Animal feed supplement classification challenge succeeds - Bio Pro-Enhac reclassification order set aside for fresh consideration

The Andhra Pradesh HC partly allowed a writ petition challenging HSN code classification of animal feed supplements. The petitioner sought classification under HSN 2309 for Bio Pro-Enhac, Minwa and Minwa Plus products, while the respondent classified Bio Pro-Enhac under HSN 2936 due to insufficient information about content percentages. The HC found the respondent failed to analyze relevant SC precedents regarding feed supplements classification. The court set aside the impugned order dated 07.02.2023 regarding Bio Pro-Enhac classification and remanded the matter for fresh consideration with proper hearing opportunity.

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Issues Involved:
1. Taxability of "Bio Pro-Enhac" under GST.
2. Taxability of "Minwa and Minwa Plus" under GST.
3. Applicability of HSN codes 2309, 2936, and 2931.
4. Validity of the impugned assessment order dated 07.02.2023.

Summary:

1. Taxability of "Bio Pro-Enhac":
The petitioner argued that "Bio Pro-Enhac" is a variety of shrimp feed containing elements such as calcium, propionate, fish meal, wheat bran, and corn meal, and should be classified under HSN code 2309, which exempts it from GST. The 1st respondent contended that "Bio Pro-Enhac" falls under HSN code 2936, which covers "Pro vitamins and vitamins, natural or reproduced by synthesis," and is taxable at 18%. The court noted that the 1st respondent rejected the petitioner's claim primarily because the petitioner did not provide information about the content percentage of the elements used in "Bio Pro-Enhac." The court found that the 1st respondent did not properly discuss and analyze the relevant case law, including the decision in Sun Export Corporation, which held that supplements and additives of animal feed are also covered under the generic term "animal feed." Therefore, the court set aside the impugned order to the extent of the finding on "Bio Pro-Enhac" and remanded the matter for fresh consideration.

2. Taxability of "Minwa and Minwa Plus":
The petitioner claimed that "Minwa and Minwa Plus" are micro minerals used as feed supplements and should be classified under HSN code 2309, which exempts them from GST. The 1st respondent argued that these products are used to stabilize alkalinity and control PH fluctuations in water and fall under HSN code 2931, which covers "other organo-inorganic compounds" and is taxable at 18%. The court agreed with the 1st respondent, noting that the main purpose of "Minwa and Minwa Plus" is to maintain PH levels in shrimp ponds, not to act as shrimp feed or feed supplements. Therefore, the court upheld the impugned order to the extent that it classified "Minwa and Minwa Plus" under HSN code 2931 and found them taxable at 18%.

3. Applicability of HSN Codes:
The court considered the applicability of HSN codes 2309, 2936, and 2931. HSN code 2309 covers animal feed supplements that improve digestion and safeguard health, while HSN code 2936 covers vitamins and pro-vitamins that are medicinal in nature. HSN code 2931 covers "other organo-inorganic compounds." The court found that "Bio Pro-Enhac" requires further examination to determine its correct classification, while "Minwa and Minwa Plus" correctly fall under HSN code 2931.

4. Validity of the Impugned Assessment Order:
The court found that the impugned assessment order dated 07.02.2023 did not properly address the petitioner's arguments and relevant case law regarding "Bio Pro-Enhac." Therefore, the court set aside the order to the extent of the finding on "Bio Pro-Enhac" and remanded the matter for fresh consideration. The court upheld the order regarding "Minwa and Minwa Plus."

Conclusion:
The writ petition is partly allowed. The impugned order dated 07.02.2023 is set aside concerning the classification of "Bio Pro-Enhac," and the matter is remanded for fresh consideration. The order is upheld regarding the classification of "Minwa and Minwa Plus." No costs.

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