Refunds of many importers have got cemented due to the fact that refunds are not subject to the self-assessment of the transactions, as explained by the income tax department while declining the reimbursement. This means the importer cannot get the refund of the extra tax they paid by mistake.
These companies which paid 12% GST on the import of goods, started demanding the refund of customs when they discovered that were required to pay 6% GST on the same.
While the income tax department put forth the condition that the importer can only be refunded when the assessment order is issued and challenged by the Tax department.
An assessment order is a notice issued by the income tax officer after he verifies and validates the computation of income tax.
25 importer approached the Supreme court for the refund of their custom when the tax department denied granting the same as in none of the cases, assessment order was challenged.
In contrast to the Tax department, the revenue department claims that there are many refunds which are not backed by assessment orders. Tax professionals have witnessed a great impact of this fray on many importers.
“This has led to several importers’ refunds being stuck and now clarity would only come after the Supreme Court decision,” said Abhishek A Rastogi, Partner at Khaitan & Company, who represents one of the importers.
Read Also: Goods & Services Tax Official Refund Procedure: Everything You Need to Know
The case has reached the SC as the Customs department is not precise with the High Court ruling which took place on November 2017 by Delhi High Court.
Importers and exporters have not been able to work smoothly and have faced many adverse circumstances under the GST framework. The exporters recently got pardoned from ‘pre-import’ condition and to claim tax exemption on imported raw material even if the finished goods have been shipped out already as ordered by the Gujarat high court.
