2024 (10) TMI 123 - HC - GST

Cotton seed oil cake supplied as cattle feed gets GST exemption under Entry 102 regardless of buyer's GSTIN status

M/s. Dharti Industries Versus Office of Commissioner (Appeal) & Ors.

Gujarat HC held that cotton seed oil cake supplied as cattle feed is exempt from GST under Entry No. 102 of Notification No. 2/2017. The court ruled that ... Levy of GST on the supply of the cotton seed oil cake on the ground of the same being exempt under Entry No. 102 of N/N. 2 of 2017 - HELD THAT:- The petitioner was not liable to pay the VAT into Pre-GST Regime on the sale of cotton seed oil cake as the same was exempted as cattle feed. The GST Act has subsumed the earlier VAT Act and as per the Entry No. 102 of Notification No. 2 of 2017, it clearly provides for exemption to levy of GST on cattle feed. Even on perusal of the show-cause notice, it is revealed that the respondent Authority has reproduced objections raised by the Audit Party which clearly shows that the Audit Party while considering the replies made by the petitioner during the course of Audit and deliberations on the issues though recorded that the petitioner was not able to prove or state the status of the cotton seed oil cake purchasers with GSTIN but such purchasers also declined to pay up the tax on such outward supplies with the contention that since end use of the cotton seed oil cakes is only for cattle feed the product has to be exempted, meaning thereby that the merely the supply of the cotton seed oil cake to the traders would not determine the levy of GST as end use of cattle feed is not in dispute. The Hon’ble Supreme Court in case of COMNR. OF CENTRAL EXCISE VERSUS M/S. GOPSONS PAPERS LTD. & ANR. [2015 (10) TMI 443 - SUPREME COURT] has therefore, in such circumstances in the facts of the said case held that end use of the product at the ends of the purchaser is not the concern of the assessee and cannot be the consideration for classifying the goods in question. It is opined that in the facts of the case when the petitioner has made supply of the cotton seed oil cake as cattle feed, the petitioner was entitled to exemption under Serial No. 102 of Exemption Notification No. 2 of 2017. The impugned orders dated 11.01.2023 passed by the Adjudicating Authority as well as order dated 29.03.2022 passed by the Appellate Authority are hereby quashed and set aside - petition allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this case were:Whether the supply of cotton seed oil cake by the petitioner was exempt from GST under Entry No. 102 of Notification No. 2 of 2017, given its use as cattle feed.Whether the exemption provided by Notification No. 28 of 2017, which inserted Entry No. 102A, applied retrospectively from 01.07.2017.Whether the petitioner was liable to pay GST on the supply of cotton seed oil cake during the period from 01.07.2017 to 21.09.2017.ISSUE-WISE DETAILED ANALYSISExemption under Entry No. 102 of Notification No. 2 of 2017The relevant legal framework involved the interpretation of Entry No. 102 of Notification No. 2 of 2017, which provided GST exemption for cattle feed. The petitioner argued that the cotton seed oil cake was used as cattle feed and thus qualified for this exemption. The Court considered the precedent set by the Supreme Court in the case of Commissioner of Central Excise Vs. Gopsons Papers Limited, which established that the end use of a product by the purchaser is not the concern of the assessee for classification purposes.The Court found that the petitioner supplied cotton seed oil cake as cattle feed, and the end use of the product was not disputed. The Court reasoned that the mere supply of the product to traders did not determine its GST liability, as the end use for cattle feed was established. Consequently, the Court concluded that the petitioner was entitled to the exemption under Entry No. 102.Retrospective Application of Notification No. 28 of 2017The petitioner contended that the insertion of Entry No. 102A by Notification No. 28 of 2017 should apply retrospectively from 01.07.2017. The Appellate Authority had previously decided that this notification did not apply retrospectively. However, the Court did not find it necessary to analyze this issue in detail, given its finding that the supply of cotton seed oil cake was exempt from GST as cattle feed under Entry No. 102 from 01.07.2017.GST Liability from 01.07.2017 to 21.09.2017The petitioner challenged the GST liability imposed for the period from 01.07.2017 to 21.09.2017. The Court considered the objections raised during the audit and the subsequent orders by the Adjudicating and Appellate Authorities. The Court concluded that, based on the facts and the established use of the cotton seed oil cake as cattle feed, the petitioner was not liable for GST during this period.SIGNIFICANT HOLDINGSThe Court held that the petitioner was entitled to GST exemption for the supply of cotton seed oil cake as cattle feed under Entry No. 102 of Notification No. 2 of 2017. The Court emphasized that the end use of the product by the purchaser was not the concern of the assessee, aligning with the Supreme Court's reasoning in the Gopsons Papers Limited case.The Court quashed and set aside the impugned orders dated 11.01.2023 and 29.03.2022, allowing the petition and making the rule absolute. The Court did not address the retrospective application of Notification No. 28 of 2017, as it was unnecessary given the exemption under Entry No. 102.In a subsequent modification order, the Court corrected a typographical error regarding the dates of the impugned orders, ensuring clarity in the judgment.