Exemption from GST by issue of Notification :
♦ Section 11(1) of CGST Act empowers Government to exempt any goods or services, by issuing notification on recommendation of GST Council [similar section 25(1) of Customs Act in respect of customs duty]
♦ Such exemption may be partial or full, conditional or unconditional.
♦ Absolute i.e. unconditional exemption (wholly or partly) is compulsory, while conditional notification is at option of taxable person.
♦ Government can also grant exemptions in exceptional cases under section 11(2) of CGST Act. This is a specific exemption and not a general notification.
♦ Government can add an explanation to exemption notification issues, within one year of issue of notification.
♦ An exemption notification should be strictly construed, but purposive construction is permissible.
♦ Strict interpretation of exemption notification at first stage but not at later stage.
♦ End use is not relevant for exemption unless specified in notification. ‘For use’ means for intended use.
♦ Department cannot challenge the certificate/clarification/license/authorization issued of prescribed authority.
♦ Principle of promissory estoppel can apply to an exemption notification i.e. Government cannot resile from its promise.
♦ However, exemption can be withdrawn anytime if time period was not specified in exemption notification.