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2019 (10) TMI 667 - HC - GSTApplicable rate of Tax on different categories of Fabric - Refund of any accumulated credit of duty arising out of inversion of tax - raw silk and raw jute - HELD THAT - From what has been argued by Mr. Shah, we are inclined to agree with his submission that the decision of the GST Council was to subject all fabrics at the rate of 5% taxation and it appears that the position stated in the affidavit filed on behalf of respondent No. 3 was only the proposal of the Joint Secretary (TRU-1), CBEC, which was not agreed to or approved by the Council. The aforesaid controversy should specifically and pointedly be placed before the Council, preferably in the next meeting. A copy of our order should also be circulated so that the controversy is brought before the Council. List on 11.02.2020.
Issues:
Interpretation of GST rates on fabric items as decided by the GST Council during meetings. Analysis: The judgment revolves around the interpretation of GST rates on fabric items as decided by the GST Council during meetings. The petitioner relied on specific paragraphs from the minutes of the 15th GST Council Meeting held on 03.06.2017, which outlined the tax rates for different types of fabrics. The petitioner argued that the decision of the Council was to tax all fabrics at the rate of 5%. On the other hand, the respondent contended that the reduction in tax rate was only related to cotton and natural fabric. The respondent filed an affidavit explaining the rationale behind the GST rate structure on textile goods, emphasizing the differentiation between different types of fabrics based on their pre-GST tax incidences and industrial usage. The respondent highlighted that the GST Council recommended a 5% GST rate for fabrics made by the MSME sector, while specialized industrial fabrics were to be taxed at 12%. The respondent also mentioned that requests for reducing tax rates on certain fabric items were rejected by the GST Council due to their pre-GST tax incidences. The judgment further delves into the arguments presented by both parties regarding the Council's decisions on fabric tax rates. The Court analyzed the minutes of the GST Council meetings and concluded that the decision was to subject all fabrics to a 5% tax rate, contrary to the proposal mentioned in the affidavit filed by the respondent. Consequently, the Court directed that the controversy be brought before the Council in the next meeting for clarification and further consideration. The case was listed for a future date for further proceedings. This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the interpretation of the GST rates on fabric items as per the GST Council meetings, and the Court's direction for future clarification from the Council.
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