High Court denies quashing milk producers' petitions challenging tax communications

The High Court refused to quash the writ petitions filed by the milk producers challenging communications from the Additional Assistant Director DGGI. The court noted that the investigation was ongoing, no demand had been raised, and the communication only sought particulars. The court stated that any further action would be taken in accordance with the law after hearing the petitioner and closed the writ petitions without imposing costs.

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Issues:
Challenging communications by Additional Assistant Director DGGI, Classification of flavoured milk under GST, Investigation initiated against milk producers, Request for details of GST payment, Quashing of writ petitions.

Challenging Communications:
The petitioner filed writ petitions challenging communications issued by the Additional Assistant Director DGGI on 15.07.2020 & 18.07.2020. The Senior Panel Counsel for R1 informed the High Court that no communication dated 21.02.2020 was made with the milk producers. An investigation was initiated against the milk producers for wrongly classifying flavoured milk under GST. An authorization for inspection was issued, and inspection was conducted on the premises of the milk producers. A summons was issued under Section 70 of the CGST Act, and a voluntary statement was recorded from the DGM (Finance) regarding the GST amount for flavoured milk. The office requested details of the GST payment from the milk producers.

Classification of Flavoured Milk under GST:
The investigation revealed that the milk producers were wrongly classifying flavoured milk under HSN 0403 instead of HSN 2202 99 30, resulting in a lower GST rate. The DGM (Finance) admitted to the differential GST amount for flavoured milk/milk shakes and changed the GST HSN to 0403 with GST @ 5% from 01.11.2017 instead of 2202. The office requested details of the GST payment made by the milk producers in view of the voluntary statement.

Investigation Initiated Against Milk Producers:
An investigation was initiated against the milk producers for wrongly classifying flavoured milk, leading to a lower GST rate. The Additional Assistant Director issued an authorization for inspection, and the inspection was conducted at the premises of the milk producers. A Mahazar was drawn on the spot, and a summons was issued under Section 70 of the CGST Act. A voluntary statement was recorded from the DGM (Finance) regarding the differential GST amount for flavoured milk/milk shakes.

Request for Details of GST Payment:
The office requested the milk producers to provide details of the GST payment made in view of the voluntary statement recorded from the DGM (Finance). The investigation was ongoing, and no demand had been raised yet. The proper officer stated that after completion of the investigation, a demand notice under Section 73 or 74 of the CGST Act would be issued.

Quashing of Writ Petitions:
The office requested the High Court to quash the writ petitions filed by the milk producers as the investigation was still ongoing, and no demand had been raised yet. The court noted that the impugned communication only sought particulars from the petitioner, and any further action would be taken in accordance with the law after hearing the petitioner. The court closed the writ petitions without imposing any costs.

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