In a major relief to Wipro GE Healthcare Private Limited, the Karnataka High Court allowed their refund claim of around 20 crores paid as Central Sales Tax (CST) for the period covered by Foreign Trade Policy for the year 2009-2014.
The petitioners, M/s. Wipro GE Healthcare Private Limited purchased goods from the Industries situated in Domestic Tariff Area (DTA) and from the Export Oriented Units situated in EOUs/SEZs/EHTP/STPI specified Zones or areas. As per the Foreign Trade Policy for the year 2009-2014, the reimbursement of CST was allowed to the petitioner – Company, in so far as the goods purchased from Domestic Tariff Area (DTA) Units (other than specified SEZs/EOUs/EHTP/STPI areas).
The petitioners 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. However, the claim was denied by the Department.
Aggrieved by the action of the department, the petitioner-Company approached the High Court seeking a direction to the Respondents to allow the pending claims amounting to apprx. Rs.20 crores to the petitioner along with appropriate interest under the respective FTPs with respect to Reimbursement of the CST paid on the goods procured from other EOU Units/SEZs as per para.6.12/6.11 of the relevant Export-Import Policy/Foreign Trade Policy as applicable.
The petitioners relied on several decisions of the High Courts wherein it was held that reimbursement of CST for the period covered by the Foreign Trade Policy for the year 2009-2014 cannot be denied to the petitioner – Company.
The department, on the other hand, strenuously contended that the goods manufactured by an EOU were not treated as goods manufactured in India, they were not amenable to excise duty. The contended that as per para.6.12/6.11 of the relevant Export-Import Policy/Foreign Trade Policy EOU cannot seek reimbursement of CST qua supplies received or purchases made from a unit other than a DTA unit.
Overruling the contentions of the department, Justice Vineeth Kothari observed that an EOU is a unit, which undertakes to export its entire production of goods and services under the relevant EOU Scheme. “Therefore, clearly, these are goods, which are manufactured in India. The production of such goods is, however, incentivised, under the relevant EOU Scheme only to promote exports, in order to enable generation of foreign exchange for the Country.”
The Court accepted the claim of the Company and held that the 2009 FTP did not disentitle the respondent company/Writ Petitioner from claiming reimbursement of CST. “The fact that the relevant provisions of the two FTPs have not undergone a change and, that, a change has singularly been effected only in the Appendix 6H in the Hand book of Procedures, which is, formulated by the DGFT would have us, hold, that it can only be clarificatory in nature and, therefore, ought to have retrospective effect.”
It further opined that there is no justifiable reason for the department to deny refund 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.”
Read the full text of the Judgment below.
