In re BVN Traders (GST AAR Uttar Pradesh)
The main issue revolved around understanding if the Duty Credit Scrips issued under the RoSCTL scheme were taxable or exempt under GST schedule I, Sl. No.-122A HSN code 4907. To decide this, the notifications and amendments concerning the Duty Credit Scrips and RoSCTL were thoroughly scrutinized.
Upon examining the legal provisions and notifications in light of the RoSCTL scheme, the conclusion drawn was that Duty Credit Scrips issued under RoSCTL are not taxable under the specified GST schedule and HSN code. Furthermore, it was determined that the relevant exemption notification is applicable to all Duty Credit Scrips, excluding certain ineligible ones.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, UTTAR PRADESH
—-M/s BVN Traders, a proprietor, registered with GST vide GSTIN 09AATFB5846Q1ZD under trade name M/s BVNTRADERS bearing principal address at 7/17, Siddarth Villa, Parwati Bangla Road, Tilak Nagar, Kanpur, Uttar Pradesh-208002 (hereinafter referred as “the applicant”) is a firm engaged in buying and selling of “Duty Credit Scrips”. For this purpose it is holder of IEC code issued by the Ministry of Commerce and Industry of Government of India.
2. The applicant has submitted application for AdvanceRuling dated 13.07.2022 enclosing duly filled Form ARA-01 (the application form for Advance Ruling) along with annexure and attachments.
3. The applicant in his application has sought advance ruling on following question-
(i) Whether Duty Credit Scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade is taxable or exempt under GST schedule I, SI. No.-122A HSN code 4907?
(ii) Whether Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017 is applicable to all duty credit scrips or not?”
4. As per declaration given by the applicant in Form ARA-01, the issue raised by the applicant is neither pending nor decided in any proceedings under any of the provisions of the Act, against the applicant.
The applicant has submitted that-
(a) It is a firm engaged in buying and selling of “Duty Credit Scrips”. For this purpose it is holder of IEC code issued by Government of India, Ministry of Commerce and Industry.
(b) Advance ruling is being sought upon taxability of duty credit scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade. Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017has been issued by the Ministry of Finance through which entry no. 122-A has been inserted which clearly exempts the duty credit scrips under HSN Code 4907.
(c) Clarification is being sought whether duty credit scrips issued under RoSCTL scheme is issued by Directorate General of Foreign Trade is taxable or exempt under aforesaid notification and GST schedule-1, entry number-122A, HSN Code 4907.
4.1 The applicant has submitted their interpretation of law as under-
(a) All the duty credit scrips are exempt under GST no matter under scheme they have been issued as the Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017 specifies the phrase “duty credit scrips” and it seems to be an inclusive list no matter under what scheme they have been issued.
(b) Duty credit scrips issued under RoSCTL scheme issued by Directorate General of Foreign Trade is just like other duty credit scrips like MEIS/SEIS. The only difference is that RoSCTL is specific to textile industry. Therefore as per us, duty credit scrips issued under RoSCTL scheme should be exempted.
4.2 Details of Facts are as under:
(1). “Duty credit scrips” nomenclature under HSN Code 4907 is zero tax rated under Serial No. 122(A) of Schedule 1 of G.S.T. Duty credit scrips has been inserted vide Notification No. 35/2017-Central Tax (Rate) dated 13th October 2017 Hence it is tax free from 13.10.2017.
(2). It is also worth mentioning here that the term Duty Credit Scrips has been used in Schedule I of GST because it is a wide term. All types of duty Credit Scrips come under this classification irrespective of whether it is issued by Customs/DGFT in respect of any particular item. The jurisdiction for adjustment/exemption of duty is vested in the RoSCTL Duty Credit Scrips. It is transferable. Duty credit and transfer are clearly mentioned in its license. These are exempted from tax under S.No. 122A of Notification No. 02/2017-Central Tax (Rate) dated 28.06.2017.
(3). It may further be mentioned that duty credit scrips have been considered as under:
A DCS provides tax incentive on exports, which can be used by exporter to set off their import duties. It is issued under the Merchandise Exports from India Scheme (MEIS), Service Exports from India Scheme (SEIS). FTP 2015-20 lays down the features and provisions related to DCS. The scheme is implemented and administered by the Ministry of Commerce and Industry, Govt. of India in association with the Directorate General of Foreign Trade.
What are the uses of Duty Credit Scrips?
DCS can be used by an exporter to pay their tax liabilities. It can be used against tax liabilities arising out of Basic Custom Duty, Additional Customs Duty, Safeguard Duty, Transitional Specific Safeguard Duty, and Anti-dumping Duty. DCS can be transferred to others, but it cannot be used to set off GST, Compensation cess and Education Cess.
