Delhi High Court quashes GST on oxygen concentrators

The Delhi High Court on Friday held the Government’s imposition of Goods and Services Tax (GST) on oxygen concentrators imported for personal use as ‘unconstitutional’ and said oxygen concentrators constitute a life-saving device during the COVID-19 pandemic.

“This is a George Floyd moment for the citizens of this country. The refrain is — ’I can’t breathe’ — albeit, in a somewhat different context and setting; although in circumstances, some would say, vastly more horrifying and ghastlier. Chased and riven by the merciless novel coronavirus, the citizenry has been driven to desperation and despair,” the judgement from the HC Bench of Justices Rajiv Shakdher and Talwant Singh noted.

The bench held that oxygen concentrators constitute a life-saving device during the ongoing COVID-19 pandemic and therefore, should be treated on par with life-saving drugs. “Oxygen concentrator, on the face of it, is a life-saving device,” Justice Shakdher said. 

“In times of war, famine, floods, pandemic, a different approach needs to be adopted,” the High Court Judge said. 

‘Thought it was an oversight’ 

The petitioner in the case, a senior citizen whose nephew had shipped him a concentrator as a gift, had challenged a May 1 notification that levied 12% GST on such imports from 28% earlier. He invoked Article 21 of the Constitution which enshrines the fundamental right to life.

When the matter was initially taken up, the bench ‘carried the impression that because of the prevailing chaos and confusion caused by the raging pandemic’, the State had not granted the GST exemption on such imports ‘due to an oversight.’

The court had asked the government to consider temporarily dropping the 12% GST levied on such imports altogether, citing the shortage of oxygen in the second wave of the pandemic.

The Finance Ministry had refused to comply, stating that if the petitioner’s argument about Article 21 is accepted, ‘it will lead to absurd consequences and interpretations, where in citizens will be seeking exemption from Property tax, since housing is an essential facet of Right of Life… or exemption from taxes imposed on several food items since Right to Food has been held by the Supreme Court to be a part of Right of Life under Article 21’.

As its hopes of ‘a course correction’ from the Centre didn’t materialise, the judgement noted: “Our attempt at nudging the State to take, what we thought was a reasonable stand, [and we dare say, a morally right position] has come a cropper,” before holding the GST levy unconstitutional.  

While quashing the relevant notification, the court said that persons importing oxygen concentrators should furnish an undertaking that the devices won’t be used for commercial purposes.  

Referring to the impact of the GST levy on such imports on overall GST collections, Justice Shakdher said: “…Without giving us details as to why this will debilitate the State if tax on such transactions was not collected where individuals import oxygen concentrators for personal use, we have said you have not really discharged the burden. You have to justify it in these situations.” 

The Court had reserved its judgement following Tuesday’s proceedings assisted by Amicus Curiae Arvind Datar.  

Pointing out that the Customs Act allows for a nil rate of Integrated GST (IGST) for lifesaving drugs for personal use, the Court said: “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 whereby paragraph 2.25 of the Foreign Trade Policy was revised.”  

The said notification had allowed the import of concentrators for personal use by treating them as a ‘gift’ – which had so far only applied to life saving drugs and Rakhis. A day later, the government had notified a reduction in the IGST rate from 28% to 12%.   

“We have also indicated and taken judicial notice of the fact that funds have been allocated for healthcare in this Budget… We would have liked more time to delve on these issues but both of us thought that time is of the essence and waiting too long would take away the meaning of the judgement,” Justice Shakdher said.  

‘Recipients can afford GST’: Finance Ministry 

“Significant relief has already been provided on personal imports of oxygen concentrators with reduction of duty incidence from 77% to 12%,” the Ministry had said in its counter-affidavit filed with the court, adding that tax parity between commercial and personal imports will prevent misuse of the latter route. 

“It is felt that any person importing concentrator for personal use or has sources for receiving such supplies in gifts would be in better position to afford the nominal 12% GST as compared to others who source it through commercial channels,” the ministry said, urging the Court to dismiss the petition. 

Since GST rates and general exemption are prescribed on the recommendation of the GST Council, all the representations seeking GST relief shall be placed before the Council at its next meeting, the Ministry said. The GST Council is slated to meet on May 28. 

“The Government is receptive to the needs of the citizens of the country… The government has an open mind to all these requests (for tax relief and exemptions) and it would intervene for further concession, as necessary, in the present unprecedented and very dynamic situation to provide relief to the public, particularly those who are not in a position by themselves to afford the COVID relief supply,” the Ministry noted. 

Finance Minister Nirmala Sitharaman had recently shot down a request from West Bengal Chief Minister Mamata Banerjee to the Prime Minister seeking GST waivers on all COVID-19 related supplies.