The Gujarat high court has struck down the constitutional validity of a provision under the goods and services tax (GST) that restricts utilisation of advance authorisation licenses. These licenses entitle the holders to import goods duty free for the purpose of exports.
Earlier, the government had restricted the use of these licenses by imposing condition of “pre imports” which meant that these licenses were only valid if goods had been imported. This also meant that licenses could only be used for only those lots of exports for which imports were made and not afterwards. This condition did not exist in the pre-GST regime.
Based on the pre-import condition, the directorate of revenue intelligence (DRI) had issued notices to exporters which have used the licenses but have not so far imported goods. This infuriated exporters as they said the new restrictions defeat the very purpose of the licenses.
Appeals were also filed in the Punjab and Haryana high court, Madras high court, Odisha high court among others.
However, the Centre lifted the conditions from the prospective effect or from January 10 2019 onwards. The condition of pre-import was effective from October 13, 2017.
