New Delhi, Feb 5 (KNN) In a landmark decision, the Gujarat High Court has allowed exporters to claim tax exemption on imported raw material even if the finished products have already been shipped out.

Under the pre-GST regime, exporters were allowed to claim tax exemption on imported raw material but post-GST regime, the pre-import condition has been imposed to be followed by exporters holding advance authorisation licences.

Because of this, exporters importing duty-free items under Advance Authorization Licences have been going through unfair and undue hardships.

The CBIC notification dated October 13, 2017 prescribed certain conditions, which denied benefits to exporters who import input goods after their finished products are exported. This notification was challenged in the High Court.

Giving the verdict in the favour of exporters, Gujarat High Court struck down the October 2017 notifications of the Central Board of Indirect Taxes & Custom (CBIC) and correspondingly by the Directorate-General of Foreign Trade (DGFT) prescribing pre-import conditions to avail IGST (Integrated Goods and Services Tax) exemption for imports under Advance Authorisation.

The court struck down the ‘pre-import’ condition on Monday, said Abhishek A Rastogi, a partner at Khaitan & Co., who represented the exporters in the case.

Though, the Finance Ministry had issue another notification in January this year to remove pre-import condition and include specified deemed export supplies for exemption from integrated tax and compensation cess for materials imported against Advance Authorisations and Advance Authorisations for Annual Requirement.

However, this relief was given prospectively while demand was to allow relief from October 2017 itself.

The petitioner continued challenging the issue in high court and Gujarat High Court declared that the exporters are allowed to claim tax exemption on imported raw material even if the finished products have already been shipped out.