Pre-import condition under Advance Authorisation, Goods and Services Tax - GST

[viraf deboo]

Dear Experts,

Prior to introduction of GST, exemption was available for all custom duties including CVD & SAD on imports under Advance Authorisation. The notification also permitted duty free imports even after fulfillment of the export obligation. No one to one correlation of import vis-à-vis corresponding export orders was required as the scheme itself provides for the export in anticipation of benefits under this scheme.

On introduction of GST regime the earlier exemption of CVD & SAD was not extended to IGST, forcing the exporters to pay IGST at the time of imports. Thereafter Notfn No. 79/2017-cus dtd.13.10.17 was issued restoring earlier position i.e. exempting IGST, however with condition of ‘pre-import’, subsequently this condition of ‘pre-import’ was removed vide Notfn 01/2019-Cus dtd. 10.01.2019. However many exporters being unaware of ‘pre-import’ condition continued imports under Advance Authorisation for the intervening period (13.10.2017 to 19.01.2019) and the customs allowed such imports. Now at the time of getting export obligation discharge certificate, office of Jt. DGFT is asking the exporter to pay IGST amount on the imports made.

Honarable HC of Gujarat High Court case of Maxim Tubes Co. Pvt. Ltd. Vs UOI 2019 (2), TMI 1445 has struck down the ‘pre-import’ condition (against Madras HC in case of Vedanta Ltd Vs. UOI 2019 (1) TMI 85)

Our query is :

1. Is Jt. DGFT is correct in demanding payment of IGST in light of Gujarat HC decision. We have imported under Advance Authorisation with IGST payment & made exports under LUT without payment of IGST.

2. If we opt to pay IGST, whether we will be eligible to claim ITC now :

How we should it – through TR-6 challan, then we would not be able to claim ITC if eligible.

Through re-assessed of Bill of Entry.

Your expert advice is solicited.

Posts / Replies

[KASTURI SETHI]

Sh. Viraf Deboo Ji,

The department has filed Special Leave Petition against the judgement of Guajrat High Court in the Supreme Court reported as [Union of India v. Yasho Industries Limited - 2019 (10) TMI 1466 - SC ORDER] & [Union of India v. Maxim Tubes Company Pvt. Ltd. - 2019 (10) TMI 1467 - SC ORDER]. The department will continue raising demands in such cases until the issue is decided by the Supreme Court. The matter is sub judice.

Re-assessed bill of entry is the better recourse. You will not face the sword of time limitation in this way.

[viraf deboo]

Thank you Mr Kasturi Sethi for your reply.

Pl advise if we pay IGST after re-assessing the Bill of entry , can we claim ITC on it.?

[KASTURI SETHI]

Sh Viraf Deboo Ji,

The issue is debatable.

However, in my view ITC can be availed on the strength of re-assessed bill of entry.You are well aware that bill of entry is assessed by the Customs Authorities. Customs duties/IGST are determined by the Customs Officer. We can say that the assessed bill of entry is assessment order. Hence the date of assessment/determination of tax is relevant for availing ITC on the strength of bill entry..

As per Section 2(11) of CGST Act “assessment” means determination of tax liability under this Act and includes self-assessment, re-assessment, provisional assessment, summary assessment and best judgment assessment;

As per Section 20 of IGST Act, the provisions of CGST Act are applicable to IGST Act. Section 20(iv) & (xii) of IGST Act refer.

I have expressed my personal views on the issue. Since the issue is debatable, you may opt for Advance Ruling.

[Shilpi Jain]

Your question states you have imported under advance authorisation with payment of IGST and department is again demanding IGST?

[viraf deboo]

Dear Mr Kasturi Sethiji

Many thanks for expert advise.

The problem with advance ruling is that it takes considerable time to get a judgement, and meanwhile department may take coercive action

[viraf deboo]

Dear Ms Jain,

We have not paid IGST at the time of import, the customs have allowed us the same .

We have done export under advance authorizations under LUT without payment of IGST on exports.

[KASTURI SETHI]

In this scenario, the querist has not availed the facility of LUT. Hence there is a world of difference between the two situations.

[Shilpi Jain]

Agree with Kasturi sir on re assessing BoE and claiming ITC.

The issue with TR-6 challan could be that it is not a prescribed doc to claim ITC under gst. But that is a gap in the law and thereby assessee should not be denied of ITC because of this.

[viraf deboo]

Thank you Kasturiji and Shilpiji for your advise

[Samik Pathak]

Hello sir,

In this connection, what if one regular exporter has started export under advance authorisation without prior important. Will the exporter be liable to pay duty ? If yes how much ?(mention calculation also )