This circular provides clarification on the GST implications and procedural requirements for goods sent or taken out of India for exhibition or on consignment basis for export promotion, where the actual sale takes place at a later stage.

The circular clarifies that merely sending or taking goods out of India for exhibition or consignment purposes does not constitute a “supply” under GST, as there is no consideration at that stage. Consequently, such movement of goods is neither a taxable supply nor a zero-rated supply. Therefore, execution of a bond or Letter of Undertaking (LUT) is not required at the time of sending goods abroad.

It is explained that these transactions are in the nature of “sale on approval basis.” The goods must be either sold abroad or brought back to India within six months from the date of removal. If the goods are sold abroad, wholly or partly, the supply is deemed to take place on the date of such sale to the extent of quantity sold. If the goods are neither sold nor brought back within six months, the supply is deemed to have taken place on the expiry of the six-month period.

During the initial movement, goods should be accompanied by a delivery challan, and registered persons are required to maintain prescribed records of such goods. A tax invoice is required to be issued only at the time when the supply is deemed to take place, either on sale or on expiry of six months.

Refund of accumulated input tax credit may be claimed only after the supply qualifies as a zero-rated supply, subject to fulfilment of statutory conditions.

These clarifications aim to remove ambiguity and ensure uniform compliance for export promotion activities.