Goods Delivered in India but Bill to Outside India- GST Implications

The concept of "Bill to & Ship to" is very common nowadays. In the case of Bill to Ship to, the goods are delivered to some other person or some other place, on the direction of the person who has placed the order of such goods. In this respect there can be a situation where the person located in India has received an order from the person located outside India to deliver the goods in India. In other words, it is the case of "Bill to Ship to" wherein the Bill to party is the person who is located outside India and the ship to party is the person who is located in India and the supplier is also located in India. In this article we are going to analyse this situation with the help of an example and also discuss the GST implications on this transaction.

Suppose company A is located in Haryana has received an order from company B located outside India to deliver the goods to company C located in Delhi. In this case, company A will deliver the goods to company C in Delhi but the payment of such goods will be received from company B in foreign currency. In this transaction the following questions can arise;
(i) Whether said transaction is considered as export since the payment is received in foreign currency?
(ii) What would be the place of supply in this transaction?
(iii) What would be the billing procedure in this case?
(iv) How such supply would be reported in GST Returns by the supplier?

As per the definition of export of goods given under sub section 5 of section 2 of IGST Act 2017 "export of goods" with its grammatical variations and cognate expressions, means taking goods out of India to a place outside India;

Thus as per the above definition, when the goods are sent outside India to a place outside India, then it shall be treated as an export of goods. The supply in question does not qualify as an export because the goods are not being taken out of India to a place outside India; instead, they are being delivered within India.

Determination of Place of Supply:
The provisions related to place of supply are given under section 10 to 13 of IGST Act 2017. Section 10 is used to determine the Place of supply of goods other than imported into, or exported from India. Section 11 covers the place of supply provisions when the goods are being imported into or exported from India. Section 12 & 13 of IGST are used to determine the place of supply of services.

In our example, since it is not the case of export, hence we have to refer section 10 of IGST to determine the place of supply of goods.

Section 10(1)(a) states that where the supply involves movement of goods, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient.

Section 10(1)(b) covers the situation where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.

In this respect the CBIC has also issued Circular No. 209/3/2024 to clarify that in case of supply of goods made to an unregistered person where billing address is different from the address of delivery of goods the place of supply would be the location where such goods are delivered.

Billing Procedure:

While preparing the tax invoice, the Bill to party would be the foreign customer "B" and the ship to party would be "C" located in Delhi and IGST would be charged in the tax invoice, since the place of supply is in Delhi which is different from the location of supplier i.e., Haryana and accordingly IGST would be applicable in this case being in inter state supply.

In addition to this, the Commercial Invoice is to be prepared in foreign currency to recover the amount from the Bill to Party "B".

Reporting in GST Returns:

In GSTR-1 & GSTR-3B the said supplies would be reported as B2C supply.

Conclusion:  As the goods are not being sent outside India but delivered in India,  hence such transaction is not considered as export of goods but considered as inter state supply made to an un-registered person and accordingly IGST would be charged in the tax invoice and such transaction would be reported as B2C supply in GST returns.

Disclaimer: The information given in this article is solely for purpose of understanding the law. It is completely based on the interpretation of the author and cannot be constituted as a legal advise, the author of this article and Lawcrux team is not responsible for any legal issues if arises on the basis of the interpretation given above.