NEW DELHI: Exporters facing huge demand from the department of revenue intelligence (DRI) may get respite as Gujarat High Court agrees to review its order related to restrictions imposed on them from a retrospective date. The reconsideration by Gujarat High Court with respect to retrospective amendment will be of significant help to exporters who face massive challenges in terms of demand of both taxes and interest.
More than hundred exporters are in the process of filing writ petition as the court ruled that the exporters can claim the benefit of only one scheme out of the five schemes prescribed by the Government. With the implementation of retrospective amendment, the exporters can benefit from Advance Authorization Scheme under which they can import goods without paying customs duty and IGST. Hence, the issue of blockage of working capital will be addressed for such exporters.
Gujarat High Court in 2020, had pronounced an order in case of Cosmo Films, after which there was a debate, whether the restrictions would be made applicable to the exporters with a retrospective date. Gujarat High Court, hearing the review petition, expressed categorically that it needs to re-look into the retrospective amendment and it apparently appears that the restrictions will be only prospective in terms of the notification 54 of 2018. This will result in getting huge demands dropped for the Indian exporters who are struggling with litigation at multiple stages.
Arguing on behalf of the exporters, Abhishek A Rastogi, founder of Rastogi Chambers, explained chronology of dates to the court to emphasise that the retrospective applicability is illegal. Rastogi further argued that industry will get relief in case this court addresses the interest issue. On the basis of proportionality, Rastogi explained to the court that the restriction does not have a legitimate aim and no rational connection with the object sought to be achieved. Hence, the entire restriction on exporters must be looked into from the perspective of public interest for which these schemes were introduced, subsequent to the recommendation of the GST Council.
It may be recalled that in October 2017, a controversy arose when exporters were denied the rebate option due to importers claiming benefits under schemes like the Advance Authorisation Scheme. The constitutional validity of these schemes was questioned, and the Gujarat High Court seems to hold that the benefit cannot be retroactively denied.