Concessional IGST entitlement denied where supply and movement did not occur between registered supplier and recipient, so notification conditions prevail.

The principal issue was entitlement to a concessional IGST rate under Notification No.41/2017-I.T. (Rate); the court applied the principle that exemption/concession notifications are to be strictly construed and the assessee bears the burden of proving eligibility, with purposive interpretation only where the text is ambiguous. On the facts, the registered recipient placed the order but the supply and initial movement occurred to a third party's premises and only thereafter the goods were packed and supplied to the recipient, which did not meet the Notification's requirement that order and supply/movement occur between the registered supplier and registered recipient (or to a registered warehouse). Outcome: benefit denied and writ dismissed.

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Issues: (i) In the facts and circumstances of the present case, whether the petitioner is entitled to the benefit of concessional rate of tax at 0.1% under Notification: 41/2017-I.T. (Rate), dated 23.10.2017?

Analysis: The Court examined the text of Notification No. 41/2017-I.T. (Rate) dated 23.10.2017 and the Minutes of the 22nd GST Council Meeting (06.10.2017). The Notification grants a concessional IGST rate subject to specified conditions including that (v) the registered recipient shall place an order on the registered supplier and furnish a copy to the supplier's jurisdictional officer, (vi) the registered recipient shall move the goods from the place of the registered supplier directly to the port/ICD/airport/LCS or directly to a registered warehouse from where they will be exported, and (vii) where aggregation from multiple suppliers occurs the goods shall first move to a registered warehouse with endorsed invoices and acknowledgements. The Court applied settled principles on interpretation of exemption/concession notifications, including that such notifications must be strictly construed and the assessee bears the burden of proving eligibility; purposive interpretation applies only where ambiguity exists. On the undisputed facts, the merchant exporter (registered recipient) placed the order but the supply was effected to the premises of a chemical manufacturer (a person other than the registered recipient) who packed the goods subsequently supplied to the merchant exporter. This did not satisfy the Notification's requirement that both the order and the supply/movement be between the registered supplier and the registered recipient (or to a registered warehouse as permitted by the Notification). The Court held that accepting the petitioner's construction would effectively rewrite or dilute the express conditions of the Notification, which is impermissible.

Conclusion: The petitioner is not entitled to the concessional rate of tax under Notification No. 41/2017-I.T. (Rate) dated 23.10.2017; the writ petition is dismissed (decision in favour of the Revenue).

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