Exporters seek amnesty scheme on IGST refund issues

Aug 8, 2023

Synopsis
The PHD Chamber of Commerce and Industry has written to the Central Board of Indirect Taxes and Customs calling for a one-off amnesty scheme to resolve issues that arose from a new provision in India's goods and services tax rules. The provision was designed to protect government revenue from exporters making refunds under integrated GST through "irrelevant" products. These products had allowed suppliers to claim higher tax credits, so the rule was introduced to combat the issue.

Exporters have sought a one-time amnesty scheme to resolve issues arising from a provision in the goods and services tax (GST) rules that seeks to shield government revenues from traders who claimed refunds under integrated GST (IGST) through what authorities have termed 'irrelevant' products.

In a letter to Central Board of Indirect Taxes and Customs (CBIC) chairman Sanjay Kumar Aggarwal, the PHD Chamber of Commerce and Industry requested the body to address IGST refunds paid on exports under Rule 96(10) of the central GST rules. 

Explaining that exporters were claiming IGST refund under provision for excess GST paid, the chamber said: "In cases of exports made on payment of IGST, the exporters claimed refund of IGST with the bona fide understanding that they are entitled to claim refund."

As per the letter, several exporters received recovery notices flagging their ineligibility in case of exports made on payment of IGST, leading to litigation.

"Hence, validity and legality of Rule 96(10) of the CGST Rules was challenged before the various high courts,"' it said, adding that several grounds for challenge to constitutional validity remain open and the issue is sub-judice before various high courts.

This is hindering exporters' ability to "conduct business with certainty and efficiency" and any delay in providing relief would have a "critical and continuous impact on several industries in India", it argued.

"Exporter community is up for a long drawn legal battle... The lack of clarity and retrospective amendments in Rule 96(10) have created irreparable damage of the Indian exporter community," said PHD Chamber of Commerce and Industry CEO and secretary general Saurabh Sanyal in a letter dated July 4.

[The Economic Times]