The recent judgment of the Hon’ble Andhra Pradesh High Court in Avanti Feeds Ltd. v. Union of India, reported in 2026(4)TMI 361 -AP High Court, has generated considerable discussion among taxpayers, importers, departmental officers and indirect tax practitioners regarding the proper appellate mechanism applicable to disputes involving levy of Integrated Goods and Services Tax (“IGST”) on imported goods. Stakeholders have been particularly curious as to whether appeals in matters relating to IGST levied on imported goods would lie before the Goods and Services Tax Appellate Tribunal (“GSTAT”) or before the Customs, Excise and Service Tax Appellate Tribunal (“CESTAT”). Though the Andhra Pradesh High Court in Avanti Feeds did not directly examine or decide the issue relating to the appellate forum, the judgment conclusively held that Customs authorities functioning under the Customs Law are the proper authorities for levy, collection and assessment of IGST on imported goods. Based on the principles laid down in the said judgment, read together with the relevant statutory provisions contained in the IGST Act, the Customs Tariff Act and the Customs Act, this article seeks to examine and interpret the correct appellate mechanism applicable to disputes relating to IGST on imported goods.
2. The issue assumes considerable importance because IGST, though a levy imposed under the Integrated Goods and Services Tax Act, 2017 (“IGST Act”), is not independently assessed or collected in the case of imported goods through the ordinary GST machinery. Parliament consciously integrated the levy and collection of IGST on imported goods into the Customs legal framework. This unique statutory structure has therefore given rise to doubts regarding the proper appellate forum in disputes involving assessment, exemption, refund, recovery, valuation or classification relating to IGST on imported goods.
3. With regard to various disputes as above on inter-state supplies involving payment of IGST and intra-state supplies involving payment of CGST and SGST and disputes on import of services, the Goods and Service Tax Appellate Tribunal (GSTAT), established under Section 109 of CGST Act, 2017, is the proper appellate forum against the orders passed by the appellate authorities under Section 107 of the said Act.
4. The Hon’ble Andhra Pradesh High Court in Avanti Feeds Ltd., examined the interplay between the IGST Act, the Customs Tariff Act, 1975 and the Customs Act, 1962 in considerable detail. The Hon’ble High Court referred to the proviso to Section 5(1) of the IGST Act and observed that the levy and collection of IGST on imported goods is specifically routed through Section 3 of the Customs Tariff Act, 1975. The Court relied upon the judgment of the Hon’ble Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd, wherein the Supreme Court examined the scope and effect of the proviso to Section 5(1) of the IGST Act. The Supreme Court in Mohit Minerals observed that the proviso clarifies that integrated tax on imported goods is levied in accordance with Section 3(7) of the Customs Tariff Act and that valuation is undertaken under Section 3(8) of the Customs Tariff Act, read with Section 14 of the Customs Act, at the point when customs duties are levied under the Customs Act.
5. The Andhra Pradesh High Court in Avanti Feeds specifically observed as follows:
“15. The proviso to Section 5(1) was considered by the Hon’ble Supreme Court in the case of Union of India and Another vs. Mohit Minerals Private Limited.
The proviso to Section 5(1) of the IGST Act clarifies that the tax is levied on goods imported into India, in accordance with Section 3 of the Customs Tariff Act, 1975. The value is determined under the Customs Tariff Act at the point when the customs duties are levied in accordance with the Customs Act.
“16.Section 2(2) stipulates that assessment, under the Customs Act, would not only include, the determination of the duty, tax or other sums under the Customs Act or the Customs Tariff Act, but would also include the determination of such taxes, etc, in relation to any other law, where such liability is to be determined, with reference to the provisions of the Customs Tariff Act or under any notification issued under the Customs Act. In the present case, the rate of IGST and the quantum of IGST payable on the supply of goods, in the course of import of such goods, is to be done on the basis of the provisions of the Customs Tariff Act. Consequently, the assessment, for the purpose of IGST Act, would have to be conducted by the Customs Authorities and not the Authorities under the IGST Act………”
6. The High Court thereafter concluded in paragraph 19 as follows:
“19. In such circumstances, the inevitable conclusion, as to the authority who can levy and collect integrated tax, on goods being imported into India, for supply of such goods can only be the Customs officers under the Customs Act.”
7. Though the Andhra Pradesh High Court did not directly adjudicate upon the appellate mechanism applicable to disputes relating to IGST on imported goods, the reasoning adopted by the Hon’ble High Court regarding the proper authority for assessment becomes highly relevant while interpreting the statutory appellate mechanism. Once the levy, collection and assessment of IGST on imported goods are held to be governed by Customs authorities functioning under the Customs Act and Customs Tariff Act, the consequential appellate provisions applicable to such assessment proceedings would also require examination within the same statutory framework.
8. The statutory scheme governing IGST on imported goods clearly supports such an interpretation. Import of Goods and Services are treated under IGST law as inter-state supplies attracting IGST as per Section 7(2) and 7(4) of IGST Act, respectively. Section 5(1) of the IGST Act is the charging provision for levy of integrated tax on inter-State supplies within the country. However, the proviso to Section 5(1) creates a special mechanism for imported goods by specifically providing that integrated tax on goods imported into India shall be levied and collected in accordance with the provisions of Section 3 of the Customs Tariff Act, 1975 on the value determined under the said Act at the point when duties of customs are levied under Section 12 of the Customs Act, 1962. Therefore, the charging provision itself consciously shifts the operational mechanism for imported goods from the GST framework into the Customs framework.
9. The substantive levy of IGST on imported goods is contained in Section 3(7) of the Customs Tariff Act, 1975, which provides that any article imported into India shall, in addition, be liable to integrated tax at such rate as is leviable under Section 5 of the IGST Act on a like article on its supply in India. Thus, while the rate of tax flows from the IGST Act, the levy itself is effectuated through the Customs Tariff Act. Consequently, the levy becomes inseparably connected with Customs assessment proceedings undertaken at the time of importation.
10. The most crucial statutory provision governing the procedural and appellate framework is Section 3(12) of the Customs Tariff Act, 1975. Section 3(12) provides that the provisions of the Customs Act, 1962 and all rules and regulations made thereunder, including those relating to assessment, non-levy, short-levy, refunds, exemptions, interest, recovery, appeals, offences and penalties, shall apply to the duty, tax or cess chargeable under Section 3 as they apply in relation to duties leviable under the Customs Act. The language employed by Parliament is comprehensive and leaves little room for ambiguity that the machinery provisions of Customs law stand incorporated into the levy and collection of IGST on imported goods.
11. The incorporation of the term “appeals” in Section 3(12) of the Customs Tariff Act, assumes immense significance. Parliament consciously intended that disputes relating to IGST on imported goods should travel through the same adjudicatory and appellate hierarchy applicable to customs duties. Import-related disputes generally involve valuation, classification, exemptions, refunds, confiscation, penalties, non-levy, short-levy and recovery proceedings. All these issues arise within the customs assessment process itself. Therefore, fragmenting appellate jurisdiction between GSTAT and CESTAT would not only create jurisdictional confusion and procedural inconsistency but would also run contrary to the statutory framework consciously designed under Section 3(12) of the Customs Tariff Act.
12. The Customs Act, 1962 itself contains a complete appellate mechanism under Chapter XV dealing with appeals and revisions. Section 129A of the Customs Act specifically provides for appeals before CESTAT against orders passed by Commissioners of Customs or Commissioners (Appeals). Since Section 3(12) incorporates the appellate machinery of the Customs Act into the levy of IGST on imported goods, it logically follows that disputes concerning such levy would also fall within the jurisdiction of CESTAT. There is no corresponding provision under the GST enactments specifically conferring jurisdiction upon GSTAT in matters relating to customs assessment of IGST on imported goods.
13. The reasoning adopted by the Andhra Pradesh High Court in Avanti Feeds therefore becomes highly persuasive while interpreting the appellate structure applicable to IGST on imported goods. The judgment reinforces the principle that where the levy, collection and assessment are statutorily entrusted to Customs authorities under the Customs Law, the procedural and appellate remedies would ordinarily continue within the same law unless the statute expressly provides otherwise.
14. A combined reading of Section 5 of the IGST Act, Sections 3(7) and 3(12) of the Customs Tariff Act, 1975, Section 129A of the Customs Act, 1962 and the principles laid down by the Andhra Pradesh High Court in Avanti Feeds Ltd., strongly indicates that disputes concerning levy and collection of IGST on imported goods are governed by the Customs law.
15.0 Consequently, it is opined that the appellate remedy against orders relating to IGST on imported goods would lie before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) and not before the Goods and Services Tax Appellate Tribunal (GSTAT). Importers and stakeholders dealing with import litigation may therefore carefully appreciate that notwithstanding the GST character of the levy, IGST on imported goods remains procedurally embedded within the Customs appellate mechanism.
(The views expressed are personal)
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Author: V.R. Pavan Kumar, IRS, Assistant Commissioner (AR), CESTAT, Hyderabad.
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