Gujarat HC denies Integrated GST rebate to advance authorisation license holders

The Gujarat High Court has denied rebate or refund of advance authorisation licenses prospectively from October 2017, upholding validity of the amendments made to the Central goods and service tax rules.

The Court gave its ruling in a case where the exporter could not avail Integrated GST rebate or refunds due to change in government rules retrospectively.

Holders of advance authorisation licenses were entitled to import raw materials without payment of integrated GST and rebate of IGST. The government changed the rules in September 2018 – retrospectively from July, 2017 – prohibiting the entitlement if benefits of advance authorisation or deemed exports have been availed while importing raw materials.

“The amendment is made retrospectively thereby avoiding the anomaly during the intervention period and exporters who already claimed refund under second option need to payback IGST along with interest and avail ITC (input tax credit),” Justices JB Pardiwala and Bhargav D Karia said in their order dated October 20.

“By virtue of the above amendment, the option of claiming refund is not restricted to the exporters who only avail basic custom duty exemption and pay IGST on the raw materials thereby exporters who want to claim refund under second option can switch over now,” the order noted.

The Court has effectively upheld the change in government rules with retrospective effect, adding that they shall remain in force in consonance with the CGST Act.

“This will resolve the problem only in specific cases but will not settle the entire controversy of denial of rebate benefit when advance authorisation and other schemes have been availed and hence as a corollary will not give blanket benefit to exporters,” said Abhishek Rastogi, partner at Khaitan & Co, who argued the matter for the petitioner.

He added that trade is looking to obtain additional options of claiming benefits as per their requirements and within the WTO guidelines, even as India gradually move towards the remission of duty schemes.