2017 (8) TMI 57 - HC - Customs

Reimbursement of Central Sales Tax (CST) - Validity of Circular dated 14.01.2015 issued by the respondent no.3 Director Software Technology Parks of India Department of Electronics and Information Technology Ministry of Communication and Information Technology Government of India - reimbursements on goods purchased from EOUs or from Special Economic Zone - authority to process the claim - Held that - It is only in respect of the benefit of deemed exports and export duty drawback that Clause (a) stipulates for the supplies from DTA but no such stipulation is contained in Clause (a) for conferring the benefit of reimbursement of CST - The Circular dated 14.04.2015 has been issued by the Director STPI Department of Electronics and Information Technology Ministry of Communication and Information Technology Government of India whereas the FTP which contains paragraph 6.11 is statutory policy under Section 5 of the Foreign Trade (Development and Regulation) Act 1992 formulated and issued by the Ministry of Commerce and Industry Government of India. Therefore the provisions and the benefits conferred therein cannot be taken away by any subordinate authority or legislation. The petitioner is an EOU who is purchasing goods as a raw material from another EOU or similar units other than DTA and therefore is entitled to reimbursement of CST in terms of paragraph 6.11(c)(i) of the FTP 2009-14 and the respondents are not legally justified in withholding the same for the reason that the petitioner has not purchased raw material from DTA on the basis of the Circular dated 14.01.2015 which is not only in conflict with the provisions of the FTP but is illegal otherwise also which cannot override the FTP. Authority responsible for the reimbursement of CST to the petitioner - Held that - The Hand Book of the Procedures under the FTP clearly lays down that the claims for reimbursement of CST shall be presented inter alia to the designated officer of the STP and that the disbursing authority of such claimed amount will inter alia be the designated officer of the STP who will make payment to the units claiming reimbursement - the liability is squarely cast upon the designated officer of the STPI to receive application for reimbursement and to make payment thereof if necessary. Circular No. STPN /CST /2015 dated 14.01.2015 illegal and issues a writ of mandamus directing the respondent no.1 to process reimbursement claim of CST of the petitioner in respect of goods purchased by it from non-DTA and to make payment thereof to the petitioner in terms of paragraph 6.11(c)(i) forthwith - petition allowed - decided in favor of petitioner.

Summary

Issues Involved:
1. Validity of Circular No. STPN/CST/2015 dated 14.01.2015.
2. Entitlement of the petitioner for reimbursement of Central Sales Tax (CST) on goods purchased from Export Oriented Units (EOUs) or Special Economic Zone (SEZ) units.
3. Authority responsible for the reimbursement of CST to the petitioner.

Issue-wise Detailed Analysis:

1. Validity of Circular No. STPN/CST/2015 dated 14.01.2015:
The petitioner challenged the circular dated 14.01.2015 issued by the Director, Software Technology Parks of India (STPI), which stated that reimbursement of CST is not permissible for goods procured from EOUs, SEZs, and other similar units. The court held that the Foreign Trade Policy (FTP) under Section 5 of the Foreign Trade (Development and Regulation) Act, 1992, is a statutory instrument and cannot be overridden by a subordinate authority's circular. The FTP, specifically paragraph 6.11(c)(i), does not stipulate the source of procurement for CST reimbursement, making the circular inconsistent with the FTP. Therefore, the circular was deemed invalid and in conflict with the statutory provisions of the FTP.

2. Entitlement of the petitioner for reimbursement of CST:
The petitioner, an EOU, sought reimbursement of CST paid on goods purchased from other EOUs or SEZ units as per paragraph 6.11(c)(i) of the FTP. The court observed that paragraph 6.11(c)(i) clearly entitles EOUs to CST reimbursement on goods manufactured in India, irrespective of the source of procurement. The court emphasized that the clause is independent and not dependent on other clauses (a) and (b) of paragraph 6.11, which pertain to deemed exports and export duty drawbacks. The court concluded that the petitioner is entitled to CST reimbursement as it fulfills the conditions of manufacturing goods in India and being an EOU.

3. Authority responsible for the reimbursement of CST:
The Handbook of Procedures under the FTP specifies that claims for CST reimbursement should be presented to the designated officer of the STP, who is also responsible for disbursing the claimed amount. The court rejected the argument that the Ministry of Commerce and Industry or another higher authority must process the claims before the STPI can make payments. The court clarified that the designated officer of the STPI is responsible for receiving applications, processing claims, and making payments. If necessary, the STPI must ensure the claims are processed and funds procured for settlement.

Conclusion:
The court declared Circular No. STPN/CST/2015 dated 14.01.2015 as illegal and issued a writ of mandamus directing the respondent to process the reimbursement claim of CST for the petitioner in respect of goods purchased from non-DTA units and make the payment in accordance with paragraph 6.11(c)(i) of the FTP. The writ petitions were allowed.