GST on Goods Moved from FTWZ to Domestic Tariff Area
The Authority for Advance Ruling confirmed that no extra IGST is due when moving goods from a Free Trade Warehousing Zone to India.
- Ruling
- Order No.23/AAR/2018 dated 31.12.2018
- 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 Bank of Nova Scotia asked if IGST applies twice on imported bullion.
- The authority ruled that IGST is only paid once at final customs clearance.
- Circular 46/2017 does not apply to goods deposited after April 1, 2018.
In short
The Bank of Nova Scotia asked if they must pay Integrated Goods and Services Tax (IGST) twice when moving imported gold and silver from a Free Trade Warehousing Zone (FTWZ) into the Indian market. The authority decided that the tax is only collected once, at the time of final customs clearance, preventing double taxation.
What has changed
How it worked before
Businesses were uncertain if they faced an additional GST charge on top of standard customs duties when clearing goods from a warehouse into the domestic market.
What has changed
The authority clarified that the deferred payment mechanism under the Customs Act is the only point of tax collection. This means businesses do not pay extra IGST when moving goods out of the warehouse, provided the goods were deposited after April 1, 2018.
Who this affects
Importers and bullion traders who store goods in Free Trade Warehousing Zones before selling them to customers in India.
An example
A jewelry wholesaler imports gold and stores it in an FTWZ. When they move the gold to their shop in Mumbai, they pay customs duty and IGST at the point of clearance. This ruling confirms they do not owe a second, separate IGST payment for the act of moving the goods out of the warehouse.
What you should do
If you operate in an FTWZ, you should review your tax filing process to ensure you are not overpaying. Remember that this ruling only binds the bank that asked for it; your own tax officer may have a different view, so consult your tax advisor before changing your tax strategy.
If you do nothing
If you assume this ruling applies to you and stop paying certain taxes, you risk a demand notice from your local tax office. Tax officers are not legally required to follow rulings issued to other businesses. You could face penalties and interest charges if your interpretation is found to be incorrect.
The terms explained
- Free Trade Warehousing Zone (FTWZ)
- A special zone where imported goods can be stored without paying customs duties or taxes until they are moved into the domestic market.
- Domestic Tariff Area (DTA)
- The rest of India outside of special economic zones or bonded warehouses where standard tax and customs rules apply.
- Integrated Goods and Services Tax (IGST)
- The tax collected on the supply of goods or services that cross state borders or are imported into India.
The ruling in detail
Authority for Advance Ruling
M/s. The Bank of Nova Scotia
Order No.23/AAR/2018 dated 31.12.2018 · Tamil Nadu
Questions before the authority
- Whether IGST is payable on Goods warehoused in FTWZ and supplied to a DTA unit, in addition to the customs duty payable [i.e. Basic Customs Duty(BCD) + IGST] on removal of goods from the FTWZ unit?
- Whether the Circular No. 46/2017 is applicable to the present factual situation?
Facts
The applicant, a bullion bank, proposes to store imported gold and silver in a Free Trade Warehousing Zone (FTWZ) on behalf of its London branch. Upon receiving orders from Indian customers, the applicant intends to remove the goods from the FTWZ to the Domestic Tariff Area (DTA) by filing a Bill of Entry for home consumption and paying applicable customs duties. The applicant sought a ruling on whether an additional IGST liability arises on this transfer under the GST law.
Ruling
| Question | What the authority ruled |
|---|---|
| IGST liability on removal from FTWZ to DTA | Not liable Applicable for goods deposited on or after 01.04.2018 |
| Applicability of Circular 46/2017 | Not applicable Superseded by Circular 3/1/2018-IGST for relevant period |
The authority ruled that the applicant is not liable to pay IGST at the time of removal of goods from the FTWZ to the DTA in addition to the customs duties payable under the Customs Tariff Act. It further held that Circular No. 46/2017 is not applicable to the supply of warehoused goods deposited in an FTWZ on or after 01.04.2018.
Reasoning
The authority relied on Circular No. 3/1/2018-IGST, which clarified that for goods deposited in a customs bonded warehouse on or after 01.04.2018, IGST is to be levied and collected only at the time of final clearance for home consumption under the Customs Act. It reasoned that the supply of goods while deposited in the warehouse is not subject to a separate levy of IGST, as the value addition is captured at the time of final clearance. Consequently, the removal from FTWZ to DTA is the point of deferred payment of customs duty, and no additional IGST under the GST Act is required.
Provisions relied on
- Section 98 of the CGST Act, 2017
- Section 5(1) and 7(2) of the IGST Act
- Section 3(7) of the Customs Tariff Act, 1975
- Circular No. 46/2017-Customs
- Circular No. 3/1/2018-IGST
For the practitioner
This ruling provides **certainty for importers** using FTWZs, confirming that they do not face double taxation through an additional IGST levy on the transfer of warehoused goods to the DTA. It clarifies that the **deferred payment mechanism** under the Customs Act is the sole point of tax collection for such transactions. Practitioners should note this applies specifically to goods deposited on or after 01.04.2018.
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/tn-23-aar-2018.pdf
Legibility of the scan, as read: high.
Prepared 20-10-2026.
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