Relief for Sikkim: Likely duty waiver by GST Council for warning system

The exemption would be valid for imports made up to the end of February 2024, a source familiar with the matter said

Amidst the Sikkim flash flood, the Goods and Services Tax (GST) Council, during its Saturday meeting, is likely to waive Customs duty and integrated GST on the import of high-tech instruments used to set up an early warning system in the state, aimed at mitigating the risk of future disasters.

The exemption will be valid for imports made until February 2024, according to a source familiar with the matter. This decision follows a request from the Ministry of Home Affairs’ Disaster Management Division for an ad hoc exemption regarding the import of instruments required for implementing a pilot project on Glacial Lake Outburst Flood (GLOF) risk in Sikkim.

The National Disaster Management Authority is collaborating with the Swiss government on a pilot project focused on GLOF risk, wherein it receives goods as a grant from its Swiss counterpart.

The team will be installing early warning system equipment at two locations in Sikkim, with the expressed aim of building capacity among states and Union Terri­tories concerned to address this emerging challenge in disaster management.

However, the current value and duty on the imported equipment used in such a system could not be ascertained.

On October 4, a cloudburst led to a flash flood in North Sikkim, resulting in the loss of at least 14 lives and the disappearance of 100 others. A flood caused by a glacial lake outburst, or GLOF, typically inflicts more destruction and harm than one caused by torrential rain. An early warning system could provide people with some evacuation time.

According to a Reuters report, the first phase of the system, including a camera to monitor Lhonak Lake’s level and weather instruments, was installed last month, as confirmed by an official involved in the project. The report stated that the Indian government had not been prepared to do it all in one go this year, so it was being executed as a two-step process. According to simulations conducted by scientists during the early warning system’s planning phase at Lhonak Lake, authorities and residents would have had a 90-minute warning time. This system would also have allowed a hydropower station to open its gates earlier. However, the camera lost power for an unknown reason in late September, according to a source at the Swiss embassy, which supported the project, as reported by the agency.

A circular regarding this matter will be issued once it is approved by the Council, as stated by the source quoted earlier. An ad hoc exemption is a special order exempting the payment of duty on goods for which duty is leviable, under circumstances of an exceptional nature specified in the order. This exemption is contingent upon the end-use of the imported goods and in compliance with the provisions of the Customs Act.

An undertaking to comply with these conditions must be submitted to the jurisdictional commissioner of Customs at the port of import to claim the benefits of the exemption.

A circular regarding this matter will be issued once it is approved by the Council, as stated by the source quoted earlier.