Benefit under a conditional notification cannot be extended in case of non-fulfillment of conditions

In re Time Technoplast Ltd (GST AAAR Karnataka)

It is a settled issue that benefit under a conditional notification cannot be extended in case of non-fulfillment of conditions and/or non-compliance of procedure prescribed therein. The basic rule in interpretation of any statutory provision is that the plain words of the statute must be given effect to. It is only in the case of ambiguity that the principle of strict/liberal interpretation would arise. In this case, there is no ambiguity in the wordings of the impugned Notification. The conditions required to be complied with by the registered supplier and the registered recipient are very clear and does not give any scope for interpretation. The Supreme Court in the case of Commissioner of Central Excise, Chandigarh I vs Maahan Diaries reported in 2004 (166) ELT 23 (SC) has observed that it is settled law that in order to claim benefit of a Notification a party must strictly comply with the terms of the Notification. If on wordings of the Notification the benefit is not available then by stretching the words of the Notification or by adding words to the Notification, benefit cannot be conferred. Applying the ratio of this decision to the case before us, we find that there is no necessity of stretching the meaning of ‘warehouse’ referred to in the impugned Notification, to include a factory premises. One must not lose sight of the fact that this Notification was introduced only to provide relief to merchant exporters under the GST regime. The merchant exporters have the option to avail the benefit of this concessional rate and export the goods under LuT and later claim refund of the concessional rate of tax paid on their procurements. However, they can choose to export the goods on payment of IGST in which case, they will not be eligible to avail the benefit of concessional rate of tax under this Notification on their procurements. The CBIC vide Circular No 125/44/2019 GST dated 18-11-2019 has also clarified that the benefit of supplies at concessional rate if tax in terms of Notification Nos 40/2017 Central Tax (Rate) and Notification No 41/2017-Integrated Tax (Rate) is subject to certain conditions and the said benefit is optional. The option may or may not be availed by the supplier and/or recipient and the goods may be procured at the normal applicable rate of tax. Therefore, we agree with the ruling passed by the lower Authority that the Appellant is not eligible for the benefit of the concessional rate of tax in terms of Notification No 41/2017-IT (Rate) dated 23-10-2017 in as much as they have not complied with the conditions of the Notification.

We uphold the order No. KAR ADRG 54/2021 dated 29/10/2021 passed by the advance ruling authority and the appeal filed by the Appellant M/s. Time Technoplast Ltd, stands dismissed on all accounts.

FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA

1. At the outset we would like to make it clear that the provisions of CGST, Act 2017 and SGST, Act 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.

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