If an importer has paid higher tax can he get a refund after finding his own mistake? About 25 importers are fighting the tax department in the Supreme Court after their customs refund was stuck.
The companies while importing the products had paid 12% Goods and Services Tax when they were required to pay only 6%. Realising their mistake they applied for a refund few later only to be denied.
The tax department claims that refunds cannot be granted unless the assessment order is challenged. In none of the cases the tax department has issued assessment order. An assessment order is similar to a notice issued by the tax department after a tax officer scrutinises the company and a particular transaction.
Tax experts say that the tussle between the tax department and the importers over a technicality in the law has impacted several importers. As per the tax department the importers cannot conduct a “self-assessment” in the situation.
“The issue is that the revenue department claims that refunds cannot be granted unless assessment order is issued and challenged but in most cases of refund there is no assessment order.
This has led to several importers’ refunds being stuck and now clarity would only come after the Supreme Court decision,” said Abhishek A Rastogi, Partner at Khaitan & Company, who represents one of the importers.
The case reached the SC after the Customs department challenged an earlier ruling of November 2017 by Delhi High Court.
Importers and exporters have come in cross hairs with the tax department on several occasions under the GST framework. The exporters recently got reprieve from ‘pre-import’ condition.
Earlier this month the Gujarat High Court allowed exporters to claim tax exemption on imported raw material even if the finished products have already been shipped out.