Dual IGST Levy on Services involving Import of Goods Resolved?

The GST law provides for the levy of IGST on import of services in the hands of the recipient under reverse charge mechanism as per Sections 5(1) and 5(3) of the IGST Act. In the case of import of goods, IGST is levied in the hands of the importer as part of customs duties as per proviso to Section 5(1) of the IGST Act read with Section 3(7) of the Customs Tariff Act. A legal issue emerged when goods sent abroad for repairs and subsequently reimported into India were treated as import of service under GST, yet upon reimportation, governed by customs laws, the same goods attracted IGST again as import of goods.

This scenario raised a critical question, could a dual levy of IGST be imposed in such cases especially when the foreign vendor is merely providing services? The Hon’ble Delhi High Court recently clarified this issue, holding that IGST payable under Section 3(7) of the Customs Tariff Act is a levy under Section 5 of the IGST Act. Consequently, once a transaction has been classified as an import of service, it cannot subsequently be recharacterized as an import of goods to justify an additional IGST levy under Section 3(7) of the Customs Tariff Act. The said proposition opens multiple avenues for debate in several scenarios.

Against this backdrop, our Partner Jignesh Ghelani, Principal Associate Navaz PC & Senior Associate Ashwini Shantharam have co-authored an article “Dual IGST Levy on Services involving Import of Goods Resolved?” published on Taxsutra.

Read the article here