HC exempts export company from paying IGST for import

The Delhi High Court has allowed a private company to import goods to manufacture products for export, without paying the additional levy of the latest Integrated Goods and Services Tax (IGST).
A bench of Justices S Muralidhar and Pratibha M Singh, in an interim direction, permitted the petitioner Narendra Plastic Private Ltd to import goods constituting inputs for the fulfilment of its export orders placed before July 1, without paying the additional levy of IGST.
"Export orders are usually placed several months in advance and the price fixed is not variable beyond a point. If an additional levy is imposed, after the acceptance of such export orders, the resultant burden cannot possibly be passed on by the exporter to the buyers outside India.

"This might lead to the cancellation of such export orders placing the exporter in a piquant situation," the bench observed.
The company, which is into manufacturing and export of plastic products, had moved the court against a notification issued under the recent GST regime that levies an additional tax on imports made after July 1 this year.
The company claimed that it holds export orders placed prior to July 1, for the fulfilment of which it has to undertake imports of inputs.

As per the Advance Authorisation Scheme (AAS) under the Foreign Trade Policy 2015-2020, exporter manufacturers were entitled to duty-free import of inputs which are physically incorporated in the export product.

"The working of the AAS is such that, for the import of inputs made by exporter towards fulfilment of export orders, the credit of customs duty, as specified in the Advance Authorisation licenses issued to the exporter, is permitted to be availed of at the time of import," the court observed.
It said that the company will be "permitted to clear the consignments of imports constituting inputs for the fulfilment of its export orders placed on it prior to July 1, 2017 without any additional levies, and subject to the quantity and value as specified in the advance authorisation licenses issued to it prior to July 1, 2017."

The order said that interim direction is "further subject to the petitioner furnishing an undertaking by way of an affidavit filed in this court within one week to the effect that in the case of the petitioner ultimately not succeeding in this writ petition, or failing to fulfil its export obligations, it is liable to pay the entire IGST as was leviable, together with whatever interest as the court may determine at the time of final disposal of the petition.