GST Liability on Goods Scrapped on Direction of Customer

In re: Dolphine Die Cast Private Limited – Ruling dated May 20, 2020 – Authority for Advance Rulings (Karnataka)

Background: Applicant manufactures steel dies, as specified by foreign customer. Without movement of such dies, the applicant invoices the recipient abroad in foreign currency. At the end of useful life, the applicant may sell such dies as scrap in India, as directed by the foreign customer. Alternately, the applicant may export such dies to the overseas customer.

Ruling: If the steel dies are sold as scrap as aforesaid (i.e., without the said dies being moved out of India), the applicant should collect and pay applicable GST.

Comment(s): Once the applicant invoices the foreign customer, the latter becomes the owner of steel dies. When the steel dies are sold as scrap in India by the applicant merely on the directions of foreign customer, how can the applicant be liable to pay GST, except in the capacity of an agent but for which due foundation has not been laid in the ruling?

Srinivasan V, Advocate

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