2023 (9) TMI 997 - HC - GST

Mango Pulp Tax Rate Reduced from 18% to 12% Under GST Circular, Providing Retrospective Relief for Taxpayers

HC set aside an Assessment Order challenging the GST rate on mango pulp. The court ruled that mango pulp should be taxed at 12% instead of 18%, ... GST rate on mango pulp - classification under heading 0804 - interpretation of Government circular - prospective versus retrospective application of departmental circular - precedential effect of Division Bench orderGST rate on mango pulp - classification under heading 0804 - interpretation of Government circular - The impugned assessment levying GST at 18% on the petitioner's fruit/mango pulp for the period 2017-18 to 2020-21 is incorrect; the correct rate is 12% as clarified in the Government circular and applied by the Division Bench. - HELD THAT: - The Court examined the Government of India, Ministry of Finance, Department of Revenue circular dated 03.08.2022 which states that mango pulp, as a form of dried mango falling under heading 0804, 'was always meant to be at the rate of 12%'. A Division Bench of this High Court in W.P.No.17267 of 2022 interpreted that clarification to mean that mango pulp was chargeable at 12% for periods prior to the circular as well. The respondents' contention that the circular operates only prospectively and therefore cannot benefit tax periods 2017-18 to 2020-21 was rejected. The Court held that the clear language of the circular and the Division Bench's reasoning establish that mango pulp attracts GST at 12% and that the assessment imposing 18% is illegal. The petitioner's relief was allowed following the Division Bench decision and the circular's explicit clarification that mango pulp was always meant to be taxed at 12%. [Paras 4, 7, 8]Assessment order levying GST at 18% on mango/fruit pulp set aside; GST on mango pulp held to be 12% for the periods 2017-18 to 2020-21.Final Conclusion: The writ petition is allowed: the impugned assessment charging GST at 18% on mango/fruit pulp is quashed and the petitioner is held liable to GST at 12% for the tax period 2017-18 to 2020-21, following the Government circular and the Division Bench precedent. Issues:The judgment involves setting aside an Assessment Order regarding the levy of tax on Fruit Pulp, interpreting the GST rate applicable on mango pulp, and determining the retrospective or prospective application of a Circular issued by the Government of India.Assessment Order Set Aside:The petitioner sought to set aside the Assessment Order passed by the 1st respondent, confirming the levy of tax on Fruit Pulp at 18% instead of 12%. The petitioner argued that a Circular clarified the GST rate for mango pulp at 12%, and a Division Bench of the High Court had previously ruled in a similar case that mango pulp should be taxed at 12%. The Court agreed with the petitioner's contention, emphasizing that the Circular had always intended mango pulp to be taxed at 12%, and therefore set aside the Assessment Order imposing tax at 18%.Interpretation of GST Rate on Mango Pulp:The Division Bench of the High Court addressed the question of the applicable GST rate on mango pulp, citing a Circular issued by the Government of India. The Circular specified that mango pulp falls under the category attracting GST at 12%, while fresh mangoes are exempt and sliced, dried mangoes are taxed at 5%. The Court concluded that mango pulp should be taxed at 12% based on the Circular and the recommendations of the GST Council. Consequently, the Court held that the petitioner was liable to pay GST on mango pulp at the rate of 12% and not 18%.Retrospective vs. Prospective Application of Circular:The Government Pleader argued that the Circular had only prospective application from 03.08.2022 and could not be applied retrospectively to tax periods from 2017-18 to 2020-21. However, the Court rejected this argument, emphasizing that the Circular clearly stated that mango pulp was always meant to be taxed at 12%. The Court held that the Circular's language indicated a consistent rate of 12% for mango pulp, leading to the conclusion that the rate had always been 12%. Therefore, the Court allowed the writ petition, setting aside the argument that the Circular had only prospective application.