2020 (12) TMI 1207 - AAR - GST

Scope of Advance Ruling application - Classification of goods - Flavored Milk - to be classified under HSN 0402 99 90 or under 2202 99 30 or under any other Chapter? - HELD THAT - It is an undisputed fact that the applicant supplies the impugned product under the brand name Nandini , to the owner of the said brand M/s. KMF, against whom an offence case is pending before DGGI, Bangalore. The applicant themselves admitted that M/s KMF hold 90% shares and hence have management / administrative control over the applicant. M/s KMF are the owners of Nandini brand, against whom an offence case is pending before DGGI, Bengaluru on classification of flavoured milk. Thus it is very clear that the applicant, being the job worker to M/s KMF, becomes part of M/s KMF, as they also supply the same product of flavoured milk and hence is bound to oblige the conclusion of the proceedings in this regard. Hence the pendency of the proceedings automatically applies to the applicant also. Therefore the instant application is liable for rejection, under first proviso to Section 98(2) of the CGST Act 2017. The application is rejected as inadmissible , in terms of first proviso to Section 98(2) of the CGST Act 2017.

Summary

Issues involved:
Classification of flavored milk under HSN 0402 99 90 or 2202 99 30, Admissibility of the application

Classification of flavored milk:
The applicant, a registered society engaged in processing milk and milk products, sought an advance ruling on the classification of flavored milk under tariff headings 0402 99 90 or 2202 99 30. The applicant supplies flavored milk under the brand name "Nandini," owned by another entity, against whom an offense case is pending. The applicant argued that the issue of classification is not pending in any proceedings under the CGST/KGST Act. However, it was noted that the applicant is a shareholder in the entity that owns the brand "Nandini," and as the offense case against the brand owner is pending, the applicant is bound by the conclusion of those proceedings. Therefore, the application was deemed inadmissible under the first proviso to Section 98(2) of the CGST Act 2017.

Admissibility of the application:
The applicant contended that the issue of classification of flavored milk was not pending in any proceedings related to the applicant under the CGST/KGST Act. They argued that they and the brand owner were separate legal entities with different registrations. However, it was highlighted that the applicant is a shareholder in the brand owner entity, and as the offense case against the brand owner is unresolved, the applicant is affected by the outcome. The applicant's plea for admissibility was rejected based on their association with the brand owner and the pending offense case, leading to the rejection of the application as inadmissible under the CGST Act 2017.