- Gujarat High Court held that the levy of 160% Compensation Cess on branded chewing tobacco for export should be paused.
- The GST Council needs to review if an exemption should be granted similar to existing CGST, SGST, and IGST exemptions.
- M/s. Sopariwala Export Ltd. manufactures branded chewing tobacco, subject to 28% CGST/SGST and 160% Compensation Cess.
- The company supplied goods to merchant exporters for export, charging 0.1% CGST/SGST.
- The Joint Commissioner issued a notice and order against the company, confirming demand with interest and penalty, stating no exemption from Compensation Cess.
- The company filed a Writ Petition against this order.
- The court observed that the supply to merchant exporters qualifies as export and is zero-rated under the IGST Act.
- The court referenced past Supreme Court cases supporting the classification of such transactions as export supply.
- The court noted that even if Compensation Cess is paid, merchant exporters can get a refund, making it revenue neutral.
Source: a2ztaxcorp.net
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
