Indirect Tax Amicus, February 2026

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Article

Realisation of export proceeds through a mode other than Irrevocable Letter of Credit – Chhattisgarh HC clarifies on export duty exemption

By Ratan Jain and Madhur Azad

In case of rice export, exemption from export duty has been provided subject to fulfilment of conditions namely, (i) goods meant for export shall have entered the customs station for the purpose of export before 25 August 2023, and an order permitting clearance has not been issued by the proper officer and (ii) goods meant for export are backed by irrevocable Letter of Credit.  The article in this issue of Indirect Tax Amicus covers a recent decision of the High Court of Chhattisgarh which examines the true scope and meaning of the requirement relating to ‘irrevocable Letter of Credit’. The High Court has held that export through irrevocable letter of credit is neither compulsory nor statutorily mandated. According to the authors, the instant decision is a welcoming move and offers significant relief to exporters facing denial of exemption solely on the ground of not operating through an irrevocable Letter of Credit.

Goods and Services Tax (GST)

Ratio decidendi
 

• ITC not deniable under Section 17(5)(d) to assessee only engaged in sub-plotting and sub-leasing of plots – Gujarat High Court
   
• Refund – Limitation under Section 54 is not applicable when tax mistakenly paid twice, once through ITC and second time by cash – Orissa High Court
   
• Penalty under Section 122(1A) on employees – Words ‘any person’ in said provision are required to be understood in context of ‘taxable person’ – Bombay High Court
   
• General penalty under Section 125 is not imposable over and above Late Fees imposed under Section 47(2) for delayed filing of returns – Madras High Court
   
• Consolidated SCN for multiple financial years/tax periods is not correct – Supreme Court’s dismissal of SLP, against Delhi HC decision holding contrary view, was not on merits – Bombay High Court
   
• Affiliation charges collected by university whether liable to GST – Contrary decisions of two Division Benches of different High Courts – Madras and Rajasthan High Courts
   
• Confiscation – Section 130(2) not allows provisional release of goods during pendency of adjudication – Kerala High Court
   
• GSTAT has jurisdiction to pass interim orders staying recovery proceedings – Bombay High Court
   

Customs and FTP

Notifications and Circulars
 

• Drawback on export of gold jewellery and silver jewellery/articles revised
   
• Deferred payment of customs duty facility to Eligible Manufacturer Importer – Guidelines
   

Ratio decidendi
 

• Interactive Flat Panels are classifiable under Customs TI 8471 41 90 and not under TI 8528 59 00 – Supreme Court
   
• Classification of goods – Application of common/trade parlance test, and consideration of ‘use’ – SC draws principles
   
• Thermal printers when classifiable under TI 9018 90 99 and not TI 8443 32 90 – CESTAT New Delhi
   
• Seizure is to be vacated if SCN is not issued within 6 months, waiver of SCN is not material – CESTAT Ahmedabad
   
• Steel imports – NOC restrictions by Ministry of Steel Circular dated 26 October 2023 not correct – CESTAT Ahmedabad
   
• Customs has no authority to confiscate foreign currency and impose penalties under Customs Act – CESTAT New Delhi

Central Excise, Service Tax and VAT

Ratio decidendi
 

• Expression ‘Furit drink’ cannot be confined solely to ready-to-consume bottled beverages – Sharbat Rooh Afza is a ‘fruit drink’ considering common parlance and essential character tests – Supreme Court
   
• Incentives/discounts received by the dealer from manufacturer are not liable to service tax even for the period post 1 July 2012 – CESTAT Hyderabad
   
• Valuation (Central Excise) of goods cleared to inter-connected undertakings who are not related under sub-clauses (ii), (iii) or (iv) of Section 4(3)(b) – CESTAT Hyderabad
   
• Intermediary services – Assessee providing data hosting services to foreign company which in turn provided cloud computing services to its Indian clients, is not an intermediary; no liability of service tax as transaction is exports – CESTAT New Delhi
   
• Authorities cannot go beyond the scope of SCN to confirm demand – CESTAT New Delhi