IGST Demand on Re-Imported Curcumin Quashed by Kerala High Court: Key Takeaways on Re-Import Liability and ITC Reversal
Background and Context
A significant ruling has emerged from the Kerala High Court in the matter of Nar Spice Products Vs Union of India, addressing a nuanced question that arises frequently in export-import transactions — whether Integrated Goods and Services Tax (IGST) is legitimately leviable on goods that are re-imported into India after an export consignment is rejected abroad. The decision provides important clarity on the extent of an assessee's liability in re-import scenarios, particularly where the original export was executed under a Letter of Undertaking (LUT).
Facts of the Case
The assessee in this matter is a partnership firm operating in the spices and food products processing and export sector. As part of its regular commercial operations, the firm exported 20 pallets of Curcumin, packaged in 260 HDPE drums, to a buyer — JSA International, USA — on 13.07.2025.
However, while the consignment was still in transit across international waters, the United States Government announced a sweeping policy decision to significantly increase tariffs on Indian goods — reportedly up to 50%. This sudden policy shift left the American buyer with no viable option but to refuse acceptance of the incoming consignment. Faced with this commercial reality, the assessee had no alternative but to arrange for the re-importation of the goods back into India.
The following documentation was central to the proceedings:
- Ext.P9 — Evidence of original export dated 13.07.2025
- Ext.P10 — Bill of Lading dated 14.11.2025
- Ext.P11 — Checklist-Bill of Entry for Home Consumption submitted by the clearing agency
- Ext.P12 — Bill of Entry dated 29.12.2025, wherein a total IGST demand of Rs. 1,03,46,656/- was raised against the assessee
The Assessee's Grievance
The assessee challenged the IGST levy primarily on the ground that the re-importation of goods does not constitute a "taxable event" under the GST framework. Since no fresh transaction, sale, or supply had occurred — the goods had merely returned to the country of origin after rejection — the imposition of IGST amounting to Rs. 1,03,46,656/- was argued to be legally untenable.
The reliefs formally sought before the Hon'ble Kerala High Court included:
- Issuance of a writ of certiorari or any other appropriate writ to quash the IGST assessment of Rs. 1,03,46,656/- appearing in Ext.P12 (both under item details Sl. No. 30 and Sl. No. 5)
- A declaration that the assessee bears no liability to pay IGST or any other duty in respect of the 20 pallets of re-imported goods
- Any such further directions as the Court deemed appropriate given the facts and circumstances
- Dispensation with the requirement to file English translations of vernacular documents
The Revenue's Stand
The 4th Respondent filed a statement in response to the writ petition, laying out the department's position with reference to the procedural and statutory framework.