1. The case concerned classification of imported goods and application of IGST rate thereon. The customs officer went with the what a layman would do, trace goods into IGST rate notification and do the rest of the math (right or wrong)
2.
But convinced with the argument
that IGST unlike
a revenue-based tax, is rather
a set-off based tax, hence
it should not be
called as ‘duties of customs’ [para 9, 12]
3.
Sec.
3 (7) of the Customs Tariff Act is not an independent source of levy, but
rather supporting (sub-servient) provision
to Sec. 5 of the IGST Act [para 11]
4.
Because the Import IGST is a tax under the IGST legislation, the power to assess rests with the ‘central tax officers’ to the exclusion of proper officers under the
Customs Act [para 13]
– the
argument has a good foundation, but most likely not survive in the sense that
proviso to Sec. 5 (1) translates the
entire mechanism for its collection
under the Customs Act which should necessarily also translation of powers of assessment with the proper
officers appointed under the Customs
Act as well
5.The rate notification
under the GST to be accommodated jointly with the Customs Tariff Schedule –
this observation essentially strikes to the very core of
residuary entry [S. No. 453 of Schedule] – to the extent that if goods are not classifiable under any of the
CTH under the Tariff, then it is not taxable [para 15]
– there are goods which are not classifiable under the Tariff
at all, particularly those having short shelf
life (e.g. hot iron, waste
and scrap of wires/ cables)
– if this principle is accepted then, all these rare products
would lose its taxability
6. Also worthwhile is to see how Expl. (iii) and (iv) are placed in GST rate notification. While clause (iv) apropos application of interpretation rules is
limited if the same goes against interpretation otherwise discernible from the GST law [see the words ‘so far as may be’], however clause (iii) applies
with full force
i.e. it requires
presence of a CTH in Tariff
for rate notification to kick in.
7.
Having
come to terms that IGST levy is under IGST Act, the Tribunal cedes its
jurisdiction to venture into the exercise
of classification under IGST law. That said, the Tribunal still goes on to
decide the list basis that it can rule upon the classification
of ‘imported goods’, thus indirectly assuming jurisdiction over IGST
law (loop) [13].
– the contrary observations, firstly ceding the jurisdiction
(source of law being IGST legislation), then indirectly assuming the jurisdiction (dialect
of import of goods
with Customs Act) is facially
dichotomous.
8. The conclusion of the judgment
appears to impact
other similarly placed
controversies as well such that only one GST is leviable on an SEZ to DTA
supply (IGST under forward charge) but, this results perhaps does not marry
with government’s intention to
treat SEZ to DTA supply as import akin (see ya DESH
Bill).
9. Also impacted
is the Indigo (re-import) case, where Delhi Tribunal had held IGST not to be ‘duty
of customs’ (the case is appealed before SC). This
decision fuels the case in favour of assessee. Further, the reactive notifications and explanation may also be
declared ultra vires. Further, interestingly the notification in order to expand the scope of taxability placed
reliance on “GST Council’s
decision”, this type of explanation sans the
backing of sound law may not survive in the light of Mohit Minerals
case. Overall, therefore the IGST levy on fair
cost of repairs (of re-imports) is in serious doubt (for both pre-amendment
period and post-amendment period).
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