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Indirect Tax News

published on 30 July 2025 I reading time approx. 10 minutes

IDT Developments and Associated Proceedures

1. The Hon’ble Sikkim High Court held that a refund of the unutilized excess ITC upon discontinuance of business can be claimed:

In case of SICPA India Private Limited Ors. WP(C) No.54 of 2023, the Hon’ble High Court relied on the judgement of Slovak India Trading Company Private Limited 2006 (201) E.L.T. 559 (Kar), wherein the company has applied for refund of unutilized ITC at the time of closing of its unit and the company was allowed such refund stating that there was no express prohibition in Rule 5 of the CENVAT Credit Rules, 2002. Similarly, in instant case, there is no express prohibition in Section 49(6) read with Section 54(3) of the CGST Act, 2017 for claiming refund of ITC on closure of unit. Thus, the Hon’ble Sikkim High Court has held that the petitioner is entitled for such a refund.

2. The Hon’ble Gujarat High Court held that omission of Rule 96(10) is applicable to all pending proceedings:

Rule 96(10) inter alia provides that a person cannot claim refund of integrated tax paid on export of goods or services if benefit of specified exemption notifications is availed. The said rule was omitted w.e.f. 8 October 2024. In case of Addwrap Packaging Pvt. Ltd. [TS-525-HC(GUJ)-2025-GST], the issue before the HC was whether Rule 96(10) was constitutionally valid. If yes, whether its omission should be applied prospectively or retrospectively, including whether the omission would extend to all pending litigations or proceedings.

In this regard, the Hon’ble High Court has held that the omission of Rule 96(10) cannot be considered curative or remedial, as it impacts the taxpayer’s substantive right to claim refund of IGST paid on export of goods where duty-free inputs are used. Hence, such omission cannot be said to apply retrospectively.
If the omission of Rule 96(10) were intended to have retrospective effect, the Central Goods and Services Tax (Second Amendment) Rules, 2024 would have expressly stated so. Further, the GST Council has recommended the omission with prospective effect.

Accordingly, the Hon’ble High Court has held that the omission of Rule 96(10) will be applicable to all pending proceedings/cases which are pending for final adjudication either before courts or adjudicating authorities. However, the question in relation to constitutional validity of Rule 96(10) was kept open.

Important GST Notifications and Circulars issued during the quarter

1.Requirement of quoting Document Identification Number (DIN) communications generated in common portal:

Vide Circular 249/06/2025 - GST dated 9 June 2025, the CBIC has clarified that that quoting of a DIN is not required in communication sent to taxpayers via common portal which bears a verifiable Reference Number (RFN), and that the communication bearing RFN is to be treated as a valid communication.

2. Clarification regarding Reviewing authority, Revisional Authority and Appellate Authority in respect of orders passed by Common Adjudicating Authority (CAA) for show cause notices issued by DGGI:

Vide Circular No. 250/07/2025-GST dated 24 June 2025, the CBIC has provided clarification regarding the authorities responsible for review, revision, and appeals against the Order-in-Original (OIO) passed by Common Adjudicating Authority (CAA) where Show Cause Notices (SCNs) have been issued by the Directorate General of GST Intelligence (DGGI). Vide Notification No. 02/2017-Central Tax dated 19 June 2017 read with Circular No. 239/33/2024-GST dated 4 December 2024, the Joint/Additional Commissioners were designated as CAA for adjudicating SCNs issued by DGGI. However, it did not specify the procedure related to review, revision, and appeals for such Orders passed by CAA. It is now clarified that:

The Principal Commissioner or Commissioner under whom the CAA is posted shall be the Reviewing Authority for review of OIOs under Section 107 of the Central Goods and Services Tax Act, 2017 (CGST Act).
The Principal Commissioner or Commissioner under whom the CAA is posted shall act as a Revisional Authority for revision in respect of OIOs under Section 108 of the CGST Act.
Appeal against OIOs passed by the CAA shall lie before the Commissioner (Appeals) corresponding to the territorial jurisdiction of the Principal Commissioner or Commissioner under whom the CAA is posted, as detailed in Table III of Notification No. 02/2017-Central Tax.
The Principal Commissioner or Commissioner under whom the CAA is posted shall represent the department in appeal proceedings against such OIOs and may appoint a subordinate officer as the designated officer for filing the departmental appeal.
The Reviewing or Revisional Authority may seek comments from the concerned DGGI formation before proceeding to review or revise the order passed by the CAA.

3. Issuance of Instructions to GST Department regarding GST Registration Applications:

Considering the recent hardships faced by multiple applicants, the CBIC had issued two specific instructions for the processing of GST Registration application as follows:

Vide Instruction No. 03/2025-GST dated 17 April 2025, the CBIC has prescribed various guidelines to the department officers in relation to processing of applications for GST registrations while preventing delays and undue hardships to applicants and while also ensuring fraud prevention.
Vide Instruction No. 04/2025-GST dated 2 May 2025, the CBIC has prescribed a grievance redressal mechanism for issues faced in application for GST registration applications, wherein applicants can e-mail grievances with ARN, jurisdiction and brief issue to a notified e-mail address for speedier resolution.

4.Important GSTN Advisories:

Vide GSTN advisory dated 7 June 2025, it was clarified that the taxpayers are not allowed to file returns after the expiry of a period of 3 years from the due date of furnishing the GST returns namely, GSTR-1, GSTR-3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR 7, GSTR 8 and GSTR 9, to be effective from July 2025.
Vide GSTN advisory dated 10 June 2025, for taxpayers filing refunds under Quarterly Return Monthly Payment scheme (QRMP) facing technical issues including non-recognition of invoices furnished using the invoice furnishing facility, technical issues have been resolved. The taxpayers under the QRMP can now file refund applications for the invoices for which GSTR-3B has already been filed.

Customs and Foreign trade policy related developments

1. Introduction to the Export Entry (Post Export Conversion in relation to Instrument Based Scheme) Regulations, 2025:

Vide Notification No. 21/2025-Customs (N.T.) dated 3 April 2025, the CBIC has devised a framework for post-export conversion of export entries (e.g shipping bills) from one instrument-based scheme to another (e.g., Advance Authorization, EPCG) in supersession of the Shipping Bill (Post export conversion in relation to Instrument Based Scheme) Regulations, 2022.

Under the new rules, exporters seeking post-export conversion must apply within one year from the clearance of goods under Sections 51 or 69 of the Customs Act, 1962. The Jurisdictional Commissioner of Customs may extend this period by six months, and the Chief Commissioner of Customs may allow further extensions under specific conditions.

These regulations aim to streamline the process for exporters to correct or amend their export declarations, ensuring compliance with scheme requirements and to maintain procedural fairness.

2. Amendment to the Goods Imported (Conditions of Transshipment) Regulations, 1995:

Vide Notification 30/2025-Customs (N.T.) dated 24 April 2025, the CBIC has amended the Goods Imported (Conditions of Transshipment) Regulations, 1995. These regulations are now called as the Goods Imported (Conditions of Transshipment) Regulations, 2025 and shall come into force on a date published in the Official Gazette. Further, Regulation 5 of the Goods Imported (Conditions of Transshipment) Regulations, 1995 is amended to specify that no fees shall be charged in respect of applications for transshipment of the goods imported for all customs stations.

3. Addition of contracting states for Cooperation and Mutual Administrative Assistance in Customs matters:

Vide Notification No 32/2025-Customs (N.T.) dated 28 April 2025, the CBIC has amended a previous notification notifying the Cooperation and Mutual Administrative Assistance (CMAA) in Customs matters agreement with contracting states. This amendment adds New Zealand and the Republic of Madagascar to the list of contracting states with whom India has such agreements or arrangements.

4. Adjudicating authority for notices involving Customs and Excise duty remanded back for 100 per cent Export Oriented Units:

Vide Notification No. 35/2025-Customs (N.T.) dated 16 May 2025, it is notified that the adjudication of cases remanded for de novo adjudication pertaining for 100 per cent Export Oriented Units (EOUs) and involving both Customs Duty and Central Excise Duty lies with the Customs officers, not Central Excise officers. The rank of the officers involved in adjudication defined on the amount of aggregate duty involved. The notification is effective from the date of publication in the Official Gazette.

Earlier notifications shifted jurisdiction over 100 per cent Export-Oriented Undertakings (EOUs) from Central Excise to Customs and simultaneously appointed Customs officers as Central-Excise officers. When appellate forums remanded the cases for de novo adjudication which contained both Customs and Central-Excise duty demands, there was no clarity on who should carry out the adjudication. The present notification now plugs that gap by reallocating such remanded SCNs to Customs officers and prescribing monetary-based authority levels.

5. Jalna, Maharashtra notified as an inland container depot in Maharashtra:

Vide Notification No 37/2025-Customs (N.T.) dated 26 May 2025, Jalna, Maharashtra is added to the list of specified customs inland container depots (ICDs).

6. Amendment to the Sea Cargo Manifest and Transshipment Regulations, 2018:

Vide Notification No. 40/2025-Customs (N.T.) dated 31 May 2025, the CBIC has amended the Sea Cargo Manifest and Transshipment Regulations, 2018. These regulations may now be called the Sea Cargo Manifest and Transshipment (Third Amendment) Regulations, 2025 and shall come into force on a date published in the Official Gazette. Further, the deadline for compliance related to sensitive cargo declaration under Sr. No. 6 in Column (3) of Table XII, of earlier the Sea Cargo Manifest and Transshipment Regulations, 2018, is now extended to 30 September 2025. The amendment aims to enhance digital compliance, simplify reporting timelines, and tighten transshipment tracking for all sea carriers and custodians in India,

7. Imposition of safeguard duty on specified goods:

Vide Notification No. 01/2025-Customs (SG) dated 21 April 2025 the CBIC has imposed a safeguard duty for a period of two hundred days from the date of publication of the notification in the Official Gazette, payable in Indian currency on import of specific categories of non-alloy and alloy steel flat products, including hot rolled coils, sheets and plates hot rolled plate mill plates, cold rolled coils and sheets, metallic coated steel (for example galvanneal, zinc, aluminium-zinc), colour coated coils and sheets, etc., falling under falling under tariff headings 7208, 7209, 7210, 7211, 7212, 7225 and 7226 of the First Schedule to the Customs Tariff Act, 1975

The Notification shall not be applicable if the goods are imported from developing countries notified under sub-section (2) of section 8B of the Customs Tariff Act, except China PR and Vietnam.

Miscellaneous Updates under Foreign Trade Policy and SEZ

Government Notifies SEZ Reforms to Boost Semiconductor and Electronics Component Manufacturing: The Ministry of Commerce and Industry (MoCI) on 9 June 2025 notified key reforms in Special Economic Zone (SEZ) rules to promote investment in semiconductor and electronics component manufacturing. The changes aim to support sectors that are capital-intensive, import-dependent, and have long gestation periods before becoming profitable. The revised rules, notified by the Department of Commerce on 3 June 2025, include amendments to Rules 5, 7, 18, and 53 of the SEZ Rules, 2006.
Under the amended Rule 5, SEZs set up exclusively for semiconductor or electronics component manufacturing will now require a minimum contiguous land area of only 10 hectares, down from 50 hectares earlier.
Amendment to Rule 7 allows the Board of Approval to relax the requirement for SEZ land to be encumbrance-free if it is mortgaged or leased to the central or state government or their authorized agencies.
As per the amended Rule 53, the value of goods received and supplied on a free-of-cost basis will now be included in Net Foreign Exchange (NFE) calculations, using applicable customs valuation rules.
Changes to Rule 18 will allow SEZ units in semiconductor and electronics component manufacturing to supply to the Domestic Tariff Area (DTA) after paying the required duties.

Following the notification, the Board of Approval has cleared two SEZ proposals. Micron Semiconductor Technology India Pvt Ltd (MSTI) will set up a facility in Sanand, Gujarat, over 37.64 hectares with an investment of ₹13,000 crore.

Prohibition on import or transit of all goods originating in or exported from Pakistan: The DGFT vide Notification No. 06/2025-26 dated 2 May 2025, by insertion of para 2.20A of the Foreign Trade Policy 2023, has notified in the interest of national security and public police, that direct or indirect import or transit of all goods originating in or exported from Pakistan whether or not freely imported or permissible otherwise, shall be prohibited with immediate effect until further orders.
RoDTEP benefit restoration: The DGFT vide Notification No. 11/2025 26 dated 26 May 2025 has clarified that with effect from 1 June 2025, RoDTEP (Remission of Duties and Taxes on Exported Products) benefits are restored for export of products manufactured from Advance Authorization (AA) holders, Export-Oriented Units (EOUs) and Special Economic Zones (SEZs). The rates are available in Appendix 4RE on the DGFT portal.
Harmonization of Schedule II (Export Policy), ITC (HS) 2022 with amendments introduced in Finance Act, 2025 – The DGFT vide Notification No. 09/2025 26 dated 19 May 2025 aligns the changes introduced by Finance Act, 2025 through Annexure‑I which lists amendments in HS codes and Annexure-II which includes relevant changes to Section Notes, Chapter Notes, Sub-heading Notes, and Supplementary Notes, etc.
Alignment of RoDTEP Schedule with the First Schedule of Customs Tariff Act with effect from 1 May 2025 - The DGFT vide Notification No. 10/2025-26 dated 26 May 2025 has amended RoDTEP Schedule to align it with the First Schedule of the Customs Tariff Act in the schedule of rates and caps in Appendix 4R.
Introduction of a Global Tariff & Trade Helpdesk - Vide Trade Notice No. 1/2025-26 dated 11 April 2025, the DGFT has launched a Global Tariff & Trade Helpdesk to assist exporters and importers encountering various challenges, to benefit exporters/importers facing operational challenges due to sudden tariff changes, industries experiencing import surges or dumping in product segments, businesses awaiting EXIM clearance or dealing with logistics and compliance issues, etc. Users may navigate to the DGFT website> Services> DGFT Helpdesk service or use the email ID: dgftedi@nic.in with the subject line: Global Tariff and Trade Helpdesk.
Introduction of a new mandatory field in the eBRC format with effect from 1 May 2025 - Vide Trade Notice No. 2/2025-26 dated 21 April 2025, the DGFT has introduced a new mandatory field in the eBRC (Electronic Bank Realization Certificate) format titled “Mode of Export of Services”, effective from 1 May 2025, for all services exports, to align India’s trade reporting with WTO standards and improve data granularity for policy insights. Exporters have to specify the mode of service export, based on WTO's GATS definition:

Mode 1: Cross-border support
Mode 2: Consumption abroad
Mode 3: Commercial presence
Mode 4: Movement of natural persons

Launch of Source from India feature to promote export - Vide Trade Notice No. 5/2025-26 dated 13 June 2025, DGFT has launched the "Source from India" feature on its Trade Connect ePlatform (trade.gov.in), targeting all Status Holders for exporters to showcase their offerings by creating pages with product details, credentials, and contact info to enhance visibility enabling international buyers (through Indian Missions, EPCs, EXIM Bank, DGFT, etc.) to discover export-ready suppliers.
Update in fees for specified import monitoring systems: Vide Public Notice No. 2/2025-26 dated 15 April 2025, Appendix 2K (Scale of User Charges & Fees) under the FTP 2023 has been revised to introduce a new Registration Fee for Import Monitoring Systems like Steel Import Monitoring System (SIMS), Copper Import Monitoring System (CIMS), Non-Ferrous Metals Import Monitoring System (NFMIMS), and Paper Import Monitoring System (PIMS).
Amendments in Handbook of Procedures concerning Stock and Sale authorization for SCOMET items: Vide Public Notice No. 4/2025-26 dated 6 May 2025, the DGFT has made amendments to Paragraph 10.10 of the Handbook of Procedures (HBP) 2023 concerning Stock & Sale authorization for SCOMET items (dual-use goods). The definition of “Stockist” has been expanded to include:

Indian & foreign Original Equipment Manufacturers (OEMs)
Electronic Manufacturing Services (EMS) providers
Contract Manufacturers (CMs)

Exporters are required to apply using Form ANF 10B, along with required documents, which shall be reviewed by an Inter Ministerial Working Group (IMWG). The eligibility criteria may be relaxed based on item type, end-use, and end-user profiling

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