2022 (12) TMI 1135 - HC - GST

Marine paint classification upheld despite mandatory ship application requirements under international conventions

Jotun India Private Limited, Versus The Union of India through the Secretary of Finance, Department of Revenue, New Delhi, The State of Maharashtra, The Maharashtra Authority for Advance Ruling for Goods and Services Tax, Mumbai, The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax Mumbai,

Jotun India Private Limited, Versus The Union of India through the Secretary of Finance, Department of Revenue, New Delhi, The State of Maharashtra, The ... Issues Involved:1. Classification of marine paints under GST.2. Applicability of advance ruling.3. Scope of writ jurisdiction against orders of Advance Ruling Authority and Appellate Authority.Issue-wise Detailed Analysis:1. Classification of Marine Paints under GST:The Petitioner, a manufacturer and supplier of marine paints, sought an advance ruling to classify marine paints as part of the ship/vessel, which would result in a lower GST rate. The Advance Ruling Authority and the Appellate Authority rejected this interpretation, classifying marine paints under Chapter heading 3208 and 3209, subject to 28% GST, instead of being considered as parts of ships under headings 8901, 8902, 8904, 8905, 8906, and 8907, which would attract a 5% GST rate. The Petitioner argued that marine paints are essential for ships' functionality and are mandated by the Merchant Shipping Act, 1958, making them an integral part of the ship. However, both Authorities concluded that marine paints, despite their mandatory application, are not integral parts of ships but standalone commodities. The Authorities emphasized that the ship could function without the paint, which only enhances comfort and durability, not its operational capability.2. Applicability of Advance Ruling:The Petitioner applied for an advance ruling under section 97 of the CGST and MGST Acts, seeking clarification on whether marine paints could be classified under Sl. No. 252 of Schedule-I of Notification No. 1/2017. The Advance Ruling Authority and the Appellate Authority held that marine paints should be classified under Chapter 3208, subject to a higher GST rate, as they are not considered parts of ships.The Authorities reasoned that the classification of goods under GST should be based on their independent existence and marketability, not on their mandatory application under other legal provisions. The Authorities distinguished judicial precedents cited by the Petitioner, which arose from different contexts, emphasizing that the marine paint's classification should be based on its standalone nature and not its functional necessity for ships.3. Scope of Writ Jurisdiction Against Orders of Advance Ruling Authority and Appellate Authority:The Court examined whether it should interfere with the orders passed by the Advance Ruling Authority and the Appellate Authority under its writ jurisdiction. The Court noted that the legislative scheme under the CGST Act provides that advance rulings are binding only on the applicant and the concerned officer, with no further appeal provided. The Court emphasized that writ jurisdiction should not be used to assume appellate jurisdiction and examine the merits of the case substantively.The Court referred to the decision in JSW Energy Limited v. Union of India, which held that the absence of an appeal does not enlarge the writ court's power of judicial review. The Court also cited the Supreme Court's decision in Appropriate Authority v. Sudha Patil, which stated that the sufficiency or adequacy of material is not open to judicial review if two views are possible. The Court concluded that the orders of the Advance Ruling Authority and the Appellate Authority were based on a considered opinion, following the principles of natural justice, and did not warrant interference in writ jurisdiction.Conclusion:The Court dismissed the writ petition, upholding the classification of marine paints under Chapter heading 3208 and 3209, subject to 28% GST. The Court found no fundamental legal error in the approach of the Advance Ruling Authority and the Appellate Authority, emphasizing that the scope of writ jurisdiction is limited and does not extend to re-evaluating the merits of the case as an appellate body.