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'Deemed Export'- whether deemed inter-state supply?


NOVEMBER 13, 2017

By Manasi Khare, Advocate

IN this article, the author seeks to highlight the discrepancy in recording 'Deemed Exports' in FORM GSTR-1 vis-à-vis understanding of inter-state supply as per the IGST Act.

Under the erstwhile law, Chapter 7 of the Foreign Trade Policy 2015-2020 notified certain supplies of goods manufactured in India as deemed exports. Deemed exports, under para 7.03 of the FTP, were eligible for all or any of the following benefits in respect of manufacture and supply of goods, qualifying as deemed exports, subject to conditions:

a. Advance Authorization/ Advance Authorization for annual requirement/ DFIA

b. Deemed Export Drawback

c. Refund of terminal excise duty, if exemption not available.

Under the GST Law,the Government, on the recommendations of the Council, was slated to notify certain supplies of goods as deemed exports, where goods supplied do not leave India and payment for such supplies is received in Indian Rupees or in convertible foreign exchange, if such goods are manufactured in India.

In exercise of powers conferred in Section 147 of the CGST Act, the Central Government, notified the supplies of goods that are to be treated as Deemed Exports vide Notification 48/2017-Central Tax dated 18 October 2017. Implying, the registered persons did not have an enabling notification for deemed exports from 01.07.2017 to 17.10.2017 .

Notification for "Deemed Exports"

The following supplies qualify as deemed exports subject to the conditions viz. -

Sl. No.

Description of Supply


Supply of goods by a registered person against Advance Authorisation


Supply of capital goods by a registered person against Export Promotion Capital Goods Authorisation


Supply of goods by a registered person to Export Oriented Unit


Supply of gold by a bank or Public Sector Undertaking specified in the notification No. 50/2017-Customs, dated the 30th June, 2017 (as amended) against Advance Authorization.

In terms of Rule 89(3) the CGST Rules, 2017 an application for claiming refund of GST paid on supplies to EOUs can be filed either by the recipient of deemed exports or by the supplier of deemed exports.

Other notifications were also issued subsequently, notifying the documents that are required to be produced by the supplier of deemed export for the purposes of claiming refund and Notification amending Rule 89 of CGST Rules, 2017 to include the provision pertaining to application to be filed for refund of tax paid on deemed export supplies. Other than furnishing the documents for receiving the refund, the deemed exports made by a registered person are also required to be recorded in GSTR-1 of the registered person.

Form GSTR-1& Deemed Exports

FORM GSTR-1 is a return of the registered person that pertains to furnishing details of outward supplies of goods or services. The return includes details of all outward supplies of registered persons including the invoice wise details of all interstate and intra state supplies, consolidated details of all intra state supplies made to unregistered persons etc.

Sl. No. 6 of the Form pertains to recording of the 'Zero-rated supplies and Deemed Exports' made by the registered person. This table records the Exports, supplies made to SEZ Unit or SEZ Developer and Deemed Exports. The invoice details, shipping bill/ bill of export details and the Integrated Tax so paid, are captured for those supplies in Table 6.

Vide Notification 45/2017- CT, dated 13 October 2017, amendment was brought about in FORM GSTR-1, whereby column 10 pertaining to 'Cess' was added to Table 6.

Whether deemed export is an 'inter-state supply'?

It is understood that in terms of Section 5 of IGST Act, levy of integrated tax is on all inter-state supplies of goods or services or both.

Section 7 of the IGST Act provides for what qualifies as 'inter-state supply'. Among others, import of goods/service into India and supply of goods or service or both to or by a Special Economic Zone/ SEZ Unit shall be treated as inter-state supply.

In this case, it is significant to note that neither in the Act nor in any of the subsequent notifications has 'deemed export' supplies been notified as an 'inter-state' supply. In such a case, for the supply of goods between DTA and EOU located in the same state, IGST would not be leviable and CGST and SGST would be leviable.

However, Form GSTR-1 falls short of the requirement because the table captures only 'Integrated Tax'. The table in the return currently is as below:

6. Zero rated and Deemed Exports

GSTIN of recipient
Invoice details
Shipping Bill/ Bill of export
Integrated Tax
1 No Date Value No. Date Rate Taxable value Amt. 10
2 3 4 5 6 7 8 9
6A. Exports
6B. Supplies made to SEZ unit or SEZ Developer
6C. Deemed Exports

There appears to be an anomaly here. It is apparent that in view of the discussion made in the preceding paragraphs and in the absence of an express provision/clarification that deemed exports qualify as inter-state supplies under the IGST Act, the authorities would be required to issue a revised GSTR-1 with additional columns to capture CGST/SGST in the Table 6 to reconcile this difference.

It is hoped that the CBEC comes out with a clarification at the earliest.

(The views expressed are strictly personal.)

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