By TIOL News Service

BENGALURU, AUG 08, 2017: THE controversy in the present petition is that the petitioner claimed reimbursement of Central Sales Tax (CST) paid by it on the purchases of Medical Equipments from "other" suppliers in the course of inter-state Trade and Commerce, in terms of the provisions made in the relevant Foreign Trade Policy for the year 2009-2014.

The petitioner purchases these goods from two sources, (i) from the Industries situated in Domestic Tariff Area (DTA) and (ii) from the EOU Units situated in EOUs/SEZs/EHTP/STPI specified Zones or areas.

While in the said Foreign Trade Policy, the reimbursement of CST was allowed to the petitioner, insofar as the goods purchased from Domestic Tariff Area (DTA) Units (other than specified SEZs/EOUs/EHTP/STPI areas), the said benefit of reimbursement was denied by the Respondent.

The said distinction about the source of purchase from two types of Units was done away with by the Union of India in the next Foreign Trade Policy for the year 2015-2020, but for the period in question, covered by the Foreign Trade Policy for the year 2009-2014, the same was denied by the Respondent under various impugned Circulars and communications.

The petitioner is, therefore, before the Karnataka High Court and seeks to draw attention towards the recent decisions (as under) holding that reimbursement of CST for the period covered by the Foreign Trade Policy for the year 2009-2014 cannot be denied to the petitioner.

++ M/s Hospira Health Care India Pvt. Ltd. judgment dated 14/06/2017  =  2017-TIOL-1341-HC-MAD-CUS

++ M/s. Samsung India Electronics Pvt.Ltd. judgment dated 18/07/2017 =  2017-TIOL-1430-HC-ALL-CX

++ M/s Asahi Songwon Colors Ltd. judgment dated 06/07/2017 =  2017-TIOL-1456-HC-AHM-MISC

The ASG appearing for the Respondent could not raise any other additional or different point to persuade the Court to take a different view and no contrary view of any other High Court was also brought to the notice of the Court.

The High Court after considering the submissions observed -

+ There is no justifiable reason for the Respondent - Authority to deny such benefit of CST reimbursement to the petitioner - Company merely because the goods in question are purchased from a Unit situated in EOUs/SEZs/EHTP/STPI specified Zones or areas and deny the said benefit merely because the Units are located in EOU/SEZ area. Irrespective of the location of the Manufacturing Units selling such products to the petitioner - Company in the course of inter-state Trade and charging CST, the goods continue to be the "Goods manufactured in India" which is the requirement in the said Foreign Trade Policy for entitling the petitioner - Company to claim such reimbursement of CST paid under the Central Sales Tax Act, 1956.

+ Moreover, the specific amendment in the said Foreign Trade Policy for the year 2015-2020 removed the said anomaly and discrimination as to the source of Units from which the petitioner may purchase such goods in the course of inter-state trade and commerce and the said amendment can be treated only as a clarificatory one and can be applied to the previous period also as held by the aforesaid Division Bench decisions by the three different High Courts.

The petitions were allowed and the impugned Circulars and communications as indicated in the prayers of these petitions were quashed.

The Respondents were directed to process expeditiously (within a period of three months) the CST reimbursement/refund to the petitioner - Company in respect of the inter-state purchases made by it from the Units located in EOUs/SEZs/EHTP/STPI specified Zones or areas for the period in question, covered by Foreign Trade Policy of 2009-2014.

(See 2017-TIOL-1500-HC-KAR-CT)