The Gujarat High Court has issued notices to the Union government, the GST Council and the Customs authorities over imposition of surcharge and cess on duties paid through scrip-based incentives by exporters.
The circular has gone ahead to clarify that surcharge becomes payable through cash and this is a serious concern for exporters, especially when the constitutional challenge is to be decided on the applicability of the surcharge. The circular has been challenged so that both the problems are addressed simultaneously and the exporters get the relief in this environment of slow down.
The cess and the surcharge are imposed at the time of imports where duties are paid through the Merchandise Exports from India Scheme (MEIS) scrips. MEIS is a scrip-based incentives provided to exporters under the foreign trade policy 2015-20. These scrips could be used for payment of duties.
However, basic Customs duty has been subsumed in GST. Now, cess and surcharge are imposed on basic Customs duty. Petitioners argued overhow cess and surcharge can be imposed on the basic Customs duty which is zero.