Exporters have approached various courts over restrictions imposed for availing advance authorisation licences under the goods and services tax (GST) regime. The change in condition has led to directorate of revenue intelligence (DRI) issuing notices to exporters.
One such case on a petition filed by an exporter came up for hearing in the Delhi High Court, which issued notices to the Central Board of Indirect Taxes and Customs (CBIC) and the Directorate General of Foreign Trade and posted the matter for hearing in January.
The gist of the case is that the CBIC had inserted a clause of “pre-import” for exempting imports done on advance authorisation licences from integrated goods and services tax (IGST). These licences are issued to allow duty free import of inputs, which are physically incorporated in export product. The clause meant that imports done after exports would not be allowed to avail exemptions from IGST.
However, advance authorisation is generally used for importing goods after exports are made, as against the pre-import condition imposed by the CBIC, argued Abhishek Rastogi, counsel for the petitioner in Delhi HC and partner at Khaitan & Co. The clause was introduced after exemption was granted to imports under advance authorisation from paying IGST. Earlier, imports under advance authorisation were subjected to IGST. This prompted exporters to move courts. Though IGST is refundable, cash flow of exporters was hampered.
Following this, CBIC came out with a notification exempting these imports from IGST. However, it inserted the contentious clause in the notification.
Rastogi argued that the petitioner had procured the advance authorisation licences on for post-export imports. “Due to imposition of pre-import condition, the benefits granted to the petitioner has been curtailed to the extent that he would never be able to get the exemptions as he was promised.”
This has left the petitioner, who has advance authorisation licences, to the level of those who would import through the normal channel, he argued.