TaxTMI 
TaxTMI 
2020 (9) TMI 929
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....No. 1, a society comprising of members engaged in the manufacture of fabrics, has invoked the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India, 1950 ("Constitution") seeking inter alia a writ in the nature of mandamus directing the Central Government ("Respondent No. 1") as well as the Government of NCT of Delhi ("Respondent No. 2") to notify the GST rate of 5% for all varieties of fabrics falling under Chapters 50 to 63 of the Customs Tariff in furtherance of the recommendations made by the Goods and Service Tax Council ("Respondent No. 3"). 4. Briefly stated, the subject matter of the present petition revolves around three GST Notifications, the details whereof are as follows: (i) No. 1/2017-Central Tax (Rate) dated 28.06.2017 issued by Respondent No. 1 under Section 9(1) of the CGST Act, 2017, notifying the rate of central tax at 6% on Intra-State supply of fabrics; (ii) No. 1/2017Integrated Tax (Rate) dated 28.06.2017 also issued by Respondent No. 1 under Section 5(1) of the IGST Act, 2017, notifying the rate of integrated tax at 12% on Inter-State supply of the fabrics; (iii) No. 1/2017-State Tax (Rate) dated 30.06.2017 issu....
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....and yarn at the rate of 18%; tax all fabrics at 5 %; tax apparels sold at a value exceeding Rs. 1,000 per piece at the rate of 12% and tax apparels sold at a value exceeding Rs. 1,000 per piece at the rate of 5%. The Council also agreed that if there was credit accumulation on account of inverted duty structure at the fibre stage, no cash refund would be given." 2. The submission of the learned counsel for the Petitioner is that the GST Council has decided the rate of tax on fabric items. He also refers to Agenda item No.4 wherein the council has approved the rates of GST on supply of goods as listed in Volume - 2 of the detailed agenda notes subject to modification No. (vi) which read as; "(vi) to tax all the varieties of fabric at the rate of 5% instead of the proposed rate of 12% and not to allow cash refund of any accumulated credit of duty arising out of inversion of tax". 3. Learned counsel for the Respondent submits that he will take instruction in this respect and is presently instructed to state that the reduction of the rate is only related to cotton and natural fabric. 4. Let the Respondent file an affidavit on the aforesaid aspect within four weeks. 5. List on....
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....ncil on the grounds that GST rate on technical textiles and specialised fabrics of chapters 56 to 59 shall attract GST at the rate of 12% as these fabrics attracted more than 13% tax incidence in pre-GS'T regime. However, the GST rate on very few items of these chapters were reduced by the GST Council to 5% without refund of ITC, as the trade requested that these fabrics are apparel fabrics, same as Man-made fabrics of chapter 50 to 55 attracting 5% GST and should not be given the GST rate of technical and industrial fabrics. These included corduroy fabrics and velvet fabrics, narrow woven fabrics of heading 5806 and all woven pile fabrics and chenille fabrics under tariff heading 5801." In the light of the aforesaid, we have heard further submissions of learned counsels. It is pointed out by Mr. Shah, learned counsel for the petitioner that on a perusal of the minutes of the 15th GST Council Meeting, held on 03.06.2017, it emerges that the decision of the Council is, inter alia, contained in paragraph 9.8.10. The Council agreed to keep raw silk and raw jute at Nil rate of GST and tax cotton and other natural fibres at the rate of 5%. It also decided to tax all fabrics at the....
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.... detailed resolution/decision, to the following effect: "Agenda Item 14: Clarification on GST rate on fabrics and articles of textiles falling in Chapters 56 to 59 of the tariff pursuant to the order of the Hon'ble High Court of Delhi in Writ petition (Civil) No. 597 of 2019 Manufacturers Traders Association & Anr. had filed Writ Petition (Civil) No. 597 of 2019 in the Hon'ble High Court of Delhi, challenging the levy of 12% GST on fabrics of chapters 56 to 59 of the HS on the grounds that as per paragraphs 9.8.10 and 9.8.11 of the Minutes of the 15th GST Council Meeting held on 03.06.2017, all fabrics should be subject to a uniform GST rate of 5% and there is no recommendation of GST rate of 12% on any fabrics by the GST Council. 2. The relevant paragraphs of the minutes of 15th GST Council meeting read as under: "9.8.10. After discussion, the Council agreed to keep raw silk and raw jute at Nil rate of GST; tax cotton and other natural fibres at the rate of 5%; tax man-made fibre and yarn at the rate of 18%; tax all fabrics at 5 %; tax apparels sold at a value exceeding Rs. 1,000 per piece at the rate of 12% and tax apparels sold at a value exceeding Rs. 1,000 per piec....
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....ngs after the rollout of GST. The Council did not recommend any change in the tax structure on these goods i.e. technical textiles and specialized fabrics of chapters 56 to 59. 6. As per the direction of the Hon'ble High Court, copy of the order dated 11th October, 2019 of the Hon'ble Delhi Court is placed before the Council with above submission." (emphasis supplied) 8. In view of the aforesaid clarification, the controversy is now put to rest. Respondent No. 3 has confirmed that it had recommended a rate of 12% on specialized and industrial fabrics. Respondent No. 3 has also confirmed that it did not recommend any change in the tax structure on these goods i.e. technical textiles and specialized fabrics which fall under Chapters 56 to 59 of the Customs Tariff. Now, in the face of aforesaid stance, Mr. Prakash Shah, learned counsel or the Petitioner contends that the Court should disregard the aforesaid decision and still grant relief sought in the present petition. Mr. Prakash Shah, submits that Respondent No. 3 has wholly erred and misdirected itself by not examining the issue in the right perspective. He again refers to the minutes of the 15th GST Council Meeting and sub....
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....under: (a) Cotton fabrics - 6.19% (3.38% on account of Excise + 2.81% on account of VAT) (b) Silk fabrics - 8.4% (5.25% on account of Excise + 3.15% on account of VAT) (c) Woollen fabrics - 4.04% (2.36% on account of Excise + 1.68% on account of VAT). (d) Fabrics of other natural fibres - 4.12% (2.01% on account of Excise + 2.11% on account of VAT) (e) Man-made fabrics- 11.88% (7.85% on account of Excise + 4.03% on account of VAT) 4. That it is respectfully submitted that the GST rate structure on all goods of the textile value chain was deliberated at length during the 15th meeting of the GST council held on 03.06.2017. Based on the Pre-GST tax incidence, the council recommended 18% GST on Man-made filaments and yams. The pre- GST tax incidence on Man-made fabrics including embedded taxes was more than 11%. Therefore, a GST rate of 12% was recommended on fabrics by the Fitment Committee. However, considering that there was no tax on Man-made fabrics of chapters 50 to 55 and 60 of the tariff in Pre-GST regime and considering the involvement of large number of powerlooms and handloom weavers in the MSME sector in this sector, the council recommended to fix GST rate of 5%....
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.... in the Rajya Sabha. We find the aforesaid contention to be unconvincing and meritless. A perusal of the response reveals that the Union Minister for Finance while responding to a question raised in connection with organized traders and unorganized sellers in textile sectors, stated that the GST rate structure for textile sector was discussed in detail in the GST Council Meeting held on 03.06.2017, and that the Council recommended the detailed rate structure for textile sector. The tabulation which form part of the response reflects the notified GST rates as 5%. This response of the Union Minister for Finance to a query, cannot prevail over the decision of the GST Council. It can also not form the basis for impugning the decision of GST Council or the notification notifying the tax rate. The Respondent No. 3 is a Constitutional body chaired by the Union Minister for Finance and all other members are the Union Minister of State for Finance, and Ministers for Revenue or Finance of all the states. The 101st Amendment to the Constitution had brought into existence the GST framework and created Respondent No. 3 as the highest deliberative forum to resolve the issues arising out of the i....