The Apex court sought the revenue department to furnish the information on the total number of show cause notices furnished to claim the GST exemption for the cases in which the exports would have been done before the imports, and in which the high courts (HCs) have provided the interim orders.
The information would have been asked by the Supreme court while reserving the order towards the union government’s petition against the Gujarat HC order.
In 2019 High court ruled that the pre-import condition is beyond the powers of the advance authorization scheme beneath the foreign trade policy.
Challenging the High court order in the identical year the government proceeded with a special leave petition (SLP).
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Accepting to hear the petition placed by the revenue department the Supreme court stayed the order of the High court.
The revenue department for the SLP withheld the opinion, a pre-import condition is directed that the goods needed to be imported and the final products made via these imported goods needed to be exported.
The pre-import condition rule is resisted by the exporters.
Tax expert stated that “The imposition of a pre-import condition defeats the objectives of the advance authorisation scheme that aims at providing working capital benefit to Indian exporters,”
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The department of revenue holds with the opinion that a pre-import clause needs the imported material that is to be utilised for making the finished goods, which are in turn needed to get exported for the release of the export duty. It might take place when the exports would undertake post to the start of imports, hence permitting a reasonable time to make the finished goods.
If the law seeks the pre-import condition on the import of the material to get imported that could not take advantage at the parallel side of the export in expecting the authorization.
In the SLP the revenue department has stated about the importers/exporters needed to claim the advantage of the mentioned provision excluding exception and that export goods would be incurred of the domestically or obtained material along with the duty-free import goods being utilized for the purpose excluding than making the export of goods.
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Tax experts mentioned that “There is a lack of intelligible differentia to deny the benefit of exemption to that class of exporters, which had already exported the goods and received the authorisation after exporting such goods.”
