In what may provide a respite for many exporters, the Gujarat High Court has asked the primary anti-smuggling intelligence agency to not initiate any action against some exporters charged with wrongly availing tax exemptions in cases where exports proceeded imports.
The court, in an interim order on Wednesday, asked the Directorate of Revenue Intelligence (DRI) to not take any coercive action against the petitioners and stayed the proceedings around ‘pre-import’ condition set by the tax authorities.
An amendment in the GST law had brought in a pre-import condition that every exporter holding advance authorisation licences must follow to avail duty exemptions. The condition essentially denies IGST benefits to those imports which had happened after exports.
IGST, or integrated goods and services tax, is the GST applicable to interstate transaction of goods and services. The high court bench of Justices Akil Kureshi and BN Karia went into details on the objective and scope of the ‘pre-import condition’, and issued notices to DRI and others.
The court studied the background of the case, starting from a Delhi High Court decision in the case of Narendra Plastic versus Union of India where the order favoured the petitioner that is an advance authorisation license holder.
Advance authorisation licence holders are issued these to allow duty free import of inputs, which are then used to make finished products for exports.
The Gujarat HC also heard the administrative problems faced by the exporters that have been issued the notice, because no matter where they are based they are required to travel to Kolkata for the summons.
DRI, the country’s primary anti-smuggling intelligence agency, started issuing showcause notices to exporters for wrongfully availing exemptions in cases where exports preceded imports. The notices asked exporters to pay IGST in cases where raw material was imported only after goods were partially or fully exported. The tax department also claimed the exporters must pay IGST first as the foreign trade policy had been amended and several notifications have been issued by the government in the last six months.
Source: Economic Times
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