State GST Cannot Assess IGST on Imports, Rules High Court

The petitioners, Avanti Feeds Limited and its Managing Director, are engaged in the manufacture of aquatic feed and regularly import inputs such as fish meal and nutritional additives. They had claimed IGST exemption on certain imported goods for several assessment years from 2017-18 to 2022-23. Although the petitioners were administratively under Central GST jurisdiction, proceedings were initiated by the State GST authorities, who issued an intimation under Section 73(5) of the APGST Act disputing the exemption claims and classification of imported goods.

The petitioners challenged the show cause notice dated 10.04.2023 on the ground that State GST authorities did not have jurisdiction to assess IGST on imported goods, as IGST on imports is levied and collected under the Customs framework. They also argued that the authorities relied on Circular No. 80/54/2018-GST, which had already been struck down by the Madras High Court and therefore could not be relied upon.

Central Issue: The court was asked whether State GST authorities could initiate proceedings and assess IGST on imported goods, particularly when the taxpayer was under Central GST jurisdiction.

HC’s Ruling: The High Court allowed the writ petition and set aside the impugned notice. The Court held that State GST authorities had no jurisdiction to assess or recover IGST on imported goods, as such levy and collection fall within the domain of Customs authorities under the statutory scheme. The Court further clarified that cross-empowerment provisions under GST laws do not allow State officers to initiate proceedings against taxpayers assigned to the Central jurisdiction. It was also noted that parallel proceedings were not permissible once Customs authorities had already examined the matter.

The Court additionally observed that the impugned circular relied upon by the department had already been struck down and that the notice was defective as it covered multiple assessment years in a single proceeding. However, liberty was granted to the competent authorities to initiate fresh proceedings in accordance with the law.

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