PIL on Double Taxation Issue: Delhi HC Issues Notices to Govt, GST Council & CBEC

GST Rate

In a petition relating to double taxation issue on imported goods sold from one Customs-bonded warehouse to another, the Delhi High Court issued notices to the Union government, the GST Council and the Central Board of Excise and Customs (CBEC).

Recently, the CBEC had issued a circular clarifying that any supply of imported goods taking place before the goods crosses Customs frontiers of India should be treated as an inter-state supply and such transaction for sale and transfer would be subject to IGST. This is without prejudice to the levy of Customs duty and collection of duty at ex-bound stage.

Advocate Abhishek Rastogi, who appeared for the petitioners contended that raised fears of the government imposing integrated goods and services tax (GST) twice on these kinds of transaction.

He pointed out another issue that the company paying the taxes will not be able to get input tax credit. Suppose a company imports goods and keeps it in its Customs-bonded warehouse. It then sells it to another company which keeps the goods in its own bonded warehouse. The second company will have to pay Customs duty and integrated GST (IGST) twice. Also since the first company has not paid duties, the second one will not get the credit.

The matter listed for hearing on March 8.

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