2022 (11) TMI 1046 - HC - Customs

Court orders refund of IGST with interest on retrospective exemption; petitioner to comply for processing.

M/s. Sanathan Textile Pvt. Ltd. Versus Union of India, Through The Secretary, Ministry of Finance, Department of Revenue & Anr.

M/s. Sanathan Textile Pvt. Ltd. Versus Union of India, Through The Secretary, Ministry of Finance, Department of Revenue & Anr. - 2023 (68) G.S.T.L. 246 ... 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.