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Cus - Export of non-basmati rice - Notification 20/2023 insofar as it denies the benefit of the transitional arrangement as contained in para-1.05 of the FTP 2023, is bad in law: HCCus - Refund of SAD - 102/2007-Cus - Areca Nut and Supari are one and the same - Objections with regard to name, nature and status of importer or buyers or the end use of goods purchased by them etc. are extraneous: HCCX - Interest on Refund - Since wrong order annexed by petitioner in paper book, Bench is unable to proceed further - Petition is dismissed with liberty to file a fresh one: HCGST - No E-way bill - When petitioner imports machinery and after Customs clearance, transports same to his own factory, it cannot be said that such a transportation would fall within the definition of term 'supply' - Penalty imposable under second limb of s.129(1)(a): HCGST - Fix responsibility on officers who allowed BG to lapse - Petitioner not justified in not renewing BG - Cost of Rs.15 lacs imposed, to be paid to PM Cares Fund: HCGST - Since the parties agree that petition can be disposed of on the basis of records available before Appellate Authority, petitioner is directed to enclose all documents filed before Appellate Authority in a compilation, in form of a paper book: HCWrong RoadST - Whether any service is used for personal consumption or not is certainly question of fact and being question of fact, no substantial question of law arises: HCGovt proposes to amend Geographical Indication of Goods Rules; Draft issued for feedbackST - If what has been paid as tax is without authority of law, Revenue should refund the same - Denial of credit would result in the whole exercise being tax neutral: HCWarehousing Authority notifies several agri goods to be stored in only registered warehousesST - Even if the petitioner may have a case on merits, it is best left to be decided by the Appellate Authority under the hierarchy prescribed under the FA, 1994: HCUS FDA okays Eli Lilly Alzheimer’s drugGST - Petitioner challenges jurisdiction of assessing officer - Petitioner is entitled to file an appeal u/s 107 by availing an alternate efficacious remedy: HCFive from Telangana killed in car accident on Pune-Solapur HighwayGST - Existence of an alternative remedy is a material consideration but not a bar to the exercise of jurisdiction: HCHush money case against Donald Trump - Sentencing deferred to Sept 18GST - It is open to a trader to take goods by whichever route he opts, unless the law otherwise requires, destination point being intact: HCDeadly hurricane Beryl smashes properties in JamaicaGST - Conclusion that taxable person is providing a service to supplier while taking the benefit of a discount by facilitating an increase in the volume of sales of such supplier is ex facie erroneous and contrary to the fundamental tenets of GST law: HCIsrael claims 900 militants killed in Rafah since May monthGST - Order expressly records that personal hearing notice was returned with endorsement 'no such person at address' - Since petitioner has shifted to a new premises, it is just and necessary to provide an opportunity to contest demand: HC116 die in stampede at UP ’Satsang’I-T- Application for revision of order dismissed in limine on grounds of delay; case remanded for re-consideration: HCWe are deepening economic ties with India, says US officialI-T- As per Section 119(2)(b), power to condone applications relate to claims for amount exceeding Rs 50 lakhs are to be considered by CBDT; however it is impermissible for CBDT to pass order on merits: HC8 Dutch engineers build world’s longest bicycle - 180 feet, 11 inchesI-T- Additions framed u/s 68 for unexplained income & u/s 69 for unexplained expenditure not tenable where complete transactional details are furnished & not doubted: HCRailways earns Rs 14798 Crore from Freight loading in June monthI-T- Delay in filing ITR is per se insufficient reason to estimate assessee's profit @15% on turnover, more so where audited financial report is filed in timely manner: ITATMoD inks MoU to set up testing facilities in Unmanned Aerial System in TN Defence Industrial CorridorI-T- For invoking section 69A, assessee should be found to be owner of any money, bullion, jewellery or other valuable article & which is not recorded in the books of account: ITATGovt proposes Guidelines for ethical approach to Coal MiningI-T- TDS credit can be allowed based on AIS, where details pertaining to TDS, advance tax & other payments are reflected in Form 26AS: ITATVaishnaw to inaugurate Global IndiaAI Summit 2024I-T- Lending money with the primary intention of earning interest can be considered a business activity, but nature and manner of lending, as well as the frequency, should be taken into account: ITAT
 
No Legal Provision To Levy Integrated Tax on imported goods: Unbelievable But True

FEBRUARY 07, 2018

By R K Singh, Member, CESTAT (Retd.)

IT has come to be accepted that integrated tax as defined in section 2(12) of the IGST Act 2017 is leviable on the goods imported into India. However, as will be demonstrated in the following paragraphs, a closer scrutiny of the provisions of law in this regard leaves no doubt that there is indeed no legal provision to levy integrated tax (as defined in S.2(12) of the IGST Act) on the goods imported into India and the convoluted drafting of the legal provisions in this regard has resulted in this unintended consequence.

2. The general belief that integrated tax (as defined in S.2(12) of the IGST Act) is leviable on goods imported into India seems to arise on the basis of the following legal provisions :

(i) Subsection (2) of section 7 of the IGST Act (which states that supply of goods imported into the territory of India till they cross the customs frontiers of India shall be treated to be supply of goods in the course of interstate trade or commerce); and

(ii) Proviso to subsection (1) of section 5 of the I GST Act.The said subsection (1) along with the proviso thereto is reproduced below:

S. 5. (1) Subject to the provisions of sub-section (2), there shall be levied a tax called the integrated goods and services tax on all inter-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 of the Central Goods and Services Tax Act and at such rates, not exceeding forty per cent., as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person:

Provided that the integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 on the value as determined under the said Act at the point when duties of customs are levied on the said goods under section 12 of the Customs Act, 1962.

It is evident from the above-quoted proviso that the integrated tax (as defined in S.2(12) of the IGST Act) is to be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975. The relevant portion of the said section 3 is reproduced below :

Section 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges –

(1) Any article which is imported into India shall, in addition, be liable to pay duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article :

***** ****

(7) Any article which is imported into India shall, in addition, be liable to integrated tax at such rate, not exceeding forty per cent as is leviable under Section 5 of the Integrated Goods and Services Tax Act, 2017 on a like article on its supply in India, on the value of the imported article as determined under sub-section (8).

 

******** *********

3. The term "integrated tax'is not defined under the Customs Tariff Act 1975 and it is well settled that the definition of a term given in one Act cannot be automatically read into another Act. However there is a general belief that the integrated tax mentioned in subsection (7) of S.3 of the Customs Tariff Act is the same as the integrated tax (as defined in S(. 2(12) of the IGSST Act) and is levied under the authority of the said Act (i.e. IGST Act). This belief is legally untenable and totally incorrect for the following reasons:

(i) Section 2(12) of IGST Act in effect states that "In this Act , unless the context otherwise requires, integrated tax means the integrated goods and service tax levied under this Act.' This clearly means that the said definition of integrated tax is applicable only to IGST Act.

(ii) Integrated tax as defined in section 2 (12) of the IGST Act is to be levied under the authority of IGST Act while the integrated tax mentioned in S. 3(7) of the Customs Tariff Act is levied in terms of that subsection under the authority of the Customs Tariff Act 1975 and not under the authority of the IGST Act 2017. As per the proviso to Section 5 (1) of the IGST Act, integrated tax as defined in section 2 (12) of the IGST Act on the goods imported into India is to be levied and collected in accordance with the provisions of Section 3 of Customs Tariff Act. But there is no provision in Section 3 of the Customs Tariff Act to collect integrated tax (as defined in section 2 (12 of the I GST Act) in pursuance of the said proviso or otherwise . It becomes even more obvious from the fact that the levy of the integrated tax mentioned in subsection (7) of section 3 of the Customs Tariff Act is totally independent of the proviso to section 5(1) of the IGST 2017. In other words, the integrated tax mentioned in subsection (7) of section 3 of the Customs Tariff Act would be leviable even if the proviso to subsection (1) of section 5 of the IGST Act did not exist.The point being made is that the integrated tax leviable under Subsection (7) of Section 3 of the Customs Tariff Act is NOT the integrated tax leviable under the IGST Act or because of the said proviso to Section 5(1) of the IGST Act.

(iii) Section 3 (7) of the Customs Tariff Act makes a reference to the IGST Act, 2017 only for the purpose of determining the rate of tax to be applied to levy tax under that subsection (i.e. subsection (7) of section 3 of the Customs Tariff Act).

(iv) The wordings of sub-section (1) and sub-section (7) of section 3 of the Customs Tariff Act are similar in the sense that just like sub-section (1) levies duty equal to excise duty leviable on a like article, subsection (7) levies tax at the rate as applicable to a like article under section 5 of the IGST Act. It deserves reiteration that the reference to IGST Act in sub-section (7) of section 3 of the Customs Tariff Act is only for the purpose of determining the rate of tax. It is pertinent to mention here that the duty leviable under section 3 (1) of the Customs Tariff Act is not treated to be excise duty and it was for this technicality that in Rule 3(1) of the Cenvat Credit Rules, apart from the duties of excise, the additional duty leviable under section 3 of the Customs Tariff Act was specifically included in the list of duties eligible for cenvat credit. If the additional duty leviable section 3(1) of the Customs Tariff Act was to be treated as excise duty, there was no need to specifically include the additional duty equal to excise duty leviable under section 3 of that Act in the list of duties eligible for cenvat credit. Exactly, similarly, the integrated tax mentioned in subsection (7) of section 3 of the Customs Tariff Act cannot be treated as integrated tax as defined in section 2 (12) of the IGST Act.

It is thus clear that the integrated tax on an imported article under subsection (7) of section 3 of the Customs Tariff Act is levied under the authority of the Customs Tariff Act and is not the "intergrated tax' as defined in section 2 (12) of the IGST Act nor is it levied under the authority of the IGST Act.

4. From the foregoing paragraphs, it is obvious that although proviso to sub-section (1) of S. 5 of the IGST Act stipulates levy and collection of integrated tax (as defined in section 2 (12) of that Act) in accordance with the provisions of section 3 of the Customs Tariff Act, the said section 3 (of the Customs tariff Act) is conspicuously devoid of any corresponding provision to operationalise the same.

5. The sum total of what has been demonstrated in the preceding paragraphs is that (i) the integrated tax mentioned in sub-section(7) of section 3 of the Customs Tariff Act is levied under the authority of the Customs Tariff Act and that integrated tax (levied under S. 3(7) of the Customs Tariff Act) is not the integrated tax as defined in section 2 (12) of the IGST Act nor is that tax levied under the authority of the IGST Act, and (ii) there are no provisions of law, the combined reading of which, would give rise to an authority to levy and collect integrated tax (as defined under section 2 (12) of the IGST Act) on the imported goods.

Q.E.D

[P.S: The aforesaid analysis applies mutatis mutandis to the cess levied under section 3(9) of the Customs Tariff Act vis-à-vis the cess leviable under the GST (Compensation To States) Act, 2017.]

(The views expressed are strictly personal.)

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

 


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: Not correct

As long as there is no doubt about legislative competence to levy IGST on the imported goods, whether it is done under Customs Tariff Act or IGST Act would not matter. Legislative authorisation to collect IGST on the imported goods in the manner provided in the Customs Tariff Act is only a machiniery provision. Primary authority for collection of IGST on the imported goods would be IGST Act itself. It is a matter of administrative convenience that IGST on imported goods is collected at the time of customs assessment.

Posted by Gururaj B N
 

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