CST reimbursement under Foreign Trade Policy extends to EOU, SEZ, EHTP and STPI purchases; restrictive circulars invalid

Reimbursement of Central Sales Tax under the Foreign Trade Policy, 2009-2014 could not be confined to purchases from DTA units, because paragraph 6.11(c)(i) refers to goods manufactured in India and goods made by EOUs also fall within that expression. The Court treated the Handbook procedure as incapable of curtailing a substantive policy benefit and regarded the 2015-2020 amendment as clarificatory, removing an anomaly rather than changing the law. On that basis, the circulars and communications restricting reimbursement for purchases from EOU, SEZ, EHTP and STPI units were invalid, and the reimbursement benefit was upheld.

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Issues: Whether reimbursement of Central Sales Tax under the Foreign Trade Policy, 2009-2014 could be denied on purchases made from EOU/SEZ/EHTP/STPI units instead of DTA units, and whether the impugned circulars and communications restricting such reimbursement were valid.

Analysis: The Court followed the consistent view taken by the Division Benches of the Madras, Allahabad, and Gujarat High Courts that paragraph 6.11(c)(i) of the Foreign Trade Policy, 2009-2014 speaks of reimbursement of CST on goods manufactured in India and does not confine the benefit only to purchases from DTA units. It held that goods manufactured by EOUs are still goods manufactured in India and that the Handbook procedure could not curtail a substantive benefit conferred by the Policy. The later amendment in the Foreign Trade Policy, 2015-2020 was treated as removing an anomaly and as clarificatory in nature.

Conclusion: The petitioner was entitled to CST reimbursement for purchases made from EOU/SEZ/EHTP/STPI units under the Foreign Trade Policy, 2009-2014, and the circulars and communications denying that benefit were quashed.

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