CONSTITUTIONAL VALIDITY OF RULE 96(10) OF CGST RULE, 2017

[KANHAIYA AGRAWAL]

My client imports some goods under an advance authorization scheme for job work purposes. After compilation of job work, export and clear the goods with payment of GST option. And also got the refund of IGST after filing the GSTR-3B.

Now my client got the notice from customs and directed the GST department to collect the GST with interest which was sanctioned earlier as this is not legal due to Rule 96(10) of CGST Act-2017.

My client is in opinion that

The effect of Rule 96(10) is an indirect violation of Section 16 of the IGST Act which provides for zero rated supply.

We haveclaimed refund of duty after payment of duty while clearing the goods so the Government has not received any revenue. Alternatively, the we could have cleared the goods under L.U.T. route, then also it was not required to pay any duty for the same. There is no loss revenue to the government in both the cases.

AI Summary

Customs notice demands GST repayment with interest under Rule 96(10); client to challenge citing Section 16 of IGST Act. A client who imports goods for job work under an advance authorization scheme and later exports them with GST payment has received a notice from customs. The notice directs the GST department to collect previously sanctioned GST with interest, citing Rule 96(10) of the CGST Rules, 2017. The client argues that this rule indirectly violates Section 16 of the IGST Act, which allows for zero-rated supply. Responses suggest challenging Rule 96(10) through a writ petition, noting that the Kerala High Court recently invalidated the rule in a related case.