Facts of the Case:

In this case, the merchant exporters placed purchase orders on the petitioner for supply intended for export consignments. The petitioner raised tax invoices on the merchant exporters; however, as per their instructions, the goods were delivered directly to the premises of a third party manufacturer for packing purposes. After packing, the goods were supplied to the merchant exporter who subsequently exported them. Claiming that the supplies were ultimately linked to export, the petitioner sought the benefit of concessional IGST at 0.1% under Notification No. 41/2017–IGST (Rate) dated 23.10.2017. To obtain certainty, the petitioner approached the Authority for Advance Ruling under Section 97 of the CGST Act. The AAR denied the concessional rate holding that the conditions of the notification were not satisfied. The same was upheld by the Appellate Authority for Advance Ruling. 

Aggrieved, the petitioner filed a writ petition before the High Court challenging the appellate ruling and seeking a declaration of eligibility for the concessional rate.

Issue:

Whether supply of goods to a third-party manufacturer, instead of direct supply to the registered merchant exporter or a registered warehouse, would qualify for concessional GST at 0.1% under Notification No. 41/2017–IGST (Rate).

Held that:

The Court observed that the notification contemplates a strict transactional framework between two specified persons, the registered supplier and the registered recipient (merchant exporter). It mandates that the registered recipient must place the order and that goods must move directly from the place of the registered supplier either to the port or export terminal, or to a registered warehouse from where export is effected.

In the present case, although the merchant exporter had placed the purchase order, the goods were delivered to the chemical manufacturer, who was neither the registered recipient nor a registered warehouse. The manufacturer used the goods for packing and thereafter supplied the finished products to the exporter. This break in the direct supply chain was held to be contrary to the explicit movement conditions prescribed in the notification.

The Court emphasized that export of goods alone does not cure non-compliance with mandatory procedural conditions. Since the language of the notification was clear and unambiguous, it could not be interpreted liberally to include supplies made to third parties. Accepting the petitioner’s interpretation would amount to rewriting the notification and diluting its safeguards.

Reliance placed on settled principles laid down by the Supreme Court of India, the Court reiterated that exemption and concessional rate notifications must be interpreted strictly. The burden lies on the assessee to clearly establish eligibility. Where conditions are prescribed, they must be fulfilled in letter and spirit, and courts cannot add to or subtract from the statutory language. The High Court dismissed the writ petition and held that the petitioner was not entitled to the concessional rate.

Case Name: M/s. Time Technoplast Ltd. Versus The Union of India, Ministry of Finance, Department of Revenue, New Delhi, The Principal Chief Commissioner of Central Tax Bengaluru, The Commissioner of Central Tax Belagavi, The Commissioner of Commercial Taxes, Bangalore. dated 11.03.2026

To read the complete judgement 2026 Taxo.online 630