Delhi high Court quashes the notification imposing IGST on import of oxygen concentrators (as gift) for personal use on a petition filed by 85 years old man.

Imposition of IGST on oxygen concentrators which are imported by individuals and are received by them as gifts, free of cost, for personal use, is unconstitutional.

Accordingly Notification no. 30/2021-Customs dated 01.05.2021 is quashed.

This writ petition represents one of those rare writ actions, whereby, a notification issued in the realm of a tax statute has been, inter alia, assailed under Article 21 of the Constitution.

Petitioner

Via the captioned writ petition, a challenge has been laid to the CBIC Notification No. 30/2021-Customs dated 01.05.2021.

This writ petition represents one of those rare writ actions, whereby, a notification issued in the realm of a tax statute has been, inter alia, assailed under Article 21 of the Constitution. That tax is an exaction by the State is well known. That its levy and collection, ordinarily, does not encompass equity, is also, well known. But, presently, we are living in difficult times and, therefore, perhaps, the petitioner has invoked Article 21 of the Constitution.

The petitioner is 85 years old. He approached this Court against the imposition of IGST on the import of the oxygen concentrator which has been gifted to him by his nephew. The petitioner, as alluded to above, asserts that the imposition of tax is discriminatory, unfair, and unreasonable and that it impinges upon his right to life and health. The clearance of the oxygen concentrator from the customs barrier required payment of IGST at the rate of 12%. It is relevant to note that before 01.05.2021, an individual importer would have had to pay IGST at the rate of 28% qua oxygen concentrator gifted to him for personal use. This stood in contrast to oxygen concentrators which were imported for commercial use. The IGST on oxygen concentrator, which was imported for commercial use, was and continues to be leviable at the rate of 12%.

Revenue

The decision to impose a tax and/or the fixation of the rate at which tax is to be imposed cannot be subjected to judicial review. [See S. Kodar vs. State of Kerala, (1974) 4 SCC 4229, at paragraph 10]. The imposition of IGST on imported oxygen concentrators, which are gifted, and are for personal use, does not violate Article 21 of the Constitution.

If this argument of the petitioner is accepted, it will lead to absurd consequences in as much citizens will attempt to seek exemption from property tax, and food items since both housing and food items have been considered as a facet of the right to life as encapsulated in Article 21 of the Constitution. [See Shanti Star Builders vs. Narayan Khimlal Totame & Ors., (1990) 1 SCC 52014; and People’s Union for Civil Liberties (PDS Matters) vs. Union of India & Ors., (2013) 2 SCC 688].

High Court

It is, perhaps, rightly argued, on behalf of the State, that the Court cannot issue a writ of mandamus directing the State to issue an exemption notification in favour of the petitioner or persons similarly circumstanced. The power to issue an exemption notification under Section 25 of the Customs Act is vested in the State. Having said so, the Court, to our minds, is not prevented from judicially reviewing an exemption notification once it is issued by the State. The State has issued the notification, dated 03.05.2021, granting exemption from imposition of IGST on import of oxygen concentrators that are routed through a canalising agency. This notification can and, in our view, must be saved, as it subserves a greater good, although partially, by interpreting and thus holding that entry no. 607A, Tariff Item no. 9804 of the General Exemption No. 190, issued under Section 25(1) of the Customs Act, which stipulates, NIL rate of IGST for ―lifesaving drugs/medicines for personal use‖, supplied free of cost by the overseas supplier - would include medical equipment such as an oxygen concentrator being a ―substance‖ used in the treatment, mitigation, prevention of infection caused by the coronavirus. The fact that oxygen concentrators are, in present times, placed at par with life-saving drugs and medicines, is evident upon a perusal of the notification dated 30.04.2021 [to which we have made a reference hereinabove] whereby paragraph 2.25 of the FTP was revised.

Mr. Datar has rightly argued, in this context, that the definition of drugs given in Section 3(b) of the Drugs and Cosmetics Act would include medical equipment such as an oxygen concentrator which is used inter alia in the treatment, mitigation, and/or prevention of the disease [i.e. coronavirus]. The expression substance found in Section 3(b) of the Drugs and Cosmetics Act would bring within its ambit, oxygen concentrator. We are fortified in this view by the observations of the Supreme Court in State of Andhra Pradesh vs. Linde India Limited, (2020) 16 SCC 33527. Besides this, it requires to be noticed that in the wake of coronavirus, raging through the country, the State has issued several notifications, such as notifications dated 20.04.202128, 24.04.2021, 30.04.2021, 01.05.2021, and 03.05.2021 as also the press release dated 03.05.2021 – which only buttresses the view taken by us that oxygen concentrators are to be treated as drugs in terms of General Exemption Notification No. 190. This approach, in our opinion, would serve two purposes.

i.First, it would preserve the notification dated 03.05.2021.

ii.Second, it would not require the State to issue a separate notification for grant of exemption to individuals who are similarly circumstanced as the petitioner.

This brings us to the other aspect, as to whether condition no. 104, which is appended to entry no. 607A, of the General Exemption No. 190 should apply in this case. To our minds, given the fact that each day counts for the person who requires an oxygen concentrator, the cumbersome certification procedure, provided under condition no. 104 is both impractical and inefficacious. We are also of the view that a plain reading of the said condition would show, certification is required, in a situation, where it could be a matter of debate as to whether the imported drug or medicine is a life-saving drug. An oxygen concentrator is, on the face of it, concededly, a piece of medical equipment that is required for treatment, mitigation, and/or prevention of the disease [i.e. coronavirus] or disorder in human beings. 

Therefore, the compliance of clause (a) of condition no. 104 appended to entry no. 607A of the General Exemption No. 190, should suffice, in our opinion. Thus, it would be sufficient if the persons, who are similarly circumstanced as the petitioner, furnish a letter of undertaking, to the officer designated by the State which would, inter alia, state that the oxygen concentrator would not be put to commercial use. Till such time an officer is designated by the State, it would be in order, if the importer were to address the letter of undertaking to the Joint Secretary, Customs and/or his/her nominee and handover the same to the officer detailed at the customs barrier.

Accordingly, we hold 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.

Given the declaration made hereinabove, notification no. 30/2021 dated 01.05.2021 is quashed.

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. 

The writ petition is disposed of in the aforesaid terms.

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