Delhi HC ex­empts ex­port com­pany from pay­ing IGST for im­port

Millennium Post - - BUSINESS -

NEW DELHI: The Delhi High Court has al­lowed a pri­vate com­pany to im­port goods to man­u­fac­ture prod­ucts for ex­port, with­out pay­ing the ad­di­tional levy of the lat­est In­te­grated Goods and Ser­vices Tax (IGST).

A bench of Jus­tices S Mu­ralid­har and Prat­i­bha M Singh, in an in­terim di­rec­tion, per­mit­ted the pe­ti­tioner Naren­dra Plas­tic Pri­vate Ltd to im­port goods con­sti­tut­ing in­puts for the ful­fil­ment of its ex­port or­ders placed be­fore July 1, with­out pay­ing the ad­di­tional levy of IGST.

"Ex­port or­ders are usu­ally placed sev­eral months in ad­vance and the price fixed is not vari­able be­yond a point. If an ad­di­tional levy is im­posed, af­ter the ac­cep­tance of such ex­port or­ders, the re­sul­tant bur­den can­not pos­si­bly be passed on by the ex­porter to the buy­ers out­side In­dia.

"This might lead to the can­cel­la­tion of such ex­port or­ders plac­ing the ex­porter in a pi­quant sit­u­a­tion," the bench ob­served.

The com­pany, which is into manufacturing and ex­port of plas­tic prod­ucts, had moved the court against a no­ti­fi­ca­tion is­sued un­der the re­cent GST regime that levies an ad­di­tional tax on im­ports made af­ter July 1 this year.

The com­pany claimed that it holds ex­port or­ders placed prior to July 1, for the ful­fil­ment of which it has to un­der­take im­ports of in­puts.

As per the Ad­vance Au­tho­ri­sa­tion Scheme (AAS) un­der the For­eign Trade Pol­icy 2015-2020, ex­porter man­u­fac­tur­ers were en­ti­tled to du­tyfree im­port of in­puts which are phys­i­cally in­cor­po­rated in the ex­port prod­uct.

"The work­ing of the AAS is such that, for the im­port of in­puts made by ex­porter to­wards ful­fil­ment of ex­port or­ders, the credit of cus­toms duty, as spec­i­fied in the Ad­vance Au­tho­ri­sa­tion li­censes is­sued to the ex­porter, is per­mit­ted to be availed of at the time of im­port," the court ob­served.

It said that the com­pany will be "per­mit­ted to clear the con­sign­ments of im­ports con­sti­tut­ing in­puts for the ful­fil­ment of its ex­port or­ders placed on it prior to July 1, 2017 with­out any ad­di­tional levies, and sub­ject to the quan­tity and value as spec­i­fied in the ad­vance au­tho­ri­sa­tion li­censes is­sued to it prior to July 1, 2017."

The or­der said that in­terim di­rec­tion is "fur­ther sub­ject to the pe­ti­tioner fur­nish­ing an un­der­tak­ing by way of an af­fi­davit filed in this court within one week to the ef­fect that in the case of the pe­ti­tioner ul­ti­mately not suc­ceed­ing in this writ pe­ti­tion, or fail­ing to ful­fil its ex­port obli­ga­tions, it is li­able to pay the en­tire IGST as was levi­able, to­gether with what­ever in­ter­est as the court may de­ter­mine at the time of fi­nal dis­posal of the pe­ti­tion." NEW DELHI: Tak­ing for­ward the process for Air In­dia di­vest­ment, the gov­ern­ment on Thurs­day in­vited ap­pli­ca­tions from in­vest­ment bankers, law firms and other en­ti­ties to act as ad­vis­ers for strate­gic stake sale of the flag car­rier.

The gov­ern­ment has de­cided on strate­gic dis­in­vest­ment of the loss-mak­ing Air In­dia, which is stay­ing afloat on tax­pay­ers' funds, and a min­is­te­rial panel is work­ing on the modal­i­ties.

Ap­pli­ca­tions have been sought for en­gag­ing up to two ad­vis­ers and a le­gal ad­viser for the "strate­gic dis­in­vest­ment of Air In­dia and its sub­sidiaries/ joint ven­ture", ac­cord­ing to two sim­i­larly-worded pub­lic no­tices is­sued by the Fi­nance Min­istry.

"The Gov­ern­ment of In­dia has in-prin­ci­ple de­cided to con­sider the dis­in­vest­ment of the AI Group as a whole or its con­stituents fully or part thereof through strate­gic sale with trans­fer of man­age­ment con­trol," the no­tices said.

It is look­ing for re­puted in­vest­ment bankers, mer­chant bankers, fi­nan­cial in­sti­tu­tions and banks for pro­vid­ing ad­vi­sory ser­vices and man­ag­ing the strate­gic dis­in­vest­ment process.

The gov­ern­ment "re­quires the ser­vices of re­puted law firms with ex­pe­ri­ence and ex­per­tise in merg­ers and ac­qui­si­tions/ takeovers/strate­gic dis­in­vest­ment/ pri­vate eq­uity trans­ac­tion to act as le­gal ad­viser and as­sist gov­ern­ment in the process," one of the no­tices said.

Ap­pli­ca­tions have to be sub­mit­ted by Oc­to­ber 12. The no­tices for Ex­pres­sion of In­ter­est have been is­sued by the De­part­ment of In­vest­ment and Pub­lic As­set Man­age­ment.

Un­der a turn­around plan ap­proved by the pre­vi­ous UPA regime, Air In­dia is to re­ceive up to Rs 30,231 crore from the gov­ern­ment sub­ject to meet­ing cer­tain per­for­mance thresh­olds.

The ten-year bailout pack­age be­gan from 2012. So far, the em­bat­tled car­rier has re­ceived around Rs 26,000 crore un­der the pack­age. The Cab­i­net Com­mit­tee on Eco­nomic Af­fairs (CCEA) gave its in-prin­ci­ple nod for the strate­gic dis­in­vest­ment of the air­line in June this year.

Sub­se­quently, an Air In­di­aspe­cific al­ter­na­tive mech­a­nism was set up to guide the process.

The min­is­te­rial group is look­ing into treat­ment of Air In­dia's un­sus­tain­able debt, hiv­ing off of cer­tain as­sets to a shell com­pany, de­merger and strate­gic dis­in­vest­ment of three prof­it­mak­ing sub­sidiaries, among other as­pects.

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