e-Invoicing is mandatory for businesses with 10 Cr+ turnover. Likely to be mandatory from Jan 2023 for businesses with 5 Cr+ turnover

Exports – Recent Amendments And Applicability Of E-Invoicing

  • April 12, 2021
  • Reading Time: 4 minutes
Reading Time: 4 minutes

Exports Under GST

Export of goods and services are given preferential treatment and benefits across the globe in the form of export benefits or refund of taxes in line with the principle that taxes should not be exported. However, the area also remains prone to fraudulent practices for the claim of such benefits. Under GST, exporters have an option to claim a refund of unutilized input tax credits (ITC) in case of exports without payment of taxes or can utilize such ITC for payment of taxes and claim a refund of the tax so paid.

To curb the fraudulent claims of ITC or unlawful encashment of the credits, the Finance Act, 2021 has amended Section 16 of the IGST Act, 2017. As per the said amendment, the option to export on payment of taxes has been restricted only to the notified class of persons for the specified category of goods or services. Further, the proposed amendment has also provided the statutory backing to Rule 96B of the CGST Rules, 2017 which requires the exporter to repay the refund of unutilized ITC claimed along with interest in case of non-realization of sale proceeds within 30 days of the expiry of the time prescribed under the Foreign Exchange Management Act, 1999 in case of exports under Letter of Undertaking (LUT).

Along with these stringent provisions, the mandate to generate e-Invoice in case of exports has been further extended to the persons (entities) having an aggregate annual turnover above ₹50 crores in any of the previous FY from 2017-18 onwards, with effect from 1st April 2021.

Though the provision mandating e-Invoice generation and the claim of refunds are not directly linked, the exporters need to be compliant with the provisions in their entirety for realizing the due benefits on exports.

Applicability Of The Mandate To Generate e-Invoice In Specific Cases Where Goods Are Sent Outside India

Notification no. 13/2020 – Central Tax (as amended) mandates the registered persons having annual turnover in excess of ₹50 crores to generate e-Invoices for ‘supply of goods or services or both to a registered person or for exports.’

A literal interpretation of the phrase ‘or for exports’ dehors the scope of supply and appears to give a disconnected connotation with the phrase ‘in respect of the supply of goods or services or both to a registered person’.

Section 2(5) of the IGST Act defines exports of goods to mean taking goods out of India to a place outside India whereas the term zero-rated supply as per Section 16 of the said Act includes the export of goods. Thus, only the exports having the essential elements of supply in terms of Section 7 of the CGST Act, 2017 such as the presence of consideration and the transaction being in the course or furtherance of business would be considered as zero-rated supplies.

Be that as it may, the Notification 13/2020 – Central Tax (as amended) leads to the question of e-Invoicing would be required in every case where the goods are sent outside the country, irrespective of them being covered under the scope of supply.

Here, we are examining specific cases where the goods are sent outside India either as samples, for job work or testing, for exhibition, or as purchase returns:

  1. The goods sent as samples are for promotion and hence usually without consideration. One of the essential conditions for a transaction to qualify as a supply under Section 7 of the CGST Act is the presence of the consideration flowing from the recipient to the supplier. In the case of promotional supplies, the absence of consideration would not make the transaction taxable under GST unless it is otherwise deemed so under Schedule I of the CGST Act.
  2. Likewise, the goods sent for job work or testing outside India cannot be considered as goods supplied by the registered person in India – in fact, such person would be the recipient of the job-work or testing services from the overseas supplier.
  3. The goods sent for exhibition or return of the goods imported from the foreign supplier (purchase return) also would not qualify as a supply since in the first case, goods are not sold whereas in the latter case, the goods are being returned to the supplier.

The transactions mentioned above pertain to goods being sent outside India, but they are not supplied or deemed to have been supplied in terms of Section 7 of the CGST Act or under Schedule I. Thus, a tax invoice (e-Invoice) maybe not required since no tax liability and consequential export benefits accrue to the person sending goods outside India.

Further, to determine the applicability of e-Invoicing for such cases, a parallel may also be drawn to the minutes from the 35th Meeting of the GST Council where one of the objectives/advantages listed for introducing e-Invoicing was to curb fraudulent export benefits and ITC refunds. Since the export benefits or refund of unutilised ITC does not become due in such cases, it appears that the intention of the Council was never to mandate e-Invoicing in such cases.

Authored By:


CA Krunal Shah

Having expertise in indirect tax and tax technology domain he has worked on various GST/VAT implementation assignments in India and Middle-east. He assists clients in development and successful implementation of customized tax solutions to smoothen their processes. He has also worked as a consultant in the past with companies like BIG4. He loves to share his insights on GST and topics related to it. He strongly believes that with automation, business processes can be seamless. 

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