The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the same tax rate applicable on Integrated Goods and Service Tax (IGST) in the course of inter-state trade and supplies in the course of imports.
The bench of Justice Mr. Dilip Gupta (President) and P.V. Subba Rao (Technical Member) has observed that Additional duty of Customs is levied on the act of importation or the act of exportation under the Customs Tariff Act, 1975 in exercise of the powers under Article 246 read with entry 83 of List I (Union List) of the Seventh Schedule to the Constitution. IGST is levied on the supply in the course of imports under section 3 of the Customs Tariff Act, 1975 read with Section 5 of the IGST Act in exercise of the powers under Article 269 of the Constitution. While Additional duty of Customs gets credited to the Consolidated Fund of India and the divisible pool of tax revenues divided between the States and Union as per the recommendations of the Finance Commission, IGST does not get credited to the Consolidated Fund of India and gets divided between the State and Union as decided by the Parliament on the recommendations of the GST Council.
The appellant/assessee had imported and cleared goods using 13 Advance Authorisations without paying either the basic customs duty or the integrated goods and services tax on them. The Directorate General of Revenue Intelligence4 investigated the matter and found that while the appellant had correctly availed exemption from BCD, it had wrongly claimed exemption from IGST because exemption from IGST under the scheme was available subject to “actual user‟ condition which the appellant had, undisputedly, not fulfilled.
The appellant had paid IGST on the imported consignments with interest. Thereafter, DRI issued a show cause notice which culminated in the order.
The appellant does not contest that it was liable to IGST and had incorrectly claimed the exemption and therefore, it paid the IGST on being pointed out by DRI.
The only contention is that although it had paid IGST with delay, it was not liable to pay any interest on the ground that IGST is an Additional Duty of Customs levied under section 3 of the Customs Tariff Act, 1975 and the provisions of interest do not apply to Additional Duty of Customs.
The undisputed legal position is that if there is delayed payment of IGST under Section 5 of the IGST Act, interest is payable. Section 20 of IGST Act, 2017 made several provisions of the CGST Act applicable to IGST including section 50 of CGST Act, 2017 which provides for interest. There is no reason to treat IGST paid on goods supplied in the course of international trade differently than the IGST paid on inter-state supply of goods. If there is delay in payment of IGST, interest as per Section 50 of the CGST Act, 2017.
The tribunal while allowing the appeal held that the Commissioner did not apply the rate of duty applicable under section 50 of the CGST Act as made applicable to IGST through section 20 of the IGST Act. Instead, he confirmed interest as applicable under section 28AB of the Customs Act. The demand of interest needs to be set aside.
Case Details
Case Title: M/s JLC Electromet Private Limited Versus Commissioner, Customs, Jodhpur, Headquarters Jaipur
Case No.: CUSTOMS APPEAL NO. 50595 OF 2024
Date: 17.04.2025
Counsel For Appellant: Yash Dhaddha
Counsel For Respondent: Rajesh Singh
