ALO Law Office- IDT Tax I Arbitration I Litigation
Date: 11.07.2025
Bombay High Court Quashes IGST Interest and Penalty
In a significant ruling, the Honβble Bombay High Court in A.R. Sulphonates Pvt. Ltd. v. Union of India & Ors., Writ Petition No. 19366 of 2024, delivered on 9th April 2025, held that interest, penalty, and redemption fine imposed for non-compliance with the βpre-importβ condition under the Advance Authorization Scheme are without the authority of law. The Court quashed the relevant portion of the Customs adjudication order dated 1st August 2024 and invalidated CBIC Circular No. 16/2023-Customs to the extent it sought to recover interest along with IGST.
Background
The Petitioner, A.R. Sulphonates Pvt. Ltd., imported Linear Alkyl Benzene (LAB) under eleven Advance Authorization Licenses between 27th October 2017 and 27th March 2018. These imports were made without payment of IGST, relying on Notification No. 18/2015-Cus. as amended by Notification No. 79/2017-Cus., which imposed a βpre-importβ condition for exemption from IGST.
Subsequently, DRI initiated investigations alleging violation of the pre-import condition, leading to the issuance of a Show Cause Notice seeking:
- IGST demand of βΉ7.18 crore,
- Interest under Section 28AA,
- Penalty under Section 112(a),
- Redemption fine of βΉ2 crore under Section 125, and
- Enforcement of bonds under Section 143(3).
- The adjudication order dated 1st August 2024 confirmed these demands.
This Article has been written by Shri Ravi Shekhar Jha, Advocate Delhi High Court based on his interpretation of the law. He can be reached at his email id intelconsul@gmail.com or on his Mobile +91-9999005379.
Source: Bombay High Court
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