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The Applicant had sought a ruling before the Gujarat AAR to ascertain whether availing exemption under Customs notification in respect of additional duty of customs, but opting to pay IGST on the import of goods under Advance Authorization, would tantamount to availing the benefits of exemption under Notification No.79/2017-Cus, as contemplated under Rule 96(10) of CGST Rules.
The Applicant stated that in terms of Circular No. 59/33/2018-GST dated 04 September 2018, the importers who are directly importing supplies on which benefit of reduced tax incidence or no tax incidence under certain specified notifications has been availed, shall not be eligible for refund of integrated tax paid on export.
The Applicant further stated that Notification No. 79/2017-Cus is specified in Rule 96(10), which exempts certain specified duties of Customs and IGST. The Applicant further argued that the restriction under Rule 96(10) seeks to prevent the exporter from claiming refund of IGST paid on the exports, if he has received the goods which are exempted or nil rated.
It was put forth by the Applicant that the term ‘tax’ referred to in the circular is the GST. In case of imports, the GST payable is IGST under the IGST Act. The applicant had been opting to pay IGST on their imports, but availing exemption on other applicable customs duties in terms of the Notification No.79/2017-Cus.
Basis the above, it was argued that the Applicant has received imported goods on which the IGST had been paid and, therefore, they cannot be held to have availed the ‘benefits of the Notification No.79/2017-Cus as contemplated in Rule 96(10). The Applicant further stated that the exemption on additional duties of Customs and ADD are governed by the Customs Act, and Customs Tariff Act, therefore, the benefit cannot be denied by the GST Act and Rules.
It was observed by the AAR that Rule 96(10) was amended with retrospective effect from and a new sub-rule (10) was inserted which provided that an exporter who is inter alia availing the benefit of Notification No. 79/2017-Cus, will not be entitled to claim refund of IGST paid on export of goods. The said provision was further clarified vide Circular No. 59/33/2018-GST.
Basis the above observations, it was held by the AAR that the importers, directly importing supplies on which benefit of reduced tax or no tax under certain notifications specified under rule 96(10) had been availed, shall not be eligible for refund of integrated tax paid on export.
Therefore, as to answer the question raised by the Applicant, it was ruled that availing exemption under Customs notification in respect of additional duty of customs, but opting to pay IGST on the import of goods under Advance Authorization, would tantamount to availing the benefits of exemption under Notification No.79/2017-Cus.
The information provided in this update is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein. This update is not intended to address the circumstances of any particular individual or corporate body. There can be no assurance that the judicial/ quasi judicial authorities may not take a position contrary to the views mentioned hereinrra quis.
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