2022 (11) TMI 1046 - HC - Customs

Levy of IGST on gods imported under EPCG Scheme - Period between 1.7.2017 to 12.7.2017 - Constitutional Validity of Section 3(7) of the Customs Tariff Act, 1975, Section 5 and Section 7(2) of the Integrated Goods and Services Tax Act, 2017 - assessment of duties and IGST made under impugned Bills of Entry - violative of Articles 14, 19, 265 and 300A being unreasonable, discriminatory, arbitrary, oppressive, excessive, premeditated and without the authority of law or not - refund of IGST - Retrospetive effect of N/N. 79/2017-Cus dated 13.10.2017. HELD THAT - Considering all the pros and cons and after being conscious of the fact that the basic structure of GST was not to grant exemptions, the GST Council decided to grant exemption from IGST, Cess, etc., under Section 6 of the IGST Act, 2017 read with Section 25 of the Customs Act, 1962 to import of goods for exporters availing the scheme of advance authorisation/export promotion capital goods/100% export oriented units upto 31st March 2018 and to continue the existing monitoring scheme for exports. Keeping in mind the the fact that even the Government of India was conscious of the problems faced by the exporters and the fact that the exemption has continued to be extended periodically and is valid even as on date, it is apparent that it was on account of inadvertence or oversight that while amending Notification No.16/2015-Cus, dated 1st April 2015, by Notification No.26/2017-Cus, the words, figures and brackets Sub Section (7) and Sub Section (9) were not inserted and that it was always the intention of the Central Government to exempt imports of capital goods under the EPCG Scheme from payment of additional duty under Section 3 of the Customs Tariff Act. Since we have held that the amendment to Notification No.16/2015-Cus dated 1st April 2015 was clarificatory/curative in nature, consequences have to follow inasmuch as Petitioner will be entitled to refund of the IGST paid by Petitioner. The refund shall be processed and paid together with interest, if any, within four weeks of Petitioner reversing the entries of availment of the subject credit and debiting the said amount from the credit ledger. Petition disposed off.

Summary

Issues Involved:
1. Constitutionality of Section 3(7) of the Customs Tariff Act, 1975, Section 5, and Section 7(2) of the Integrated Goods and Services Tax Act, 2017.
2. Validity of the assessment of duties and IGST under the impugned Bills of Entry.
3. Retrospective application of IGST exemption and refund of duties/taxes paid.

Issue-wise Detailed Analysis:

1. Constitutionality of Section 3(7) of the Customs Tariff Act, 1975, Section 5, and Section 7(2) of the Integrated Goods and Services Tax Act, 2017:
The petitioner sought a declaration that these provisions are unconstitutional as they violate Articles 246, 246A, and 269A of the Constitution of India. The court did not explicitly address the constitutionality in the judgment, focusing instead on the interpretation and application of the relevant notifications and statutory provisions.

2. Validity of the assessment of duties and IGST under the impugned Bills of Entry:
The petitioner challenged the assessment of duties and IGST made under the impugned Bills of Entry, arguing that it was unreasonable, discriminatory, arbitrary, oppressive, excessive, premeditated, and without the authority of law, thus violating Articles 14, 19, 265, and 300A of the Constitution. The court examined the sequence of notifications and amendments, noting that the original intention of the Central Government was to permit import at zero customs duty under the EPCG Scheme. The court found that the omission of references to Sub Sections (7) and (9) of Section 3 in Notification No. 16/2015-Cus by Notification No. 26/2017-Cus was inadvertent and that the subsequent Notification No. 79/2017-Cus was clarificatory or curative in nature.

3. Retrospective application of IGST exemption and refund of duties/taxes paid:
The petitioner argued that the exemption to IGST inserted via Notification No. 79/2017-Cus dated 13.10.2017 should have retrospective effect, covering the period from 1st July 2017 to 13th October 2017. The court agreed, noting that the exemption was intended to be in place continuously and that the omission was due to oversight. The court referenced the Gujarat High Court's judgment in Prince Spintex Pvt. Ltd. vs. Union of India, which supported the view that the amendment was clarificatory and curative. Consequently, the court held that the petitioner was entitled to a refund of the IGST paid during the disputed period.

Separate Judgments:
The court also noted that an SLP against the Prince Spintex judgment had been admitted but no stay was granted. Additionally, the court referenced another Gujarat High Court judgment in Radheshyam Spinning Pvt. Ltd. vs. Union of India, which followed the reasoning in Prince Spintex and supported the petitioner's claim for a refund.

Conclusion:
The court concluded that the amendment to Notification No. 16/2015-Cus dated 1st April 2015 was clarificatory/curative in nature. As a result, the petitioner was entitled to a refund of the IGST paid, subject to the reversal of the credit entries. The refund was to be processed and paid with interest within four weeks of the petitioner reversing the entries. The court also clarified that any necessary amendments to the bill of entry should be permitted by the Customs Authority. The petition was disposed of with no order as to costs.