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Companies seek refund after HC reaffirms Advance Authorisation benefit.

Date: 10-08-2022
Subject: Companies seek refund after HC reaffirms Advance Authorisation benefit
Several companies that were under scrutiny by the government for availing duty-free benefits granted through advance authorisation scheme are all set to approach the taxman for refunds following a court direction.

The Delhi High Court recently dismissed the government's review petition on an earlier order that had said that these benefits shouldn't be curtailed.

The government had filed a review petition on an earlier order to extend the benefit of Advance Authorisation Licences from July 1, 2017 till October 12, 2017 that is till the time IGST exemption was officially notified by the government.

Advance authorisation is a scheme whereby a company can import raw materials without paying duties on that if it can demonstrate that these raw materials are to be used in a final product that will eventually be exported. The tax department had rejected several claims for companies. The recent order could benefit the companies, say legal experts.

"This will provide relief to a lot of those importers who may have taken the benefit and would have got the demands," said Abhishek A Rastogi, partner at Khaitan & Co, who was representing some companies in the case. "There is also an option to claim back refund as the court has now decided in favour of the importers claiming Advance Authorisation benefits."

Companies take licences to avail certain benefits of government schemes such as Advance Authorisation and Export Promotion for Capital Goods, among others. In most cases, the tax department is seeking that exporters and the companies cough up the GST on the licence amount paid to the government.

The government was giving the benefits before the GST was introduced in 2017. However, after GST was introduced, exporters no longer got complete exemptions on imports. This meant that the exemption was not available against IGST paid when goods were imported.

Many companies had approached the Delhi High Court in this regard. The court extended the benefits of upfront duty exemptions on import of goods under the licence to IGST as well.

"The entire benefit in the earlier regime was granted so that the Indian importers do not face the hassle of working capital and this aspect may be useful for several other petitions under this regime," said Rastogi.

Source Name:-Economic Times

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