Gujarat HC Denies Integrated GST Rebate To Advance Authorization License Holders – Is It Fair?

Gujarat HC Denies Integrated GST Rebate To Advance Authorization License Holders – Is It Fair?

✔️Holders of advance authorization licenses were entitled to import raw materials without payment of integrated GST and rebate of IGST. The government changed the rules in September 2018 – retrospectively from July 2017 – prohibiting the entitlement if benefits of advance authorization or deemed exports have been availed while importing raw materials.

✔️The Gujarat High Court has denied rebate or refund of advance authorization licenses prospectively from October 2017, upholding the validity of the amendments made to the Central goods and service tax rules.

✔️The Court gave its ruling in a case where the exporter could not avail of Integrated GST rebates or refunds due to a change in government rules retrospectively.

But the question is, is it fair? Were all points analyzed by the Hon’ble High Court?

✔️Please have a look at our critique analyzing the issue in detail.

What is this all about?

• The exporters were entitled to import raw materials without payment of IGST under the AA License and pay IGST on exports and claim Rebate (Refund) of the IGST so paid on exports. The exporter received benefits of rebate of IGST at the relevant point of time and then, Subrule (10) of Rule 96 of the CGST Rules was amended by Notification No. 39/2018- Central Tax dated September 4, 2018, with retrospective effect from October 23, 2017, providing that rebate on exports cannot be availed by the Petitioner if the inputs procured by the Petitioner have enjoyed AA benefits or Deemed Export Benefits under the said notification. Therefore, the Petitioner was unable to utilize the benefit of duty-free imports under AA Licenses and take the benefit of a rebate on exports.
• Thereafter, by Notification No. 53/2018-Central Tax dated October 9, 2018, subclause (a) and (b) of subrule 10 of Rule 96 of the CGST Rules were merged. Thereafter, vide Notification No. 54/2018-Central Tax dated October 9, 2018, the subrule 10 of Rule 96 of the CGST Rules was again demerged and “with effect from October 23, 2017”.
• The Hon’ble HC, Gujarat in Cosmo Films India v. Union of India & Ors. [R/SLP No. 15833/2018 dated October 20, 2020] upheld the validity of rule 96(10) of the Central Goods and Services Tax Rules, 2017 (“CGST Rules”) and rules that notification is required to be made applicable prospectively only w.e.f. October 23, 2017, and not prior thereto from the inception of Rule 96(10) of the CGST Rules w.e.f. July 1, 2017.

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