Consider GST Relief On COVID Imports Purchased For Donations To States: Delhi High Court To Delhi Govt., GST Council

The Delhi High Court on Thursday (May 27) asked the Centre to place the facts of a case, before the GST Council, wherein the lack of GST exemption on imports of COVID-19 relief materials by corporate entities purchased for donations to States was challenged.

Also, the Bench of Justice Rajiv Shakdher and Justice Talwant Singh asked the Delhi Government as to whether it would be possible for it, to issue a notification granting refunds of GST paid on imports of such supplies.

The Court was hearing a plea filed by International Cargo Terminals And Rail Infrastructure Pvt. Ltd which had imported oxygen cylinders and regulators from foreign and thereafter, donated them to the Delhi government for free distribution to the people, however, it had to remit GST on such imports.

While Oxygen regulators attract an IGST of 5%, the cylinders and the rakes for carrying the regulators are liable to 18% IGST.

The matter before the Court

The plea has challenged the Centre's exclusion of such imports from the 'Ad hoc Exemption from IGST on imports of specified COVID-19 relief material donated from abroad.'

The plea argues that when corporate entities purchase oxygen cylinders and regulators and pass it on the state government 'for free' i.e., donated to State-approved entities for free distribution, yet they have to remit GST on such imports. However, on the other hand, if a state or its agencies/instrumentalities import the same items, they don't have to remit GST.

Further, submitting that there is 'no intelligible' difference between the firm's efforts to import oxygen cylinders or any other 'authorized person'/state/its instrumentalities doing so, the petition argues that in both the cases, ultimately benefit accrues to the government for helping the common people and thus there appears no purpose to pay GST.

Thus, maintaining that the conditions for getting the exemption are 'arbitrary and onerous', the plea states that this defeats the purpose of 'One Nation, One Tax', as Gujarat and Haryana states have already notified that the GST on critical COVID-19 imports will be reimbursed to domestic entities, who are importing material for free donation in its jurisdiction.

The plea also states that there was no notification issued by the Delhi Government on the lines of the notification issued by the Gujarat and Haryana Government.

In response to this, the Court directed:

"The Delhi government's counsel will revert with instructions as to whether it would be possible for them 'to issue a notification, on the same lines, as has been done by the State of Haryana and State of Gujarat'.

[With inputs from Abhishek A. Rastogi, Partner at Khaitan & Co, arguing counsel and 'The Hindu']

In related news, the Delhi High Court last week held that the imposition of IGST on the import of oxygen concentrators by individuals for personal use is unconstitutional.

The High Court had reserved an order in the 85-year-old's plea challenging the levy of IGST on the import of oxygen generators as gift for personal use to India.

The petitioner challenged a notification dated 01.05.2021 issued by the Ministry of Finance stating that it would force payment of IGST of 12% on the oxygen concentrator, which was accordingly quashed by the High Court on Friday.

Also Read: "This Is A George Floyd Moment For Citizens Of This Country": Delhi HC Strikes Down IGST Imposition On Oxygen Concentrators Imported By Individuals

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