Levy of Compensation Cess on Export Supply Requires GST Council Review

Last updated: 29 May 2025

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Quick Summary

The Gujarat High Court has ordered a halt to the 160% Compensation Cess on branded chewing tobacco supplied for export. The court referred the matter to the GST Council, suggesting an exemption similar to that for CGST/SGST and IGST. This decision aims to prevent working capital blockage for exporters, as the cess is ultimately refundable and intended to compensate states for GST revenue losses.

Court :
Gujarat High Court

Brief :
The Hon'ble Gujarat High Court in M/s. Sopariwala Export (P.) Ltd. v. Joint Commissioner, CGST and Central Excise [R/Special Civil Application No(s). 6701 &7073 of 2023, and 15708 of 2024, dated May 09, 2025] held that the levy of 160% Compensation Cess on the supply of branded chewing tobacco products by manufacturers to merchant exporters for export must be kept in abeyance. The matter was referred to the GST Council to decide whether an exemption should be granted at par with the Central Goods & Services Tax ("CGST")/StateGoods & Services Tax ("SGST") and Integrated Goods & Services Tax ("IGST") exemption provided under Notification No.40/2017-Central Tax (Rate), dated October 23, 2017("the Notification No. 40/2017") and Notification No. 41/2017-Central Tax (Rate), dated November 14, 2017("the Notification No. 41/2017")(collectively, "the Notifications").

Citation :
R/Special Civil Application No(s). 6701 &7073 of 2023, and 15708 of 2024, dated May 09, 2025]

Daily Limit Reached