Question

XYZ(Supplier) had kept the imported goods in to Customs Bonded Warehouse without payment of import duty. These goods were re-exported directly from Customs Bonded Warehouse without filing ex-bond bill of entry and without payment of any customs duty. A simple Commercial Invoice (No Tax Invoice under GST was prepared) was prepared by XYZ along with other export documents such as shipping bill etc.
1) Is the procedure followed correct?
2) In GST Return it has to be shown as Export at Nil duty or under exempted goods?

Answer

Facts of the case: Imported goods are sold without clearing them from bonded warehouse without raising a GST invoice.

Law applicable: As per schedule III, entry number 8 (a);
"Supply of warehoused goods to any person before clearance for home consumption"
shall not be regarded as a supply.

Interpretation: All the sales made before the clearance of goods from custom warehouse shall be outside the purview of GST since the same are not regarded as "supply".
Other implications of this would be :
1. It shall not be added in aggregate turnover to check registration limits.
2. It shall not be considered in aggregate turnover for the purpose of reversal of Input Tax Credit as per section 17
3. No GST is applicable. No GST invoice is required.

Conclusion: To answer your questions;
1. So far as GST is concerned, Your procedure is correct.
2. Since this is outside the purview of GST, it should not be shown under any head in any return.  (Reply dt.13/03/2019)