Supply of free replacements by an agent

This query is : Resolved

Shivu Pas Freight (Querist)
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22 August 2018 Hi all, I am a customs clearing agent, i wish to inform one of my overseas customer having supply of Electronic goods to different distributors in India. if they found any defective as per their agreement they will provide free replacement to their distributor from overseas itself. as of now we are regularly doing customs clearance on their distributor IEC (as a free replacement) but now our Overseas customer want to reduce the time and cost. so, is it possible to import under single IEC (on us) to keep stock in our own warehouse and supply to their distributors without any commercial value and without statutory charges locally. kindly let us know is there any provision under GST and Customs also to do this type of transactions.

kindly give a call to 9110257750 if required more clarifications. thanks and looking forward for your suggestions
Regards
Shivu

Rajesh Kumar

Rajesh Kumar (Expert)
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23 August 2018 Yes. The transaction is possible. Tax law exist for businesses, businesses do not exist for tax law. The transaction you are proposing is a valid commercial transaction, and there is no reason why such transaction cannot be done under GST laws.

The transaction is slightly complicated in the sense that it involves agency [who will hold goods on behalf of your client in India], Custom Duty, IGST payment at the time of import, passing of the same IGST to your customers at the time of free supply, receipt of defective pieces if required. I think you should sit with your lawyer to develop a procedure to undertake the transaction.