Subject: Clarification on issues related to furnishing of Bond / Letter of Undertaking for exports.

Two circulars, namely Circular No. 1/2017-GST dated 21st July, 2017 and Circular No. 2/2017-GST dated 17th August, 2017 were issued specifying conditions and safeguards for furnishing a letter of Undertaking (LUT) in place of a Bond by a registered person who intends to supply goods or services for export without payment of integrated tax. Now, in supersession of the said circulars, except as respects things done or omitted to be done before such supersession in this matter, and in exercise of powers conferred under section 168 of the Assam Goods and Services Tax Act, 2017 (Assam Act XXVIII of 2017), for the purpose of uniformity in the implementation of the Act, following issues are being clarified hereunder:

(a) Eligibility to export under LUT:

The facility of export under LUT has been now extended to all registered persons who intend to supply goods or services for export without payment of integrated tax except those who have been prosecuted for any offence under the Assam Goods and Services Tax Act, 2017 or the Central Goods and Services Tax Act, 2017 (12 of 2017) or the Integrated Goods and Services Tax Act, 2017 (13 of 2017) or and any of the existing laws in force in a case where the amount of tax evaded exceeds two hundred and fifty lakh rupees unlike condition mentioned in earlier circulars which extended the facility of export under LUT to status holder as specified in paragraph 5 of the Foreign Trade Policy 2015-2020 and to persons receiving a minimum foreign inward remittance of 10% of the export turnover in the preceding financial year which was not less than Rs. one crore.

(b) Validity of LUT:

The LUT shall be valid for the whole financial year in which it is tendered. However, in case the goods are not exported within the time specified in subrule (1) of rule 96 A of the Assam Goods and Services Tax Rules, 2017 / Central Goods and Services Tax Rules, 2017 and the registered person fails to pay the amount mentioned in the said sub-rule, the facility of export under LUT will be deemed to have been withdrawn. If the amount mentioned in the said sub-rule is paid subsequently, the facility of export under LUT shall be restored. As a result, exports, during the period from when the facility to export under LUT is withdrawn till the time the same is restored, shall be either on payment of the applicable integrated tax or under bond with bank guarantee.

c) Form for LUT: The registered person (exporters) shall fill and submit FORM GST RFD-11 on the common portal. An LUT shall be deemed to be accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online.

d) Documents for LUT: No document needs to be physically submitted to the jurisdictional office for acceptance of LUT.

e) Acceptance of LUT/bond: An LUT shall be deemed to have been accepted as soon as an acknowledgement for the same, bearing the Application Reference Number (ARN), is generated online. If it is discovered that an exporter whose LUT has been so accepted, was ineligible to furnish an LUT in place of bond as per Notification No. 37/2017-Central Tax, then the exporter's LUT will be liable for rejection. In case of rejection, the LUT shall be deemed to have been rejected ab initio.

(f) Bank guarantee:

Since the facility of export under LUT has been extended to all registered persons, bond will be required to be furnished by those persons who have been prosecuted for cases involving an amount exceeding Rupees two hundred and fifty lakhs. A bond, in all cases, shall be accompanied by a bank guarantee of 15% of the bond amount.

(g) Clarification regarding running bond:

The exporters shall furnish a running bond where the bond amount would cover the amount of self-assessed estimated tax liability on the export. The exporter shall ensure that the outstanding integrated tax liability on exports is within the bond amount. In case the bond amount is insufficient to cover the said liability in yet to be completed exports, the exporter shall furnish a fresh bond to cover such liability. The onus of maintaining the debit / credit entries of integrated tax in the running bond will lie with the exporter. The record of such entries shall be furnished to the State tax officer as and when required.

(h) Sealing by officers:

Till mandatory self-sealing is operationalized, sealing of containers, wherever required to be carried out under the supervision of the officer, shall be done under the supervision of the State tax officer having jurisdiction over the place of business where the sealing is required to be done. A copy of the sealing report would be forwarded to the Assistant Commissioner of Taxes / Superintendent of Taxes having jurisdiction over the principal place of business.

(i) Purchases from manufacturer and Form CT-1:

It is clarified that there is no provision for issuance of CT-1 form which enables merchant exporters to purchase goods from a manufacturer without payment of tax under the GST regime. The transaction between a manufacturer and a merchant exporter is in the nature of supply and the same would be subject to GST.

(j) Transactions with EOUs:

Zero rating is not applicable to supplies to EOUs and there is no special dispensation for them under GST regime. Therefore, supplies to EOUs are taxable like any other taxable supplies. EOUs, to the extent of exports, are eligible for zero rating like any other exporter.

(k) Realization of export proceeds in Indian Rupee:

Attention is invited to para A (v) Part- I of RBI Master Circular No. 14/2015-16 dated 01stJuly, 2015 (updated as on 05th November, 2015), which states that "there is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act, 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020), all export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan". Further, attention is invited to the amendment to section 2(6) of the IGST Act, 2017 which allows realization of export proceeds of services in INR, wherever allowed by the RBI.

Accordingly, it is clarified that the acceptance of LUT for supplies of goods or services to countries outside India or SEZ developer or SEZ unit will be permissible irrespective of whether the payments are made in Indian currency or convertible foreign exchange as long as they are in accordance with the applicable RBI guidelines.

(l) Jurisdictional officer:

In exercise of the powers conferred by sub-section (3) of section 5 of the Assam Goods and Services Tax Act, 2017, it is hereby stated that the LUT / Bond shall be accepted by the jurisdictional Assistant Commissioner of State tax / Superintendent of State tax having jurisdiction over the principal place of business of the exporter. The exporter is at liberty to furnish the LUT / bond before either the State Tax Authority or the Central Tax Authority till the administrative mechanism for assigning of taxpayers to the respective authority is implemented.

This Circular is clarificatory in nature and not meant for any interpretation of provisions of the Act and rules.

Sd/- Anurag Goel,

Commissioner of State tax, Assam,

Dispur, Guwahati

Amended Vide Ciruclar No CIRCULAR No. 9/2018-GST, No. CT/GST-15/2017/82, Dated, 9th May, 2018. Prior to amendment the clause c, d and e read as under:

(c) Form for bond / LUT:

Till the time FORM GST RFD-llis available on the common portal, the registered person (exporters) may download the FORM GST RFD-11 from the website of the Commissioner of State tax, Assam (www.tax.assam.gov.in) / Central Board of Excise and Customs (www.cbec. gov.in ) and furnish the duly filled form to the jurisdictional Assistant Commissioner of State tax / Superintendent of State tax having jurisdiction over their principal place of business. The LUT shall be furnished on the letter head of the registered person, in duplicate, and it shall be executed by the working partner, the Managing Director or the Company Secretary or the proprietor or by a person duly authorised by such working partner or Board of Directors of such company or proprietor. , The bond, wherever required, shall be furnished on non-judicial stamp paper of the value as applicable in the State in which the bond is being furnished.

(d) Documents for LUT:

Self-declaration to the effect that the conditions of LUT have been fulfilled shall be accepted unless there is specific information otherwise. That is, self-declaration by the exporter to the effect that he has not been prosecuted. Verification, if any, may be done on post-facto basis.

(e) Time for acceptance of LUT / Bond:

As LUT / Bond is a priori requirement for export, including exports to a SEZ developer or a SEZ unit, the LUT / bond should be processed on top most priority. It is clarified that LUT / bond should be accepted within a period of three working days of its receipt along with the self-declaration as stated in para (d) above by the exporter. If the LUT / bond is not accepted within a period of three working days from the date of submission, it shall deemed to have been accepted.