Gujarat High Court has asked the Centre to file its response to a petition challenging the validity of a clause in the goods and services tax (GST) law that denies benefits to traders who import input goods after their finished products are exported. Noting that the government had not filed a reply until now, the court said it would otherwise summon the secretaries concerned to the courtroom to present the facts in the case.
The GST law had been amended to introduce a pre-import condition to be followed by exporters holding advance authorisation licences to avail of duty exemptions. The clause denies benefits of integrated goods and services tax — applicable to interstate transactions — to imports that take place after exports. Advance authorisation licences are issued to allow duty-free import of inputs, which are used to make finished products for export.
“The implementation of such a condition will make life tough for exporters from the working capital perspective and one-to-one correlation with exports will only increase litigation, thereby, defeating the entire ease-of doing-business initiative.