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03 June 2021

Imposition of IGST on importation of oxygen concentrator in pandemic times by an Individual for personal use is unconstitutional

In view of the COVID-19 pandemic, Central government has taken several measures to provide relief to the public in various forms. One important measure taken up is reduction of IGST to 12% on the import of oxygen concentrator for personal use. The said benefit was given vide notification No. 30/2021-Custom effective from 01/05/2021 till 30/06/2021 which was further reduced to Nil rate vide an adhoc exemption Order No. 4/2021-Custom dated 3/5/2021 subject to the fulfilment of the following conditions:-

  1. The said goods are imported free of cost for the purpose of COVID relief by a State Government or, any entity, relief agency or statutory body, authorised in this regard by any State Government.
  2. The said goods are received from abroad for free distribution in India for the purpose of COVID relief.
  3. Before clearance of the goods, the importer produces to the Deputy or Assistant Commissioner of Customs, as the case may be, a certificate from a nodal authority, appointed by a State Government, that the imported goods are meant for free distribution for COVID relief, by the State Government, or the entity, relief agency or statutory body, as specified in such certificate.
  4. The importer produces before the Deputy or Assistant Commissioner of Customs, as the case may be, at the port of import within a period of six months from the date of importation, or within such extended period not exceeding nine months from the said date as that Deputy or Assistant Commissioner of Customs may allow, a statement containing details of goods distributed free of cost duly certified by the said nodal authority of the State Government.

It is evident from the condition (i) in the aforesaid notification that the benefit of the lower rate is available to the person specified in the notification and goods must be used for COVID relief purpose specifically i.e. free distribution (non-commercial use) for relief.

Now, the question arises as why benefit is available to specified person and not for the person importing goods for personal use (not for commercial use) as life-saving instrument?

This issue was challenged though a writ petition filed with Hon’ble Delhi High Court by an individual seeking the relief of lower tax rate on oxygen concentrator imported and received as gift for personal use.

Mr. Gurcharan Singh (Petitioner) in the Writ Petition (C) 5149/2021 raised the concern of not allowing the individuals to take advantage of lowered IGST on oxygen concentrator & consider such imposition of tax as discriminatory, unfair, and unreasonable and that it impinges upon his right to life and health laid under Article 21 of constitution. The petitioner is 85 years old & his nephew located in New York gifted the oxygen concentrator for personal use during this extraordinary times. However the condition prescribed above prevent the Petitioner to avail the benefit of exemption from the imposition of IGST, thought the oxygen concentrator is for personal use of petitioner and not for the commercial use.

After hearing the respondent i.e. Ministry of Finance (Department of Revenue) Government of India & the Petitioner, the Hon’ble Delhi High court held that imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts [i.e. free of cost] for personal use, is unconstitutional. The Hon’ble High Court states that in order to obviate misuse of the oxygen concentrators, by the Petitioner and/or persons similarly circumstanced, she/he/they would have to furnish a letter of undertaking to the officer designated by the State that the same would not be put to commercial use. The petitioner would thus submit a letter of undertaking with seven days of the State intimating/notifying the particulars of the officer designated for this purpose. Till such time an officer is designated by the State.