Skip to main content

Delhi HC allows exporter to import without paying IGST

Delhi HC allows exporter to import without paying IGST
The Delhi High Court has granted interim relief for an exporter, to import goods without payment of the integrated goods and services tax (IGST) to the extent allowed by advance authorisations received by him prior to July 1, when GST was enforced.
Advance authorisation is issued for exporters to allow dutyfree import of inputs which are physically incorporated in export products.
The relief given relates to export orders placed on the petitioner, an exporter of plastic products, before July 1. The next hearing in this case is on February 22.
Prior to GST, import under the Advance Authorisation Scheme was exempt from payment of basic Customs duty, additional Customs duty, education cess, etc.Amajor change since July 1 is additional levy of IGST.
While upfront exemption is extended to basic Customs duty, exporters are required to pay IGST on import and central, state or Union Territory GST (as the case applicable) on domestic procurement; thereafter, they may claimarefund.
The petitioner in this case had contended that suchamechanism adversely affected his working capital, impacting export orders got prior to July 1, for the fulfilment of which he had to undertake import of inputs.
One such export order placed on the petitioner by Walmart Inc, USA, was cited.
The petitioner said with the change brought about by the GST regime, he would have no option but to pay IGST out of own sources, causingaworking capital blockage.
As the petitioner had already used up the overdraft limit with banks, borrowing would have to be done.
Counsel for the Customs department said the petitioner could seek refund of the IGST after completion of the export obligation.
Hence, there was no ground forareal grievance.
The petitioner replied that the prospect of IGST being ultimately refunded was little consolation —he required liquidity to discharge the additional levy of IGST, failing which the import would get blocked.
Abhishek Rastogi of Khaitan &Co, the petitioner´s counsel, said while the order was specific to the petitioner, it did lay down the foundation for benefits that should go to exporters.
After GST implementation, he said, the commerce ministry had asked the finance ministry to ensure export benefits continued as these were prior to GST. The finance ministry had not acted on this representation, resulting in exporters´ loss of working capital onalarge scale.
The interim relief, he added, wasa “beginning for the two ministries to paveaclear path for exporters”.
The Business Standard, New delhi, 14th September 2017

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…