TaxTMI 
TaxTMI 
2024 (9) TMI 759
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....section 74 of the Central/Gujarat Goods and Services Tax Act, 2017 (for short "the GST Act") as being wholly without jurisdiction. 3. The impugned show cause notice is issued to levy GST at the rate of 18% as the petitioner is engaged in manufacture of un-fried or un-cooked snack pellets through the process of extrusion and supplying the same without payment of GST by classifying it under HSN 19059040 instead of HSN 19059030. 4. These petitions are raising the similar issue of classification of the product manufactured by the petitioner under HSN 19059040 instead of HSN 19059030. 5. Having regard to the controversy involved in these petitions which is in a very narrow compass, with the consent of the learned advocates for the respective parties, matters are taken up for hearing. 6. Rule returnable forthwith. Learned advocate Ms. Sancheti waives service of notice of rule on behalf of respondent. 7. For the sake of convenience, Special Civil Application No.3711 of 2024 is treated as the the lead matter. 8. Facts of Special Civil Application No.3711 of 2024 are as under: 1) The petitioner is a private limited company and is engaged in the business of edible ....
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.... challenging the advance ruling order. The Advance Ruling Appellate Authority vide order dated 28.06.2021 allowed the appeal and held that 'papad' of different shapes and sizes are classifiable under heading 1905 which is covered by Entry no. 96 of the exemption notification and therefore, chargeable to Nil rate of tax. 8) It is the case of the petitioner that while the issue of classification was settled in case of the petitioners, the Central Board of Indirect Taxes and Customs issued impugned circular dated 13.01.2023 wherein it was clarified in para 5 that snack pellets such as fryums would be classifiable under Custom Tariff Heading 19059030 and they would be taxable at the rate of 18%. 9) It is the case of the petitioner that the authorities of Central GST department conducted audit of the returns of the books of accounts of the petitioner under the GST Act on different dates from February to April 2023 and the issue of classification of unfried fryums was raised in audit and it was alleged that tax was payable under the GST Act on supply of unfried fryums at the rate of 18% by relying upon the impugned circular dated 13.01.2023. 10) The petitioner ....
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....ed by the petitioners classifying the product under HSN 19059040. 11. In the alternative it was further submitted that Gujarat Appellate Authority for Advance Ruling while considering the issue of taxability of product 'Papad' manufactured by the petitioners has held to be classifiable under HSN 19059040 of the Customs Tariff Act, 1975 after considering the ingredients, the manufacturing process as well as its understanding in common parlance. 12. It was submitted that as per section 103 of the GST Act, Advance Ruling Appellate order is binding on the petitioners as well as jurisdictional officer and therefore, the product 'Papad' manufactured by the petitioners is liable to GST at Nil rate. It was therefore, submitted that the impugned notice is without any jurisdiction wherein it is alleged that correct manufacturing process was not pointed out by the petitioners before the Advance Ruling Authority, however, in fact the manufacturing process submitted before the Advance Ruling Appellate Authority and the process which was observed by the Audit authority is the same and therefore, the respondent authority are bound to follow the binding judgment of Advance Ruling Appellate A....
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....ion as the petitioners bonafide believe that their products were exempt from tax under the GST Act which is fortified by further issuance of the notification by the Board on the basis of Minutes of GST Council which has accepted that there were genuine doubts which existed with respect to classification of the product manufactured by the petitioners in addition to Advance Ruling of the Appellate Authority holding that the goods were exempt from tax. It was therefore, submitted that the impugned notice is liable to be quashed and set aside. 16. On the other hand, learned advocate Ms. Hetvi Sancheti for the respondent submitted that the petitioners could not have challenged the vires of para no. 5 of CBIC Circular No.189/09/2023-GST dated 13.01.2023 in view of Article 279A of the Constitution of India which provides for constitution of GST council for recommending the rate and exemptions and issuance of classification on any matter relating to GST Act. 17. It was submitted that Circular dated 13.01.2023 was issued on recommendation of GST Council and it is only a clarificatory circular. 18. It was further submitted that the petitioners did not mention the stage of extrusion ....
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.... therefore, the impugned show cause notice has been issued invoking jurisdiction under section 74 of the GST Act calling upon the petitioners as to why GST at the rate of 18% should not be levied classifying the product manufactured by the petitioners under Tariff Item no. 19059030 till 27.07.2023. 22. Learned advocate Ms. Sancheti relied upon the decision of the Apex Court in case of Commissioner of Customs(Import) Mumbai v. Dilip Kumar & Company reported in 2018 (361) ELT 577(SC) wherein it is held that Tariff notifications are to be strictly interpreted and the Courts cannot expand the scope of any tax concession. 23. Reliance was also placed on the circular No.200/12/2023-GST issued with the approval of the Board on the recommendation of the GST Council in its 50th meeting held on 11th July, 2023 clarifying that GST rate on un-fried or un-cooked snack pellets by whatever name called, manufactured through process of extrusion, the issue for past period upto 27.07.2023 in view of the prevailing genuine doubt, is to be reguarlised on 'as is' basis. 24. It was therefore, submitted that upto 27.07.2023 the petitioners are liable to pay GST at the rate of 18% on the product ....
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....uch products as a different type or variety of Papad only. 42.6 Therefore, we are of the view that applicant's products of different shapes and sizes of papad, whose pictures are reproduced above, are nothing but Papad, classifiable under Tariff Item 1905 90 40 of the Customs Tariff Act, 1975. 43. Now, the question which arises is, would it be judicious to stick that the product which are having Round shape, manufactured by using ingredient of cereal flour only are PAPAD and the products having the same characteristic and uses but shape and size is different cannot be termed as "PAPAD". We find that for classification of product, the ingredient, uses and common parlance test is decisive factor and not the name. The appellant has relied upon the decision of the various courts in their support. (a) Hon'ble Supreme Court of India in case of Shiv Shakti Gold Finger Vs. Assisstant Commissioner, Commercial Tax, Jaipur-(1996) 9 SCC 514 wherein Honourable Supreme Court has clearly observed and held that irrespective of the shape of PAPAD and irrespective of ingredients used, the PAPAD still remains PAPAD (b) In the case of State of Karnataka Vs. ....
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....herefore, in common parlance or in market, Fryums are not sold as "PAPAD" instead of "PAPAD" sold as papad and Fryums are sold as Fryums. Both the products are different and have their individual identity. Accordingly, in common parlance test, the applicant's products i.e. "different shapes and sizes of Papad" is not "Papad" but is "Un-fried Fryums". In the aforementioned paras, we have already discussed that the Fryums is a brand name and not a generic name of the product therefore, impugned product "different shapes and size of papad", known as Fryums, is nothing but Papad. 47. We find that CTH No. 2106 of Customs Tariff Act, 1975 covers the Food preparations not elsewhere specified or included means under this heading all types of foods preparation are covered which are not covered under the specific heading of tariff. It is important to refer to Chapter Notes of Heading #21 wherein under clause 5 (b) it is stated that Heading 2106 includes preparations for use, either directly or after processing (such as cooking, dissolving or boiling in water, milk or other liquids), for human consumption and under clause 6 it has been stated that Tariff item 2106 90 99 includes ....
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....eting, supply of un-cooked/un-fried extruded snack pellets by whatever name called, falling under CTH 1905 it was decided to reduce the rate from 18% to 5% by observing as under: "5.5 The first issue pertained to tax rate change on uncooked/unfried snack pellets manufactured through extrusion process where the Fitment Committee recommended to reduce GST to 5% on uncooked/unfried extruded products by whatever name called. Fitment Committee also recommended to regularize for past period on 'as is where is basis due to genuine doubts. She further informed that the said issue was also discussed in detail in the Officer's Meeting on 10.07.2023 and no objections were raised." 29. On the basis of the above minutes of the meeting dated 11th July, 2023 of GST Council in its 50th meeting, CBIC issued Circular No. 200/12/2023-GST dated 1st August, 2023 wherein it is stated as under with regard to product in question: "2. Applicability of GST on unfried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion: 2.1 In the 48th meeting of the GST Council, it was clarified that the snack pellets (such 'fryums'), w....