TaxTMI 
TaxTMI 
2026 (4) TMI 1333
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....of prevailing tariff entry. 4. On 1 September 2023, the Deputy Commissioner of State Tax initiated audit proceedings against the petitioner for the period 2020-21, in terms of Section 65 of the CGST Act. Under the said audit proceedings, the petitioner was called upon to produce books of accounts and records and other documents. It is the petitioners case that the petitioner complied with the said requisition. 5. It is the petitioners case that on 24 February 2023, on a purported belief of short payment of tax, owing to mis-declaration of supply, the Chief Commissioner CGST & CX, Mumbai Zone directed the Commissioner CGST & CX, Thane to verify tax compliance by the petitioner and recover tax dues, if any. It is also the petitioners contention that this was based on the observations of alleged short payment of tax owing to mis-declaration of supply of the subject-good "Blood Glucose Monitoring System" and consequent discharge of GST liability @12% instead of applicable GST @18%. 6. On 21 April 2023, a summons under Section 70 of the GST Act was issued to the petitioner. In compliance of the said summons, the Authorized signatory of the petitioner appeared before the Superin....
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.... Our physical & email submissions on 20 November 2023 ● Our email dated 3 January 2024 We, Ascensia Diabetes Care India Pvt. Ltd. (hereinafter referred to as 'we' or 'us' or company'), being registered under Maharashtra Goods and Services Tax Act 2017, Central Goods and Services Tax Act 2017 and Integrated Goods and Services Tax Act 2017 bearing the captioned GST registration number are in receipt of Intimation Notice in Form DRC-01A dated 31 July 2024 intimating and advising us about short GST lability payable under Section 74(5) of CGST Act, 2017 and Section 122 of the CGST Act, 2017 Maharashtra GST Act, 2017 read with IGST Act, 2017 The Intimation Notice alleges that company has short paid GST of INR 5.21 crores on supply declared under HSN 9027 and accordingly advised the company to discharge such short payment of GST along with interest and penalty as per Section 74(5) of CGST Aet, 2017, by 1 August 2024 failing which Show Cause Notice will be issued under section 74(1). It is further mentioned therein that, In case Company wished to file any submissions against the above ascertainment, the same may be furnished by 1 August 2024 in part B of th....
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....under HSN 9027 and correctly paid GST at the rate of 12 per cent under sr. no. 212 of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017. The Respondents in their reply affidavit have accepted the same. (ii) The other product imported and supplied by the Petitioner is "Diastix" - a ready to use test strip specifically designed to test the glucose in the urine under HSN 3822. iii) There can be no demand in the impugned show cause notice on the Urine Glucometer as they are covered under HSN 3822 and are covered under Entry 80 of Schedule II and subject to 12 per cent GST. (iv) The records of the Petitioner indicate that it supplied only Blood Glucose Meter of HSN 9027. No other product of HSN 9027 is supplied by the Petitioner. (v) The Respondents, without complying with the directions of this Hon'ble Court dated 14.10.2024, in their reply, instead of indicating clearly whether impugned demand includes urine glucose monitoring instrument and if so, the break-up of the amount of 5.21 crores demanded in the impugned show cause notice, contends that the Petitioner succeeds in their contention that they are selling one and only blood glucose m....
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.... 8. Until next date, adjudication of show cause notice should not be proceeded with." 14. Mr. Shah has contended that in the petitioner's own case, in Ascensia Diabetes Care India Pvt. Ltd. Vs. The Union of India and Anr 2022 (11) TMI 871 Bombay High Court, the issue of classification was subject matter of adjudication, when the Court had considered that in the context of a show cause notice which was challenged by the petitioner, the petitioner had relied on the decision in Bayer Pharmaceuticals Pvt. Ltd. Vs. Commissioner of Customs, Mumbai 2016 (331) E.L.T. 317 wherein it was held that the goods Glucometers consisting of Glucometer, test strips, Lancet device and user guide will get classified under 9027 and not under 9018, which was binding on the adjudicating authority. The petitioner also contended that they were incorporated in India in line with the global arrangement for sale between Bayer and Panasonic, and therefore, Bayer (supra) was the petitioner's own case. It is in such context that the Court delved on the issue of classification. The Court entertain the Writ Petition, rejecting the respondents contention on alternate remedy and considered the issues whether th....
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....that even the Appellate Authority in another matter had accepted that Glucometer will get classified under 9027 and not 9018. It is pertinent to mention that Petitioner even clarified to the adjudicating authority that Bayer AG, Germany sold its entire diabetes care business to Panasonic Healthcare, Japan. Panasonic Healthcare, Japan for the acquisition of diabetes care business formed a new company named Ascensia Diabetes Care across the world including India. Accordingly, Petitioner was formed by Panasonic in India to acquire diabetes care business in India. Petitioner was incorporated in India on 5th November, 2015 in line with the global arrangement for sale between Bayer and Panasonic. Mr. Dada therefore submitted that the Bayer (supra) was in Petitioner's own case. 6. Mr. Dada further submitted that judicial discipline would require that Respondent No. 2 had followed the ruling of CESTAT in Bayer (supra) since ratio laid down by CESTAT in Bayer (supra) was binding on the Department. 7. The fact in Bayer (supra) were identical to the case at hand and the short Judgment in Bayer (supra), for ease of reference, is reproduced herein; ". This appeal is d....
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....e countries, like India, also follow the Customs Tariff based on the WCO HSN Explanatory notes. But the Commissioner in the impugned Order held that the earlier Order of Commissioner (Appeals) as well as the U.S. Customs and Canadian Tribunal Rulings dealt with complete glucose monitoring systems whereas the goods in the present case are only Glucose meters with user guide and not a complete glucose monitoring systems set. The leaned Counsel argued that the Glucose meter will continue to be classified under Heading 90.27 only, irrespective of the fact whether it is packed with test strips etc. because the glucometer gives the essential character to the entire kit. According to him, the actual analysis is undertaken by the glucometer only and the test strip does not play any role in testing and analyzing of the sample by the glucose meter. To substantiate this point, he referred to Sr. No. 65 of notification No. 6/2006 which specifies that Blood Glucose monitoring system (Glucometer) and test strips will be subject to SAD duty of 4%. According to him, this indicates that the glucose monitoring system refers to glucometer only. 3.2. The learned Counsel argued that HSN Explan....
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....illogical to say that the Glucose meter with strips will be classifiable under heading 90.18 whereas the Glucose meter without strips will get classified under heading 90.27. Therefore we reject this argument of the Commissioner. 6. For a deeper examination of the issue, we may refer to the HSN Explanatory Notes and the Customs Tariff Act. The General Rules for the Interpretation of the Customs Tariff Act provide that (Rule 1) for legal purposes classification shall be determined according to the terms of the Headings and any relative Section or Chapter notes We find in this case that heading 90.27 covers instruments for chemical analysis. This heading appears to be more specific than the description of heading 90.18 which covers instruments used in medical, surgical etc. sciences. Thus by virtue of Rule 3 which says that a specific description is to be preferred over a general description, the Heading 90.27 appears more appropriate. 6.1. Further, we may refer to the HSN Explanatory Note to heading 90.18 which states that This heading covers a very wide range of instruments and appliances which, in the vast majority of cases, are used only in professional practice....
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....ent is not applicable in our view because the Hon'ble Apex Court was considering a matter where the Court had entertained a Writ Petition under Article 226 of the Constitution of India at the stage of show cause notice. 9. We are inclined to reject this submission of Mr. Mishra on alternate remedy because Respondent No. 2 has not even examined the merits of the case when there was a binding order of CESTAT in the case of Bayer (supra). Having considered the judgment of Bayer (supra), relegating Petitioner to exercise its alternate remedy would be a mere exercise in formality when CESTAT has already passed well considered order in exercise of its statutory jurisdiction in Petitioner's own case. As the Tribunal has already expressed its views in an identical matter and has classified the Glucometer under 9027, an Appeal to CESTAT against impugned order would be a mere idle formality. 10. Moreover, with this background, Petitioner will also have to make compliance with an onerous precondition of mandatory pre-deposit. When the order is ex facie erroneous and patently in violation of principles of judicial discipline and doctrine of stare decisis, in our view, this is....
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....d/or would stand concluded in view of the decision in the petitioner's own case (supra) on classification. This is clear from the reading of the impugned show cause notice which is on a different foundation as noted by us above. Also for completeness, the relevant part of the show cause notice is required to be noted which reads thus: "4. Based on the Intelligence reference No. CIU/MZ/1340/2023 vide letter F.No. IV/16-Tech-76/CI/PCCO/MZ/2021-Pt-II dated 24.02.2023 was received from the PCCO, CGST & CX. Mumbai Zone, an enquiry was initiated against the taxpayer, M/s. Ascensia Diabetes Care India Pvt Ltd. on the ground that M/s Ascensia Diabetes Care India Pvt Ltd (GSTIN-27AANCA9421BIZS) declared the supply of goods majorly under HSN 9027, which is for instruments and apparatus for physical or chemical analysis (for example: polarimeters. refractometers, spectrometers, gas or smoke analysis apparatus); instruments and apparatus for measuring or checking viscocity, porosity, expansion, surface tension or the like: instruments and apparatus for measuring or checking quantities of heat, sound or light (including exposure meters), microtomes, and discharging GST liability @ 12% ....
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....e is a specific entry in the GST Rate Schedule for the product Blood Glucose Monitoring System. However, the representative assured that if any liability arises on the said issue the Company will pay the differential tax amount along with applicable interest and penalty. 9. The taxpayer M/s Ascensia Diabetes Care India Pvt Ltd. vide letter did. 20.11.2023 has submitted the reconciliation of Input Tax Credit (ITC) availed in GSTR-3B with GSTR-2A for the FY 2019-20 to 2021-22, sample copies of sales invoices, details towards reimbursement of expenses for FY 2018-19 and 2019-20, brief write up on nature of other income, details of export transactions for FY 2017-18 to 2021-22 10. Whereas the taxpayer M/s. Ascensia Diabetes Care India Pvt. Ltd. is dealing in goods as a supplier of instruments and appliances used in medical, surgical, dental or veterinary sciences including scientigraphic apparatus, etc and as per analysis of data, it is observed that the taxpayer has declared supply of goods majority under HSN 9027 which is for instruments and for physical or chemical analysis. The description of H5Ns 9027, 90278 90278090 of Chapter 90 rate of GST thereon is summarize....
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....and thereby the taxpayer has short paid their GST liability amounting to Rs. 5.21 Crores which is liable to be demanded and recovered from them under Section 74(1) of the CGST Act, 2017. 12. It is evident that the provisions of both the CGST Act and MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the MGST, Act. 13. The taxpayer is required to correctly assess the GST payable in respect of bills raised/supplies made by them. The taxpayer is operating under self-assessment system and the onus is on them to ensure that all the stipulations laid down in the CGST Act, 2017 and Rules made there under are complied with and the statutory dues are discharged. The above points explicit towards the fact that during the relevant period the taxpayer had short paid the tax in as much as, they have failed to correctly assess the appropriate taxes due on the value of taxable supplies under Section 49 of the CGST Act, 2017. Thus, it appears that the taxpayer has deliberately evaded the payment of tax due under the....
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..... We find that there is an increase in the tendency in the litigants to by-pass the statutory procedure and approach the High Court in proceedings under Article 226 of the Constitution in challenging the show cause notices, sometimes even before reply to the show cause notices are filed and obviously before a view is taken by the proper officer. It cannot be held as a matter of routine that the moment a show cause notice is issued, the party on some or the other ground, by labeling the same to be a jurisdictional issue can approach the High Court to assail the show cause notice and stall the proceedings of the show cause notice. Such litigation, in our opinion, needs to be deprecated, as this would amount to complete discarding of the statutory procedure mandated under the provisions of the concerned laws, whereunder not only an opportunity is available to the assessee to respond to the show cause notice on all counts including on jurisdiction, but also, a remedy of an appeal is available to assail any order which would be passed on the show cause notice, and still a further appeal before the Tribunal. However, very frequently such statutory mechanism is being circumvented with imp....