Friends!
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.
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