Circular No. 46/2017-Cus: Repugnant to objective and purpose of GST law

Prabhad Dobriyal – [2021] 129 taxmann.com 280 (Article)

The Central Board of Excise & Customs (CBEC/CBIC) issued a clarificatory Circular No. 46/2017- Cus dated 24-11-2017, clarifying that IGST would also be leviable on in-bond sale/transfer of goods even prior to home clearance, thereby effectively creating an additional taxable event. Interestingly, the Circular also specified that IGST would be levied twice but collected only once at the time of home clearance of the warehoused goods, begging the question as to why IGST could not have been levied on the value of the warehoused goods at the time of sale, thereby reducing the onerous conditions placed on the importer to levy IGST on in-bond sale of goods and avail ITC, to pass such ITC on to the buyer.

In this article, the author has discussed the levy of IGST on in-bond transfer of goods before home clearance by means of parliamentary discussions, draft bills, circulars issued by the CBIC, the meetings of the GST Council, and amendment made to the Customs Tariff Act and aim to satisfactorily assert that Circular No. 46 was a misstep that was never intended to exist and is squarely in contravention of the objective of the GST laws.

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