Court upholds fish meal exemption under Exemption Notification; Circular invalidated.

The court held that the petitioner's fish meal product qualifies for exemption under Sl.No.102 of Exemption Notification No. 2/2017. The Circular issued by the Central Board of Indirect Taxes and Customs, which sought to deny this exemption, was deemed unsustainable and set aside. The court emphasized that the legislative intent and explicit inclusion of fish meal in the exempted entries supported the petitioner's position. Actions taken by the Revenue based on the Circular were declared invalid, affirming the petitioner's right to the claimed exemption.

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Issues Involved:
1. Classification and Taxability of Fish Meal under GST.
2. Validity of Circular No. 80/54/2018-GST dated 31.12.2018.
3. Interpretation of Exemption Notifications No. 1/2017 and 2/2017.
4. Powers of the Central Board of Indirect Taxes and Customs under Section 168 of the CGST Act, 2017.

Detailed Analysis:

Issue 1: Classification and Taxability of Fish Meal under GST
The petitioner, a manufacturer of fish meal, contended that their product is exempt from GST under entries 2301 and 2309 of the Customs Tariff Act, 1975, which are included in Sl.No.102 of Exemption Notification No. 2/2017. The process involves procuring fresh fish, steam boiling, drying, and pulverizing it into a powder form. The petitioner argued that fish meal, whether used directly as aquatic feed or as an ingredient in other feeds, should be exempt from GST.

Issue 2: Validity of Circular No. 80/54/2018-GST dated 31.12.2018
The Circular issued by the Central Board of Indirect Taxes and Customs clarified that fish meal and other raw materials used for making cattle/poultry/aquatic feed are not exempt under Sl.No.102 of Exemption Notification No. 2/2017. The petitioner challenged this Circular, arguing that it incorrectly interpreted the exemption notification and contradicted the legislative intent.

Issue 3: Interpretation of Exemption Notifications No. 1/2017 and 2/2017
The court examined the relevant entries in the Customs Tariff Act and the exemption notifications. It was noted that entries 2301 and 2309, which include fish meal in powdered form, are explicitly covered under the exemption. The court found that the finished product of fish meal, even if used as an ingredient in other feeds, retains its exempt status. The court emphasized that the exemption notifications should be interpreted in a manner that aligns with the legislative intent and the explicit inclusion of fish meal under the exempted entries.

Issue 4: Powers of the Central Board of Indirect Taxes and Customs under Section 168 of the CGST Act, 2017
The court scrutinized the powers granted under Section 168, which allows the Board to issue orders or instructions for uniform implementation of the Act. It was determined that such powers are procedural and not substantive. The court held that the Board's Circular cannot override the statutory exemption provided under the notifications issued by the Central Government. The Circular was deemed to be beyond the scope of the Board's authority as it attempted to substantively alter the exemption status of fish meal.

Conclusion:
The court concluded that the impugned Circular was unsustainable and set it aside. It was ruled that the petitioner's fish meal, as a finished product, is entitled to exemption under Sl.No.102 of Exemption Notification No. 2/2017. Consequently, any actions taken by the Revenue based on the Circular were declared invalid. The court allowed the writ petitions, affirming the petitioner's right to the claimed exemption.

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