Exporters were earlier entitled to import raw material without payment of IGST under the AA licence, and pay IGST on exports and claim rebate (refund) paid on exports. They received the benefits of rebate of IGST initially. However, the government then amended sub-rule (10) of Rule 96 of the central GST
through a notification dated September 4, 2018. It denied rebates on IGST on exports if exporters enjoyed AA benefits with effect from October 23, 2017.
Earlier, Gujarat HC had upheld the validity of this rule.
The court also upheld the validity of another amendment to the rule that allows rebates to those who only avail of exemption on basic Customs duty and pay IGST on raw material. This amendment was made effective with retrospective effect.
This means that those who claimed a refund under this option need to pay back IGST on raw material, along with interest and avail of input tax credit. Aggrieved, exporters filed a review petition in Gujarat HC, as well as petitions in the Bombay and Punjab & Haryana HCs.
Meanwhile, DRI issued notices to exporters and initiated proceedings against them over the issue.
“After DRI notices, the matter has been raised afresh in several courts which have issued notices or granted a stay on proceedings. The retrospective amendment is also a subject matter of challenge,” said Abhishek Rastogi, who is arguing a plethora of petitions for exporters.
Offering rationale behind the fresh batch of petitions, Rastogi said while the authorities allege there is twin benefit, there is actually no additional benefit, given the exporters are in any case eligible to a refund of taxes on the input side in some way or the other.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.