated principles for determining supply of goods or services in the course of inter-State trade or commerce, supply, by or to SEZ unit and SEZ developer, where SEZ, supplier or recipient and place of supply, are located within the same State, provision has been made that such supply shall be treated to be a supply in the course of inter-State trade or commerce. Similar provision has also been made in respect export supply.
I am of the view that barring the case of supply of goods or services or both in the course of import into the territory of India, Parliament has nowhere been permitted to convert intra-State as well as export transactions into inter-State transactions by enacting deeming clauses. Purpose of creating fiction has not been given. As such, purpose of creating fiction should be understood as "for all purposes of the Act". This includes levy and collection of tax also. But amount required to be paid does not form part of public revenue, amount cannot be termed as tax. Words "import" and "export" should be understood in their popular sense. Term "in the course of" conveys a definite meaning. I think that it is essential to formulate principles required in clause (5) of article 269A and clause (2) of article 286 of the Constitution.