Typical issues in the Export of Goods through E-commerce Platforms – Part II


This write-up is in continuation of Part I published in last month’s magazine. In an earlier write-up, various aspects of e-commerce exports were touched upon. In particular, we have deliberated upon the definition of exports under various legislations. Thereafter consignment exports and their modus operandi were discussed in the light of CBIC Circular No. 108/27/2019-GST dated 18th July 2019 (hereinafter referred to as “GST circular”). We have then gone through the important concept of Importer on Record. Since e-commerce exports are predominantly fulfilled through courier and postal mode, prescribed procedures for e-commerce export through courier and postal mode were reviewed. Further, we have also observed 2(two) below mentioned widely followed practices by Indian e-commerce exporters (hereinafter, “Indian exporters”) to serve their shoppers located in foreign countries (United States or US in our example):

  • E-commerce exports ie Goods are moving from India to a place outside India only on the receipt of confirmed orders on the marketplace/E-commerce website  OR
  • Consignment exports ie Goods are moved from India to Amazon-controlled fulfilment centers located in the US (or similar arrangements) without transferring any ownership rights.

It is a matter of common knowledge that e-commerce exports are typically characterized by a sizeable volume of order cancellations, goods returns, etc. Further E-commerce companies follow a liberal goods return policy to attract customers.  Against this backdrop, let us consider taxation implications in a case where goods have been moved out of India under either of the scenario discussed above and subsequently returned to India (popularly called ‘reimportation’). The prime question to consider is whether would there be Customs Duty, IGST, and Cess implications on such reimportation. This question assumes very much relevance as in the case of goods return Indian exporters must have borne the burden of logistics cost and any further taxation hit would discourage them from further indulging in e-commerce exports.

Re-cap of CBIC Circular No. 108/27/2019-GST

In part I of the write-up, we have covered in detail said GST circular(supra). Important points coming out of the said circular are reiterated as under:

  • Activity of sending/taking the goods out of India for exhibition or on a consignment basis for export promotion, except when such activity satisfies the tests laid down in 2Schedule I of the CGST Act (hereinafter referred to as the “specified goods”), does not constitute supply as the said activity does not fall within the scope of section 7 of the CGST Act as there is no consideration at that point in time.


  • Since such activity is not a supply, the same cannot be considered a ‘Zero-rated supply’ as per the provisions contained in section 16 of the IGST Act.


  • Refund claims cannot be preferred under Rule 96 of CGST Rules (Automatic refund on Shipping Bill) as export supply is taking place much after the goods have already been sent/taken out of India.

Basis the aforesaid clarification one can presume that movement of goods from India to Amazon-controlled fulfilment centres located in the US is a species of consignment exports and such movements could be made on delivery challan issued in accordance with the provisions contained in Rule 55 of the CGST Rules, without payment of IGST. It is to be highlighted that though GST circular (supra) permits the movement of goods from India to a place outside India under the cover of delivery challan, however, Indian Customs law mandates the preparation of commercial invoice in such a situation. On a harmonious reading of provisions of Customs law and aforesaid GST circular, it is safe to interpret that Indian exporters must prepare a commercial invoice and delivery challan for consignment exports and by virtue of aforesaid GST circular eligible for exemption from issuance of Tax Invoice at the time of movement of such goods outside India.

Reimportation of Goods – Relevant GST Provisions

In common parlance, reimportation simply means the importation of goods into a country which had previously been exported from that country. Section 2(10) of the IGST Act defines ‘import of goods’ with its grammatical variations and cognate expressions mean bringing goods into India from a place outside India. 

Proviso to Section 5(1) of the IGST Act (Levy section) provides that IGST shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.  As the levy section of the IGST act refers to customs provisions it would therefore make sense to first run through relevant customs provisions applicable in the case of reimportation in subsequent paragraphs.

Reimportation of Goods – Relevant Customs Provisions

Section 20 of the Customs Act lays down broad principles in case of reimportation of goods and specifies that If goods are imported into India after exportation therefrom, then such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable or subject, on the importation thereof. Thus, in terms of Section 20 of the Customs Act, normal Customs duty under Section 12 of Customs Act, 1962 shall be payable on re-import of exported goods.

Prima facie Section 20(supra) is a severe blow to the Indian exporters. We, therefore, have to look at exemptions, if any, granted from levy in case of reimportation.

Exemption Provisions in Customs Act

It is to be noted that Section 25 of the Customs Act empowers Central Government to grant full/partial exemptions from the levy of various duties of Customs.  Exercising this power various Exemption Notifications were issued from time to time to provide absolute/conditional exemptions, in the public interest. Specific attention is invited to Notification No. 45/2017-Customs dated 30.6.2017 (hereinafter referred to as ‘Customs Notification’). This Customs Notification exempts goods specified in the First Schedule of Customs Tariff Act when re-imported into India from so much of the duty of customs as is in excess of the amount of specified export benefits availed at the time of their export i.e. drawback, IGST exemption / IGST refund etc. [as specified in the Notification]

Before we analyze aforesaid notification in detail, it is important to highlight the universal principle applicable in the case of reimportation. It is a settled position that on reimportation any export benefits, export incentives or exemption or any other benefits availed (e.g duty drawback/rebate claim etc) should be surrendered.

Notification No. 45/2017-Customs

This Notification covers various exports scenarios and against each scenario quantum of Customs duty, IGST and cess, if any, payable on reimportation is prescribed. Only relevant entries of said Notification are discussed hereinbelow in the interest of the time of readers:

Sl. No. Scenario Duty payable on reimportation
1(c) Goods exported under claim for refund of integrated tax paid on export goods amount of refund of IGST availed at the time of export
1(d) Goods exported under bond without payment of IGST amount of IGST not paid
5 Goods other than those falling under Sl. No. 1, 2, 3 and 4 NIL

Entry no 1(c) above is quite obvious and is in harmony with the universal principle discussed above. However, harmonious reading of GST circular and Sr No. 1(d) of Customs Notification (supra) create jittery for Indian exporters as prima facia it seems that on reimportation they may be required to pay IGST which has not been paid at the time of exportation.  Ironically on one hand GST circular(supra) rightfully accepts that such movements are not a supply at all in the first place and therefore there could have been no charge of IGST at the time of movement from India.  Whereas, aforesaid Customs Notification creates IGST levy on reimportation. This disconnect could have been a major setback for mushrooming e-commerce exports and accordingly matter was escalated to CBIC for further clarification.

Relevant Customs Circular

CBIC has issued Circular No. 21/2019 – Customs dated 24th July 2019 (hereinafter, “Customs circular”) to clarify the aforesaid disconnect. It has been beneficially clarified as under:

“Situation mentioned at Sl. No. 1(d) of the Notification no. 45/2017-Customs dated 30.06.2017 require payment at the time of re-import of IGST not paid initially at the time of export, for availing exemption under the said notification. As in the case of re-import of specified goods, no IGST was required to be paid for specified goods at the time of taking these out of India, the activity being not a supply, hence the said condition requiring payment of integrated tax at the time of re-import of specified goods in such cases is not applicable. It is clarified that such re-import cannot be taken to be falling under situation at Sl. No. 1(d) of the said Notification. Such cases will fall more appropriately under residuary entry at Sl. No. 5 of the said Notification even though those specified goods were exported under LUT, in view of the fact that the activity of sending/taking specified goods out of India is neither a supply nor a zero-rated supply.

It is also clarified that, even in cases where exports have been made to related or distinct persons or to principals or agents, as the case may be, for participation in an exhibition or on a consignment basis, but, such goods exported are returned after participation in an exhibition or the goods are returned by such consignees without approval or acceptance, as the case may be, the basic requirement of ‘supply’ as defined cannot be said to be met as there has been no acceptance of the goods by the consignees. Hence, re-import of such goods after return from such exhibition or from such consignees will be covered by entry at Serial no. 5 of the Notification No. 45/2017 dated 30.06.2017, provided re-import happens before six months from the date of delivery challan.”

Key takeaways for E-commerce exporters

A harmonious reading of above said GST and Customs Circulars and Customs Notifications (supra) lay down the following legislative provisions:

  • In the case of e-commerce exports if any export benefits have been availed at the time of exportation then on reimportation thereof such benefits should be surrendered.
  • In the case of consignment exports, since the activity is not a supply, reimportation thereof within 6(six) months from its date of movement (as evidenced by the date of delivery challan) shall be eligible for 100% exemption of duties of customs, IGST and cess(if any), subject to fulfilment of conditions mentioned in Customs Notifications and Customs Circulars.

FTP benefits in case of E-commerce exports

Merchandise Exports from India Scheme (MEIS) benefits have been replaced by a newly introduced scheme called Remission of Duties and Taxes on Exported Products (‘RoDTEP’). RoDTEP rates are recently prescribed and shall be effective from 1st January 2021. Many sectors viz pharmaceuticals, steel, organic and inorganics chemicals etc. have been kept out for RoDTEP benefits.  Exporting community has raised its voice against lower than expected rates of RoDTEP. Further existing Foreign Trade Policy, 2015-2020 (FTP) was to expire on March 31, 2020. Due to the Covid-19 pandemic, FTP was initially extended up to 31st March 2021 and subsequently extended to 30th September 2021. Even extended expiry is fast approaching.

Be that as it may, Para 3.05 of FTP 2015-2020 is worth discussing to have a broader perspective of FTP benefits in the case of e-commerce exports. As per the amendment carried out in 2018, the export of goods through courier or foreign post offices up to Free on Board (FOB) value of Rs 35,00,000 per consignment shall be entitled to rewards under MEIS. If the value of exports, is more than Rs 5,00,000 per consignment then MEIS reward would be calculated on the basis of FOB Value of Rs 5,00,000 only. As per para 3.05 of Foreign Trade Policy 2015-20, the eligible category of exporters under MEIS, if exported through e-commerce are Handicraft Items/Products, Handloom Products, Books/Periodicals, Leather Footwear, Toys, Customized Fashion Garments (Customized Fashion Garments are garments that are made on specific request/order of customer and accordingly tailored/manufactured) etc.   Indian exporters if eligible should also avail of such benefits under RoDTEP.

Before we detour to other facets of E-commerce exports Let us also consider the implications of reimportation on availed FTP benefits.

Recovery of FTP benefits on reimportation

RBI Master Direction on exports and imports issued vide F.No. RBI/2006-2007/313 A.P.(DIR Series) Circular No.37 dated 5th April 2007 provides for recovery of FTP incentives reimportation. Said RBI Circular lays down conditions for permitting refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality. One of the prescribed conditions mandates exporters to procure a certificate from Director General of Foreign Trade (DGFT)/Custom authorities to the effect that no incentives have been availed by the exporter against the relevant export or the proportionate incentives availed, if any, for the relevant export have been surrendered. This view was also re-iterated in Public Notice No 07/2020-DGFT dated 18th February 2020. The recovery provision envisaged in FTP 2015-2020 is also based on the universal principle discussed above. 

Now comes the part about the applicability of reverse charge on the import of services. In the case of e-commerce exports, Indian exporters might be making various payments to non-resident suppliers located in foreign countries. The question that arises is whether the Indian exporter shall be liable to pay GST on reverse charge on such payments. To answer this question, we must first understand the concept of ‘import of services’.

Import of Services

As per Section 2(11) of the IGST Act, ‘‘Import of services” means the supply of any service, where:

(i) The supplier of service is located outside of India

(ii) The recipient of service is located in India and

(iii) The place of supply of service is in India

On fulfillment of the three cumulative conditions listed above, the relevant inward supply shall be treated as an import of service. As GST is a transaction-based tax, the condition of import of service shall be tested qua every inward supply. It is worth mentioning that as per Entry no. 1 of Notification No. 10/2017-Integrated Tax (Rate), Import of Service is subject to reverse charge in the hands of the Recipient.

Against this backdrop, let us explore reverse charge implications on common outgoes associated with e-commerce exports.

Applicability of Reverse charge on Advertisement charges paid to non-resident vendors

Amazon and similar marketplaces provide the facility of product discovery by way of sponsored advertisements on its website. A very relevant question to answer is whether a reverse charge levy shall apply to such online advertisements. It would be very apt at this stage to refer to the concept of “online information and database access or retrieval services” (hereinafter “OIDAR Services”)

“Section 2(17) of the IGST Act defines OIDAR services means services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as,-

(i) advertising on the internet;


In the opinion of the author, online advertisements would be covered under OIDAR services. Taking this discussion further, in terms of Section 13(12) of the IGST Act, the place of supply of OIDAR services shall be the location of the recipient of services, ie the location of the Indian exporter. Further explanation to Section 13(12) of the IGST Act deems the location of a place of supply of OIDAR services in the taxable territory (ie India) if any two of the non-contradictory conditions mentioned therein are satisfied. A cursory glance at said explanation also gives an impression that the place of supply of such OIDAR services shall be deemed within the taxable territory.  Since all three conditions of import of services are fulfilled in toto, in the opinion of the author, the Indian exporter shall be required to pay GST @ 18% on a reverse charge basis on such online advertisement charges.

Intermediary charges/Display charges/Commission

Amazon and similar marketplaces may charge intermediary charges/display charges/commissions etc. for connecting Indian exporters with US shoppers. Let us now explore whether Indian exporters are liable to pay GST on a reverse charge basis on such intermediary charges.  

For a lucid understanding of this issue, it would be worthwhile to first capture the meaning of the term ‘Intermediary’. Section 2(13) of the IGST Act defines an Intermediary as under:

“Intermediary” means a broker, an agent, or any other person, by whatever name called, who arranges or facilitates the supply of goods or services or both, or securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account;”

There is a history of litigation on the taxability of Intermediary charges in erstwhile service tax as well as the present GST regime. In terms of Section 13(8)(b) of the IGST Act, the place of supply of the Intermediary services shall be the location of the supplier of services. Since Amazon US is located outside India (non-taxable territory), the Place of supply of such services would be a place where such supplier of services is located i.e. outside India.  Accordingly, one of the conditions of the import of services fails and so the reverse charge levy on the import of services.

Warehousing/Fulfillment charges

For providing storage facilities in its fullfillment centres located in the US, Amazon may charge warehousing charges depending upon cubic feet consumed. The next point for consideration is whether an Indian exporter would be required to pay GST on a reverse charge basis on such warehousing charges.

To answer this question reference is invited to Section 13(3)(a) of the IGST Act which reads as under:

“The place of supply of the following services shall be the location where the services are actually performed, namely:—

services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services”

In terms of Section 13(3)(a) of the IGST Act place of supply of such warehousing services would place where such services are performed. Since warehousing activity is factually performed in the US ie. a non-taxable territory, therefore once again a test of import of services fails and consequently there would be no levy of reverse charge on warehousing charges paid in the US.

Reverse charge levy on Professional Fees

Indian exporters might have availed various professional services abroad e.g. services of importer on record, marketing and consultancy services to boost exports, etc. Let us further examine reverse charge levy on such professional fees. In the opinion of the author, such charges may fall under residuary head covered by Section13(2) of the IGST Act, reproduced hereunder for quick reference

“The place of supply of services except the services specified in sub-sections (3) to (13) shall be the location of the recipient of services”

Since the location of the Indian e-commerce exporter would be India (taxable territory), therefore all tests of import of services are fulfilled consequently reverse charge levy shall be attracted on such professional fees/charges.  

Reverse charge levy on Courier Charges

If courier charges are paid within India then apparently such services will be covered under forward charge and service providers may charge GST, if registered. However, if any courier charges are paid directly to a US-based courier, then there is a need to examine the levy of reverse charge on such payments.

Section 13(9) of the IGST Act provides that the place of supply of services of transportation of goods, other than by way of mail or courier, shall be the place of destination of such goods.  As section 13(9) of the  IGST is not relevant to the case in hand,  in the opinion of the author residuary provision ie Section 13(2) of the IGST Act shall determine the place of supply.  As discussed in the earlier paragraph reverse charge levy shall be attracted even in case of courier charges paid abroad.

Up until now, we have analyzed the implications of reverse charge on certain common expenditures associated with e-commerce exports. Depending upon the terms of the contract, on a case-to-case basis applicability reverse charge levy shall be ascertained and paid if required. Further, in the opinion of the author prima facie in all the above cases discussed above, IGST paid on a reverse charge basis shall be eligible for input tax credits.

Other contentious Issues

Indian exporters should also be wary of recently amended Rule 89(4)(c) and recently introduced Rule 96B of the CGST Rules. Accordingly, e-commerce export without payment of IGST would be subject to the upper limit while working out the valuation of the export of goods for the purpose of the Refund formula. Further, in terms of Rule 96B, Indian exporters may have to temporarily return GST refunds along with interest in case of failure to realize sales proceeds within 9 months of exports as prescribed in the Foreign Exchange Management Act (FEMA) and subsequently if eligible may reclaim such refunds.

Parting Note

E-commerce export is a boon for young Indian entrepreneurs and is likely to earn humongous foreign exchange for our country. However, such supply involves an interplay of various complicated statutes. Unfortunately, MSME exporters are not equipped with the required resources to comply with laid down statutory requirements. Author humbly makes a plea to ease out compliance requirements in case of e-commerce exports to reclaim the lost crown of ‘Land of Golden Sparrow – ie India as Sone ki Chidiya’.


The views expressed herein are strictly personal to the author and should not be construed as advice/ legal opinion. The contents of this article are based on the interpretation of the facts, relevant legislation, rules, notifications, circulars, judgments/rulings, etc. on the date of publishing of this article.  One should not act upon the information in this article without obtaining specific professional advice. Author of this blog is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, or omission pertaining to this article. Further, the said article is only for information and guidance purposes and should not be construed as any kind of advertisement or solicitation of work.

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  1. This paper was also published in the Monthly GSTPAM magazine of  September 2021.
  2. In most cases, it is safe to presume that the activity of merely sending goods from India to Amazon-controlled fulfilment centres in the US will not be covered by any of the entries prescribed Schedule I to the CGST Act.
  3. Increased from Rs. 25,000 per consignment to Rs. 5,00,000 per consignment vide  DGFT Notification No: 22/2015-2020  dated 26th July, 2018.


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