The recent Stay Order passed by the Gujarat High Court in the case of Raajratna Ventures Limited v. Union of India, 2019-TIOL-2911-HC-AHM-CUS.

Background

In the case of Maxim Tubes Company Private Limited v. UOI, 2019-TIOL-459-HC-AHM-CUS (‘Maxim Tubes’), the Gujarat High Court struck down the pre-import condition in Advance Authorisation scheme as ultra vires the Foreign Trade Policy (Please refer trail mails for our detailed updates on this issue). The revenue challenged this decision before the Supreme Court and the Apex Court stayed the operation of the judgment. Subsequently, the revenue had issued Show Cause Notice (‘SCN’) to various taxpayers and demanded IGST for violation of the pre-import condition.

Decision in this case

In this case, the Petitioner had challenged SCN issued by the department and contended that an order keeping the judgment of lower Court or authority in abeyance, will not deface the reasoning of the judgment in the case of Maxim Tubes. Unless a contrary judgment is passed by the Supreme Court, no action can be initiated for violation of pre-import condition in light of the judgment of Maxim Tubes. The Court agreed with petitioner’s reasoning and granted an ad-interim relief with a direction to the revenue not to take any coercive action against the petitioner for recovery of any amount.

NITYA’s Comments: While this decision renders Stay Order of the Supreme Court otiose, the decision is favorable for the taxpayers. Taxpayers who are in receipt of SCN for recovery of IGST for violation of pre-import condition, can approach the jurisdictional High Court for stay of such SCNs.