The Delhi High Court (HC) was dealing with a petition from 85-year-old Gurcharan Singh whose nephew abroad had gifted him an oxygen generator. Oxygen generators donated to the governments and entities recognised by the government for free distribution are fully exempted from payment of IGST when imported whereas the same item when imported as gifts for personal use by individuals is subject to 12 per cent IGST. The Delhi HC found it discriminatory and violative of Article 14 of the Constitution that guarantees right to equality in the eyes of law.
The court also said that in exceptional times like the ongoing pandemic, the courts must examine the stand taken by the State on the anvil of Article 21 (right to life). For exempting IGST on imported goods, the court held that the recommendation of the GST Council is not required. The High Court quashed the notification bringing down from 28 per cent to 12 per cent, the IGST rate on import of oxygen generators gifted to individuals for personal use and held that Entry No. 607A of Notification 50/2017-Cus dated June 30, 2017 includes oxygen concentrator within the ambit of ‘life-saving drugs/medicines for personal use’.
While granting the stay on the said judgment, the Supreme Court took note that following the decision of the GST Council on May 28, the finance ministry had constituted a Group of Ministers (GoM) to look into all the issues relating to levy of GST on Covid-related vaccines, medicines and medical equipment. Hopefully, the GoM will give its findings by June 8 and the GST Council will take suitable decisions soon.
Among the many notifications issued to give effect to the decisions of the GST Council, a welcome relief relates to charging interest on net tax liability with effect from July 1, 2017. However, many taxpayers have already paid interest on gross tax liability on the basis of the law as it existed and the Telangana HC judgment in the case of Megha Engineering and Infrastructure Limited Vs. C.C.T. [2019 (26) G.S.T.L. 183 (Telangana)]. They can file their refund application by filing RFD-01. However, it is better if the finance ministry clarifies this matter.
Another relief granted is the reduction of the GST rate from 18 per cent to 5 per cent for maintenance, repair or overhaul (MRO) services in respect of ships and other vessels, their engines and other components or parts. The idea is to encourage and help the MRO industry become globally competitive. The MRO service providers can take input tax credit.
The GST Council has been sympathetic to the compliance difficulties faced by the taxpayers during the pandemic. Hopefully, the GoM will be compassionate to the people struggling to cope with Covid-19.
Email: tncrajagopalan@gmail.com
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