No relation between Section 8 of FEMA and Section 16 of IGST Act for realization of foreign exchange for export of goods

Last updated: 09 June 2021

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The Delhi High Court has ruled that Section 8 of the Foreign Exchange Management Act (FEMA) is not directly linked to Section 16 of the Integrated Goods and Services Tax (IGST) Act concerning the realisation of foreign exchange for exported goods. The court noted that the Revenue Department failed to provide evidence connecting these two provisions. The case involved a refund claim for input tax credit, which was initially rejected by the respondent for lack of bank realisation certificates, a stance supported by FEMA S8. The matter has been adjourned for further examination, allowing the petitioner to submit evidence of reasonable steps taken to realise export proceeds.

Court :
Delhi High Court

Brief :
The Hon’ble Delhi High Court ("HC") in Vandna Pharma Industries v. Commissioner of Goods and Service Tax ("GST") [W.P. (C) No. 5228/2021 decided on May 07, 2021] noted that nothing has been shown to the Court by the Revenue Department which would connect the provisions of Section 8 of the Foreign Exchange Management Act, 1999 ("the FEMA") with Section 16 of the Integrated Goods and Services Tax Act, 2017 ("the IGST Act"). Further, held that the matter requires further examination and listed the matter on August 25, 2021.

Citation :
W.P. (C) No. 5228/2021 decided on May 07, 2021

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