No Separate GST Registration Required in Tamil Nadu for FTWZ Operations – Sec. 22, CGST Act

West Pharmaceutical Packaging India Private Limited

22/ARA/2025

09/05/2025

AUTHORITY FOR ADVANCE RULING TAMIL NADU GOODS & SERVICE TAX

The applicant is not required to obtain a separate registration under GST in the state of Tamil Nadu, as per Section 22 of the CGST Act for the operations undertaken from the FTWZ unit at Chennai, Tamilnadu

BACKGROUND:

M/s. West Pharmaceutical Packaging India Private Limited (hereinafter called as the “Applicant”) is registered in the state of Telangana bearing GSTIN 36AAACW8510C1ZM. The applicant is engaged in the trading of “rubber stopper” products for pharmaceutical use which is imported through Free Trade Warehousing Zone unit located in Tamil Nadu.

ISSUE RAISED:

Whether the applicant is required to obtain registration under GST in the state of Tamil Nadu as per Section 22 of the CGST Act for the operations undertaken from the FTWZ unit?

IMPORTANT PARA

Para 7.14 Notwithstanding the above, in order to bring clarity to the issue in question, and to be more specific, the Government by way of clause 128 of the Finance Bill, 2025 (Bill No.14 of 2025) has proposed to insert a new clause (aa) in paragraph 8 of Schedule III of the CGST Act, which shall be retrospectively effective from the 1st day of July, 2017. The proposed insertion is to the effect that ‘supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall be treated neither as supply of goods nor as supply of services.’. The excerpts of the relevant clause in the Finance Bill, is reproduced as under for reference, i.e.,

“Clause 128 of the Bill seeks to insert a new clause (aa) in paragraph 8 of Schedule II of the Central Goods and Services Tax Act to specify that the supply of goods warehoused in a Special Economic Zone or in a Free Trade Warehousing Zone to any person before clearance for exports or to the Domestic Tariff Area shall be treated neither as supply of goods nor as supply of services.

It further seeks to amend the Explanation 2 of the said Schedule to clarify that the said Explanation shall be applicable in respect of clause (a) of paragraph 8 of the said Schedule.

It also seeks to insert an Explanation 3 in the said Schedule to define the expressions “Special Economic Zone”, “Free Trade Warehousing Zone” and “Domestic Tariff Area”, for the purpose of the proposed clause (aa) in paragraph 8 of said Schedule.

These amendments shall take effect retrospectively with effect from the 1st day of July, 2017.”

Para 7.15 Accordingly, once it is clear that the activity of the applicant involved in the instant case, i.e., sale of goods lying in the FTWZ warehouse before clearance for home consumption, are not be treated as ‘Supply’, the question of payment of Customs duty and IGST on the said transaction does not arise at all. In other words, the legal position even before the insertion of clause (a) of Para 8 of the Schedule III to the CGST Act, 2017, in the year 2018, was that the supply of goods before their clearance from the warehouse would not be subject to the levy of Customs duty or integrated tax and that the same would be levied and collected only when the warehoused goods are cleared for home consumption from the warehouse.

Para 7.16 Further, it is clear that unless the applicant themselves clear the goods into DTA for home consumption, which activity is not contemplated in the instant case, there is no requirement for payment of duties of customs and IGST by the applicant, and that the same becomes payable only when the customer to whom the goods are sold, clears the same into DTA. Under the facts and circumstances of the case, we are of the opinion that the GST registration reported to have been obtained by the applicant in the state of Telengana would be sufficient enough to take care of tax compliances, if any, that may arise due to clearance of imported goods into DTA, suo-moto by the applicant. Other than the said activity, since no liability to pay IGST by the applicant arises while making sale of goods lying in the FTWZ warehouse to any customer (before clearance for home consumption), the requirement of a registration under Section 22 of the CGST Act, 2017 for this purpose, in the state of Tamilnadu where the port of clearance is located, does not arise. We are of the opinion that the said situation is ideally covered under the provisions of Section 23(1)(a), which reads as below:-

Section 23. Persons not liable for registration- (1) The following persons shall not be liable to registration, namely:-

(a) any person engaged exclusively in the business of supplying goods or services or both that are not liable to tax or wholly exempt from tax under this Act or under the Integrated Goods and Services Tax Act;”

RULING

The applicant is not required to obtain a separate registration under GST in the state of Tamil Nadu, as per Section 22 of the CGST Act for the operations undertaken from the FTWZ unit at Chennai, Tamil nadu.