POS for goods imported into or exported from India

Section 11 — Place of supply of goods imported into, or exported from India

BLOCK 2 — PRE-GST COUNTERPART / PARALLEL PROVISIONS / OPERATIVE RULES

BLOCK 3 — COMMENTARY

1. Statutory Architecture

2. Historical Context

Pre-GST, the place-of-taxation rules for export and import of goods were embedded in s. 5 of the CST Act 1956. Section 5(1) defined 'sale in the course of export' — sale or purchase that occasions the export. Section 5(2) defined 'sale in the course of import' — sale or purchase that occasions the import. The K. Gopinathan Nair and successor cases interpreted these provisions extensively, with concepts like 'integrally connected' and 'penultimate sale-for-export' under s. 5(3).

Section 11 IGST simplifies this with a single straight-line rule. For imports — POS is the location of the importer. For exports — POS is the location outside India. The complex jurisprudence on integral connection, penultimate sale, and direct vs indirect exports is no longer needed for POS determination — though it may still inform the eligibility of zero-rated treatment under s. 16 IGST.

For imports, s. 11(a) channels the supply into s. 7(2) inter-State characterisation (imports until customs frontiers are inter-State). The actual IGST charge is then collected at customs clearance under s. 5(1) proviso + s. 3(7) Customs Tariff Act + s. 12 Customs Act time-anchor. The importer becomes the deemed recipient at the location of the importer. IGST paid at customs becomes ITC in the importer's electronic credit ledger.

For exports, s. 11(b) places the POS outside India, making the supply zero-rated under s. 16 IGST. The exporter has two operational choices: (i) export under LUT (no IGST payment, refund of accumulated ITC under Rule 89); or (ii) export on IGST-paid basis and claim refund of IGST under Rule 96. Choice depends on the supplier's ITC accumulation pattern and cash-flow needs.

An important distinction is between 'export of goods' under s. 2(5) IGST (which requires physical removal of goods from India) and 'deemed export' under s. 147 CGST (where goods do not leave India but are nevertheless treated as exports for refund purposes under specified notifications). Section 11(b) applies only to actual exports; deemed exports remain domestic supplies for POS purposes under s. 10 IGST.

The Mohit Minerals reset is critical for imports. Pre-Mohit Minerals (2022), the Department had attempted to levy separate IGST on the ocean freight component of CIF imports under s. 5(3)/(4) RCM. The SC struck this down — freight is part of the composite supply of imported goods already taxed under s. 5(1) proviso + s. 11(a). Post Mohit Minerals, no separate IGST on ocean freight; the entire IGST on imports is collected at customs clearance on the CIF + BCD value base.

3. Judicial Evolution

Union of India v Mohit Minerals Pvt Ltd — (2022) 10 SCC 700 [Supreme Court — 3-Judge Bench (Constitution Bench questions)]

Brief Facts: Importers of coal on CIF basis were held liable under Notification Nos. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate) to pay IGST on ocean freight component under reverse charge under s. 5(3)/(4) of the IGST Act. Importers challenged the levy as ultra vires the charging section and contended that IGST had already been paid on CIF value (which included freight) at the time of import under s. 3(7) of the Customs Tariff Act.

Issue: Whether IGST could be levied separately on the ocean freight component of CIF imports when the entire CIF value (inclusive of freight) had suffered IGST under s. 3(7) of the Customs Tariff Act; and whether GST Council recommendations are binding on the Union and States.

HELD: Levy struck down. The Court held that the impugned notification offended the principle of 'composite supply' under s. 8 of the CGST Act because ocean freight in CIF imports is part of the composite supply of imported goods and cannot be artificially severed. Further, the GST Council's recommendations are recommendatory, not binding, on the Union and States — both Parliament and State legislatures have simultaneous legislative power under Article 246A.

"The recommendations of the GST Council are not binding on the Union and the States. The recommendations only have a persuasive value. To regard them as binding would disrupt fiscal federalism, where both the Union and the States are conferred equal power to legislate on GST."

Relevance: Foundational authority on the IGST charging section, the limits of reverse-charge notifications under s. 5(3)/(4), and the constitutional architecture of the GST Council. Repeatedly cited in RCM, place-of-supply, and composite-supply disputes.

Mafatlal Industries Ltd v Union of India — (1997) 5 SCC 536 [Supreme Court — 9-Judge Constitution Bench]

Brief Facts: Multiple manufacturers had paid central excise duty under protest, succeeded in challenges, and sought refund. The question arose whether the doctrine of unjust enrichment applies to indirect-tax refunds, whether refund can be denied if the burden has been passed on, and whether common-law refund claims survive the statutory refund regime.

Issue: Constitutional and doctrinal scope of refund of indirect taxes — whether unjust enrichment bars refund where burden has been passed on; whether the statutory refund mechanism is exclusive.

HELD: Constitution Bench held (i) the statutory refund mechanism under the Central Excise Act is exclusive — common-law refund claims are excluded; (ii) the doctrine of unjust enrichment applies — refund will not be granted where the assessee has passed on the burden to the ultimate consumer; (iii) the burden of proof on incidence-passing is on the claimant.

"Where the duty has been passed on to the buyer, the manufacturer is not entitled to refund. To do otherwise would be to enrich the manufacturer at the expense of the consumer — a course no principle of justice can support."

Relevance: Foundational unjust-enrichment authority that animates s. 54(8)(e) and the Consumer Welfare Fund mechanism. Decisive in every IGST refund claim including zero-rated/inverted-duty/excess-balance refunds.

Union of India v Bharti Airtel Ltd — (2022) 4 SCC 328 [Supreme Court — 2-Judge Bench]

Brief Facts: Bharti Airtel claimed it had under-reported ITC in GSTR-3B for July-Sept 2017 (the early GST months when GSTR-2A was not operational) and sought rectification of GSTR-3B for those months to correct the under-claim. Delhi HC permitted rectification; Revenue appealed to SC.

Issue: Whether GSTR-3B for past periods can be rectified to correct an under-claim of ITC where the registered person's books would support the correction but GSTN does not allow retrospective edit.

HELD: Rectification not permitted. The Court held that the GST return-filing regime is self-assessed; the registered person is duty-bound to verify entitlements at the time of filing and cannot, after the fact, claim that GSTR-2A was not available. ITC is a statutory entitlement that must be claimed within the period prescribed under s. 16(4) and not through retrospective rectification.

"GST is a self-assessment regime. The registered person bears the burden of correctly computing and reporting tax liability at the time of filing the return. The unavailability of GSTR-2A does not absolve the assessee of this duty."

Relevance: Substance-over-form authority on self-assessment, the finality of GSTR-3B, and limits on retrospective rectification — critical for place-of-supply disputes where mis-classification may be alleged years later.

All India Federation of Tax Practitioners v Union of India — (2007) 7 SCC 527 [Supreme Court — 3-Judge Bench]

Brief Facts: The constitutional validity of the service-tax levy on chartered accountants, cost accountants, and architects was challenged on the ground that these professions had been historically regulated by State legislation and were therefore outside Union legislative competence.

Issue: Constitutional foundation of the service-tax levy — whether 'service' can be taxed by the Union under the residuary entry (Entry 97 List I) and what is the doctrinal nature of a service-tax levy.

HELD: Service-tax upheld. The Court held that service-tax is a value-added tax on the value of services rendered, traceable to Entry 97 of List I until Entry 92C was inserted by the Constitution (88th Amendment). The economic concept of value addition through services is the doctrinal basis on which service-tax — and now GST on services — rests.

"Service-tax is a value-added tax on the commercial activity of providing services. The taxable event is the rendition of service and the levy attaches to the value addition at the point of service delivery."

Relevance: Constitutional anchor for taxation of services under GST — pre-101st-Amendment doctrinal framework that informs the place-of-supply concept under s. 12 and s. 13 of the IGST Act.

Commissioner of Income Tax v Vatika Township Pvt Ltd — (2015) 1 SCC 1 [Supreme Court — 5-Judge Constitution Bench]

Brief Facts: The Income-tax Act's surcharge provisions had been amended mid-year. Question was whether the amendment applied retrospectively to assessment years already commenced. Constitution Bench was constituted to settle conflicting two-Judge Bench rulings on the presumption of prospectivity for fiscal statutes.

Issue: Whether a fiscal statute that imposes or enhances a burden operates prospectively unless expressly or by necessary implication retrospective; and what is the standard of clarity required for retrospective imposition.

HELD: Strong presumption of prospectivity for any provision that imposes or enhances a burden. Retrospective imposition requires either an express statutory direction or a necessary implication so unmistakable that no reasonable construction can avoid it. Beneficial provisions may be construed retrospectively; burden-imposing provisions cannot.

"If a legislation confers a benefit on some persons but without inflicting a corresponding detriment on another, it could be construed to be retrospective. The same is not true of a provision imposing a tax or otherwise creating a fresh burden — there, the presumption of prospectivity is at its strongest."

Relevance: Constitutional anchor for prospective operation of GST amendments. Decisive in every dispute over the effective date of a notification, amendment, or rule change under IGST.

GVK Industries Ltd v Income Tax Officer — (2011) 4 SCC 36 [Supreme Court — 5-Judge Constitution Bench]

Brief Facts: Question was the extent of Parliament's legislative competence to tax extraterritorial events. GVK had paid fees to a Swiss consultant for services rendered abroad in connection with raising finance for an Indian power project. Question was whether such fees could be taxed under the Income-tax Act when the service was entirely rendered abroad.

Issue: Constitutional limits of extraterritorial legislation under Article 245 — whether Parliament can tax events occurring wholly outside India if there is a 'real and substantial' nexus with India.

HELD: Parliament has competence to legislate with extraterritorial operation provided there is a real and substantial nexus with India — not merely an illusory or fanciful connection. A nexus that is rationally connected to the welfare of India is sufficient. Pure extraterritoriality without nexus is impermissible.

"Parliament's competence to legislate with extraterritorial operation is conditioned on the existence of a real and substantial — and not merely fanciful — nexus with India. The nexus must be rational and connected to India's legitimate concerns."

Relevance: Constitutional anchor for cross-border place-of-supply provisions under s. 13 of the IGST Act (services where supplier or recipient is outside India) — establishes the nexus doctrine that underpins extraterritorial GST on imports of services.

4. Circulars and Notifications

Notification No. 1/2017-Integrated Tax (Rate) dated 28.06.2017 — IGST rate schedule operative for imports under s. 11(a)

Goods rate schedule. Rate per HSN attaches to imports at customs clearance under s. 5(1) proviso + s. 3(7) Customs Tariff Act + s. 11(a) IGST POS.

Notification No. 18/2017-Integrated Tax (Rate) dated 05.07.2017 — Exemption for inter-State supplies to SEZ — alternative route to LUT / IGST-paid

Exempts supplies to SEZ developer / unit. Operative for SEZ supplies which under s. 11 are NOT export of goods (goods don't leave India) — but treated as zero-rated under s. 16 IGST via the s. 7(5)(b) channel. Three routes — LUT under Rule 96A, IGST-paid + refund under Rule 96, or Notif 18 exemption.

Circular No. 33/2018-Customs dated 19.10.2018 — High-seas sale treatment — pre-customs-clearance bill-to-ship-to

Clarifies high-seas sale framework — A imports goods, on-sells to B before customs clearance, B becomes ultimate importer. s. 7(2) IGST applies to entire pre-clearance chain; B (final importer) pays IGST at customs clearance on landed value (including A's margin).

Notification No. 41/2017-Integrated Tax (Rate) dated 23.10.2017 — 0.1% IGST concessional rate for inputs supplied to merchant exporters

Merchant exporter framework — registered supplier supplying inputs to merchant exporter (for export) can charge 0.1% IGST (concessional rate). Merchant exporter exports within 90 days, takes IGST refund under Rule 96. Critical scheme for inputs-export chain optimisation under s. 11(b).

Circular No. 161/17/2021-GST dated 20.09.2021 — Distinct-person export of services — conceptual extension to goods

Primarily for services, but the underlying principle (Indian subsidiary supplying foreign parent is NOT mere establishment of distinct person) applies to s. 11(b) goods exports by Indian subsidiary to foreign parent. Subsidiary-parent supplies qualify as export of goods if other conditions met.

CBIC Frequently Asked Questions on Refunds (various) dated Updated periodically — Operational guidance on export refunds under Rules 89 / 96

Comprehensive operational guidance — eligibility, documentation, timelines, common rejection grounds for export refunds. The principal practitioner reference for s. 11(b) + s. 16 + Rule 89/96 refund framework.

5. Worked Examples

6. Practitioner Planning

• For every export, decide LUT vs IGST-paid route based on ITC accumulation, cash-flow, and customer-relationship factors.
• For LUT route, file Form GST RFD-11 annually before 1 April; ensure each export Shipping Bill references the LUT.
• For IGST-paid route, ensure Shipping Bill / Customs return data matches GSTR-1 export reporting — auto-refund depends on matching.
• For imports, exhibit Customs Valuation working — CIF + landing + BCD + SWS = IGST base.
• Post Mohit Minerals — do NOT pay separate IGST on ocean freight; if Department demands, challenge under Mohit Minerals framework.
• For high-seas sales, document HSS agreement clearly; final importer pays IGST at customs on landed value.
• For deemed exports, never conflate with s. 11(b); separate refund route under s. 147 CGST.
• For merchant-exporter chains, use Notification 41/2017-IT(R) 0.1% concessional inputs route + Rule 96 refund.
• For SEZ supplies, recall s. 11(b) doesn't apply (goods don't leave India); use s. 16 + Notif 18 exemption / LUT / IGST-paid route.
• For exports of services via electronic means, s. 11 doesn't apply (s. 11 is goods-only); use s. 13 + s. 16 framework.
• For exports to Nepal / Bhutan / ACU countries, recall s. 2(6)(iv) INR-receipt flexibility for services (post 01.02.2019); for goods, standard FX framework.
• For repeat-importer clients, design IGST cash-flow planning — IGST paid at customs is significant working capital tied up until ITC utilisation.
• For exporters with significant inputs ITC, LUT route preserves liquidity vs IGST-paid + 30-60 day refund cycle.
• Maintain master log of LUT / IGST-paid election + export documentation per shipment.
• Periodic reconciliation of GSTR-1 export data vs customs ICEGATE shipping bill data — discrepancies trigger refund delays.

7. Litigation Defence

• Mohit Minerals defence — for any separate IGST levy on ocean freight component of CIF imports, invoke Constitution-Bench reasoning.
• Composite-supply import defence — for any attempt to separately tax bundled import elements (freight, insurance, commission), invoke composite-supply principle.
• Location-of-importer defence under s. 11(a) — for jurisdictional disputes, exhibit importer's registered place of business.
• Location-outside-India defence under s. 11(b) — for export-classification disputes, exhibit recipient's location outside India.
• Mafatlal unjust-enrichment defence — for IGST refund on exports, prove burden-not-passed-on (in export pricing context, generally not passed on since recipient is foreign).
• Vatika Township prospectivity — for any Mohit Minerals interpretation by Department, recall the strong prospectivity presumption.
• Bharti Airtel finality defence — for retrospective import-IGST or export-IGST reclassification.
• GVK Industries nexus defence — for any extraterritorial reach beyond export-of-goods framework.
• AIFTP constitutional anchor — for any challenge to s. 11 framework on entry-of-list grounds.
• Maneka Gandhi audi alteram partem — for adverse import-classification without hearing.
• Section 19 IGST refund + re-payment — for honest mis-classification correction.
• Deemed-export-vs-export defence — exhibit Notification 48/2017-CT and s. 147 CGST framework to distinguish.
• Merchant-exporter defence under Notif 41/2017-IT(R) — for inputs-export chain compliance disputes.
• Rule 96 auto-refund defence — for export refunds delayed by GSTR-1 / Shipping Bill mismatches, invoke architectural failure + Filco Trade Article 142.
• FEMA-compliant payment defence — for export-realisation disputes, exhibit FIRC / eFIRC + RBI Master Direction.
• Hierarchy-of-instruments defence — Customs Tariff Act notifications cannot enlarge s. 11 POS scope.

8. Procedural Map — POS for Imports / Exports of Goods

Step 1. Identify supply as import or export of goods

s. 11(a) imports or s. 11(b) exports.

Step 2. For imports, identify location of importer

POS = importer's registered place of business.

Step 3. For exports, identify location outside India

POS = recipient's country.

Step 4. For imports, compute IGST at customs

CIF + BCD + SWS = IGST base × applicable rate.

Step 5. For exports, choose LUT or IGST-paid route

LUT route per Rule 96A; IGST-paid per Rule 96.

Step 6. For LUT route, file Form GST RFD-11 annually

Before 1 April for the financial year.

Step 7. For IGST-paid route, ensure GSTR-1 / Shipping Bill data match

For auto-refund processing.

Step 8. For high-seas sales, document HSS agreement

Final importer pays IGST at customs.

Step 9. For deemed exports, apply s. 147 CGST framework — NOT s. 11(b)

Separate refund route.

Step 10. For merchant-exporter inputs, use Notif 41/2017-IT(R) 0.1% rate

Concessional inputs-route refund under Rule 96.

Step 11. For SEZ supplies, recall s. 11(b) doesn't apply

Use s. 16 + Notif 18 / LUT / IGST-paid.

Step 12. For import ITC, claim in GSTR-3B Table 4(A)(1)

BoE-based ITC.

Step 13. For export reporting in GSTR-1

Table 6A (B2B export), 6B (SEZ), 6C (deemed exports).

Step 14. For Mohit Minerals defence

No separate IGST on ocean freight; if demanded, challenge.

Step 15. Periodic reconciliation of GSTR-1 vs ICEGATE for refund eligibility

Monthly review minimum.

CROSS-REFERENCES

• s. 1 IGST — Commencement.
• s. 2 IGST — Definitions including export of goods (s. 2(5)), import of goods (s. 2(10)).
• s. 5 IGST — Charging section incl. s. 5(1) proviso for IGST on imports.
• s. 7 IGST — Inter-State supply incl. s. 7(2) imports and s. 7(5)(a) exports.
• s. 8 IGST — Intra-State supply incl. s. 8(1) proviso (ii) imports exclusion.
• s. 10 IGST — POS for domestic goods (excludes imports / exports).
• s. 12 / s. 13 IGST — POS for services (separate framework for service exports/imports).
• s. 16 IGST — Zero-rated supply (operates on s. 11(b) exports + s. 7(5)(b) SEZ).
• s. 17 IGST — Apportionment of import-IGST.
• s. 19 IGST — Wrongly-paid tax refund route.
• s. 20 IGST — Application of CGST provisions.
• s. 54 CGST — Refund mechanism for exports.
• s. 147 CGST — Deemed exports framework (distinct from s. 11(b)).
• Customs Act 1962, ss. 12, 14, 17 — Customs duty + valuation + assessment.
• Customs Tariff Act 1975, s. 3(7)/(9) — IGST + cess on imports.
• Foreign Trade Policy 2023, Chapter 7 — deemed export framework.
• SEZ Act 2005 — SEZ-supply framework (s. 16 IGST route).
• FEMA 1999 + RBI Master Direction on Export of Goods — payment realisation.
• Rule 89 CGST Rules — Refund for LUT-route exports.
• Rule 96 CGST Rules — Auto-refund for IGST-paid exports.
• Rule 96A CGST Rules — LUT framework.
• Notification 1/2017-Integrated Tax (Rate) — Goods rate schedule.
• Notification 18/2017-Integrated Tax (Rate) — SEZ exemption.
• Notification 41/2017-Integrated Tax (Rate) — Merchant exporter 0.1% rate.
• Notification 48/2017-Central Tax — Deemed exports notification.
• Circular 33/2018-Customs — High-seas sales.
• Circular 161/17/2021-GST — Subsidiary-parent (services context).
• Mohit Minerals (2022) 10 SCC 700 — Ocean-freight IGST reset.