Court Rules Against Inclusion of IGST in Bank Guarantee Calculation for SEZ Unit

The court ruled in favor of the petitioner, a private limited company and approved SEZ unit, in a case challenging the demand for a bank guarantee of 25% of the IGST on re-exported goods. The court held that there was no legal basis for including IGST in the bank guarantee calculation as per the Integrated Goods and Services Tax Act, 2017. It quashed the communication insisting on the IGST-based bank guarantee and directed the respondents to permit re-export based on a bank guarantee of 25% of the customs duty, excluding IGST. The petitioner's request was deemed valid, and the court made the rule absolute without costs.

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Issues Involved:

1. Legality of the demand for a bank guarantee of 25% of the IGST on re-exported goods.
2. The petitioner's request to re-export goods without including IGST in the bank guarantee calculation.
3. Validity of the communication dated 07.09.2018 insisting on IGST-based bank guarantee.

Issue-wise Detailed Analysis:

1. Legality of the demand for a bank guarantee of 25% of the IGST on re-exported goods:

The petitioner, a private limited company and an approved SEZ unit, challenged the demand for a bank guarantee of 25% of the IGST on re-exported goods. The court noted that the petitioner had previously been allowed to re-export goods with a bank guarantee of 25% of the customs duty, not IGST. The court emphasized that the respondent's insistence on including IGST in the bank guarantee was without basis, as there was no provision for levying IGST on the re-exported goods under the Integrated Goods and Services Tax Act, 2017. The court concluded that the respondent was not entitled to demand a bank guarantee on the IGST amount.

2. The petitioner's request to re-export goods without including IGST in the bank guarantee calculation:

The petitioner argued that the inclusion of IGST in the bank guarantee calculation was unjustified. The court acknowledged that the petitioner had already furnished a bank guarantee of Rs. 9,18,723, which was deemed insufficient by the Deputy Commissioner of Customs, who demanded an additional Rs. 15,20,183 to cover the IGST component. The court reiterated its previous order, which directed the respondents to permit the re-export of goods based on a bank guarantee of 25% of the customs duty, excluding IGST. The court found the petitioner's request valid and directed the respondents to comply accordingly.

3. Validity of the communication dated 07.09.2018 insisting on IGST-based bank guarantee:

The court examined the communication dated 07.09.2018, which insisted on a bank guarantee including the IGST component. The court found this communication contrary to its earlier order, which specified that the bank guarantee should be 25% of the customs duty only. The court declared the communication invalid and quashed it, stating that the petitioner was not liable to furnish the additional bank guarantee of Rs. 15,20,183 for IGST. The court clarified that the respondent-authority could adjudicate the issue of IGST levy in pending proceedings as per the law.

Conclusion:

The court allowed the petition, quashing the impugned communication dated 07.09.2018. It ruled that the petitioner was not required to furnish a bank guarantee for the IGST amount for re-exporting the goods. The court maintained that the respondents could adjudicate the IGST levy issue in ongoing proceedings. The rule was made absolute to the extent specified, with no order as to costs.

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