April 12, Delhi/Mumbai: Cyril Amarchand Mangaldas advises Fresenius Medical Care India Pvt Ltd ("FMC") on Equitable IGST Rates for Dialysis Equipment Imports. FMC is the Indian subsidiary of the global leader in production, marketing and distribution of quality dialysis and renal medical equipment. Upon the uncertainty of the correct Integrated Goods and Services Tax ("IGST") rates applicable to “dialysis machines” and “dialysers”, FMC approached the firm first to seek advice on the correct position and also the litigation strategy to ensure that the IGST rates that its competitors were discharging and importing dialysis machines at i.e. 5%, be applied to all, universally, as opposed to higher rate of 12% at which FMC was importing the same product.

FMC inquired about IGST Rates for Dialysis Equipment Imports, contacted Customs Authorities with a silence. CAM advised FMC to immediately file a writ petition before Hon'ble Delhi High Court challenging unequitable treatment by the state and a violation of its rights under the Constitution of India, which was a successful strategic call as it allowed the client the quickest possible relief, immediately placing it at par in the market with its competitors.

The decision of the Hon'ble Delhi High Court is a landmark one with far reaching effects on the medical equipment industry.  Based on the arguments advanced, the court clarified that dialysis machines covered under HSN Code 9018 90 31 are liable to be taxed at 5%, essentially awarding a significant rebate of 7% to the client on import of dialysis machines. The decision completely puts to rest the confusion and ambiguity that has existed around applicable IGST rate for dialysis machines.

Gauhar Mirza (Partner-Disputes) argued for the client at all the stages.

The Disputes team of Cyril Amarchand Mangaldas advised on the transaction. The team was led by Gauhar Mirza, Partner; with support from Hiral Gupta, Principal Associate; and Sukanya Singh, Senior Associate Designate.

Other advisors to the transaction included Gibran Naushad, acted as legal counsel for Central Board of Indirect Taxes and Customs; Anurag Ojha, acted as legal counsel for Ministry of Finance, Department of Revenue.

The Judgment was passed by Hon’ble Delhi high Court on 9th April, 2024.