GST Registration for Goods Sold Abroad by Indian Companies
The Authority for Advance Ruling decided that selling goods between two Indian entities requires GST registration, even if the goods never enter India.
- Ruling
- Advance Ruling No.56/AAR/2025, dated 21.11.2025
- Dated
- 21 Nov 2025
- Authority
- Authority for Advance Ruling
This page was written by Patron Accounting’s AI from the official release and reviewed before publishing. It explains the document in plain language. It is not the document itself. Where this page and the original differ, the original governs.
The short version
- The company asked for classification of goods sold directly from abroad to customers.
- The Authority rejected most questions due to a lack of specific product details.
- The ruling confirms that sales between two Indian entities are taxable in India.
- GST registration is mandatory for these transactions under the CGST Act.
In short
Snag & Bag Retail Private Ltd asked the Authority for Advance Ruling (AAR) how to handle GST for goods they buy from foreign vendors and sell to other Indian companies without the goods ever touching Indian soil. The company wanted to know if these sales were exempt or required registration. The Authority ruled that because the buyer and seller are both in India, the transaction is a taxable supply that requires GST registration.
What has changed
How it worked before
Many businesses assumed that if goods move directly from a foreign country to another foreign country, the transaction might be outside the scope of Indian GST.
What has changed
The Authority clarified that the location of the goods does not override the fact that the contract is between two Indian entities. This means businesses must register for GST and pay tax on these transactions, regardless of where the goods are physically shipped.
Who this affects
Indian trading companies that source goods from abroad and sell them to other Indian businesses without importing the goods into India.
An example
Imagine a Mumbai-based trader buys machinery from a German factory and sells it to a construction firm in Dubai. The machinery is shipped directly from Germany to Dubai. Based on this ruling, the Mumbai trader must register for GST and treat the sale to the Dubai-based firm as a taxable supply because the contract is between two Indian entities.
What you should do
If your business model matches this, you should consult a tax professional to ensure you are registered and paying the correct tax. Remember that an advance ruling only binds the company that asked the question and its specific tax officer; it is not a general law that applies to your business automatically.
If you do nothing
If you assume this ruling does not apply to you and fail to register, you risk penalties for non-compliance. A tax officer may view your unregistered sales as a violation of the CGST Act. You could be forced to pay back-taxes, interest, and significant fines.
The terms explained
- Advance Ruling
- A formal decision provided by tax authorities to a specific business regarding how GST applies to their particular transaction.
- Taxable Territory
- The geographical area of India where the GST law is in force and applicable.
- Supply
- Any form of sale, transfer, or exchange of goods or services made for a price in the course of business.
The ruling in detail
Authority for Advance Ruling
M/s. Snag & Bag Retail Private Limited
Advance Ruling No.56/AAR/2025, dated 21.11.2025 · Tamil Nadu
Questions before the authority
- Kindly classify the above mentioned as goods or services along with HSN/SAC code with rate of GST?
- Kindly clarify under which category our business will fall on the above mentioned list and what are the documents should be maintained by us for the transactions depend upon the specified category?
- Kindly clarify the time and value of supply of goods and services or both based on our business transactions?
- In above scenario, Please clarify whether we can get the refund amount from ITC credit availed?
- Kindly Check and advice whether we are on the correct path or we need to raise invoice under export / Nil rated / Exempted / Zero Rate or any other? If it is falls under the category of Export/Nil rated/Exempted/Zero rated sales/services, then whether we can get the refund of tax which is paid for previous months under B2B category.
- In case, the above transaction is under negative list of GST Act means, are we required to register under GST Law?
Facts
The applicant is an Indian company that sources goods from vendors in Spain/USA and sells them to another Indian entity (Party B). The goods are delivered directly from the foreign vendor to the customer's location abroad, without entering India. The applicant seeks clarity on the GST implications of this business model, specifically regarding classification, registration, and taxability.
Ruling
| Question | What the authority ruled |
|---|---|
| Classification and rate | Could not be done Specific details of goods and services were not furnished |
| Business category | Liable for rejection Not covered under Section 97(2) |
| Time and value of supply | Could not be classified To be determined by applicant per Sections 12, 13, and 15 |
| Refund of ITC | Liable for rejection Not covered under Section 97(2) |
| Invoice type and refund eligibility | Liable for rejection Not covered under Section 97(2) |
| Registration requirement | Registration is required Supply is between two units in the taxable territory |
The Authority ruled that it could not classify the goods or services due to a lack of specific details provided by the applicant. It further held that most of the questions raised were not covered under the scope of Section 97(2) of the CGST Act and were thus liable for rejection. Regarding registration, the Authority determined that since the supply occurs between two units within the taxable territory, the transaction is subject to GST and registration is required.
Reasoning
The Authority observed that the applicant failed to provide specific descriptions of the goods or services, making classification impossible. It noted that most questions did not fall under the permissible scope of Section 97(2) of the CGST Act. Regarding registration, it relied on Schedule II 1(a) of the CGST Act, concluding that because the supply involves two persons in the taxable territory, it constitutes a taxable supply of goods, necessitating registration and payment of tax.
Provisions relied on
- Section 97(2) of the CGST Act, 2017
- Section 12 of the CGST Act, 2017
- Section 13 of the CGST Act, 2017
- Section 15 of the CGST Act, 2017
- Schedule II 1(a) of the CGST Act, 2017
For the practitioner
This ruling highlights the **strict requirement for specific details** when seeking an advance ruling on classification. It serves as a warning that the Authority will reject questions that fall outside the scope of Section 97(2). Practitioners should note that the Authority viewed the transaction between two Indian entities as a **taxable supply within the taxable territory**, regardless of the physical movement of goods outside India.
Source
This is a summary prepared from the published order, which is a scanned document. It is a reading aid and not the authority: where the two differ, the order governs. Verify every provision against the original before relying on it.
Original order: https://www.gstcouncil.gov.in/sites/default/files/AAR/12-ms-snag-bag.pdf
Legibility of the scan, as read: high.
Prepared 14-10-2026.
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