In a recent landmark ruling, the Customs, Excise and Service Tax Appellate Tribunal of Hyderabad made a significant decision in the case of M/s Himadri Speciality Chemical Ltd. V Pr. Commissioner of Customs Visakhapatnam [Customs Appeal No. 30069 of 2024]. The tribunal held that the invocation of an extended period of limitation is impermissible for raising a demand on the Integrated Goods and Services Tax (IGST) portion of Customs duty, which is eligible for Input Tax Credit (ITC) under the Goods and Services Tax (GST) regime.
The Case Background
M/s Himadri Speciality Chemical Ltd., the appellant, is involved in producing Coal Tar Pitch, Carbon Black, and other products, which are sold both within India and abroad. The appellant was registered with the GST authority and was utilizing the benefit of ITC under GST regulations to settle their output taxes, including CGST/SGST/IGST.
The appellant received an Advance Authorization (AA) from the DGFT on December 30, 2019, as a replacement for the invalidated AA issued to Hindalco Industries Ltd. Under this authorization, the appellant could import raw materials without paying customs duty, provided these materials were used in manufacturing goods for export by Hindalco.
The Issue
The issue before the Supreme Court was whether the appellant is eligible for IGST exemption at the time of import of input materials.
The Decision
The Hon’ble Tribunal observed that the question whether the appellant had paid the IGST at the time of import so that they would have been eligible for input tax credit is not disputed. Additionally, it was acknowledged that the goods imported by the appellant were used as inputs for manufacturing other goods, which were then exported to Hindalco.
Considering the situation is revenue neutral and no malafide intentions are evident on the part of the appellant, and following the precedent set by the Supreme Court in the case of Nirlon Ltd., Vs CCE, Mumbai [2015 (320) ELT 22 (SC)], it was held that the demand cannot be enforced by invoking an extended period of limitation.
Karn Associates Remarks
This case made a significant ruling regarding the invocation of an extended period of limitation for IGST demands eligible for ITC under the GST regime. This decision not only upholds the rights of the appellant but also reinforces the importance of procedural accuracy and equitable application of tax regulations. As per the Tribunal’s ruling, the appellant shall be entitled to consequential benefits in accordance with the law, ensuring a just outcome in this matter.
