2021 (3) TMI 842 - HC - GST

Classification of goods - Roja Pakku - Change in classification, post GST - whether it come under Chapter 8 of the Central Excise Tariff Act, 1985 or classified under Chapter 21? - HELD THAT - There is considerable merit in the contention of the petitioner's counsel that the petitioner also deserves to be given a treatment of parity and not taxed at a higher rate, if the petitioner's product is comparable to Nizam Pakku and Crane Pakku. More than anything else, as per Article 141 of the Constitution of the India, the law declared by the Hon'ble Supreme Court is law of the land. Merely because the petitioner had earlier opted to be classified under Chapter 21, the petitioner's past conduct cannot operate as estoppel. In fact, the petitioner's counsel made it clear that he will still clear all controversy and he will respond to the show cause and participate in enquiry, that may be initiated by the respondent - the writ petition is disposed of giving liberty to the respondent to proceed against the petitioner with the demand but then, by not putting the petitioner's past conduct against him.

Summary

Issues:
Classification of betel nut product under Central Excise Tariff Act, 1985 - Chapter 8 or Chapter 21
Taxation rates post-GST for products under Chapter 21
Maintainability of the writ petition due to premature approach by the petitioner
Predetermination by the respondent regarding classification and tax rate for the petitioner's product
Claim of parity in taxation for the petitioner's product compared to similar products under lower tax rates
Applicability of past conduct as estoppel in determining taxation

Classification Issue:
The petitioner, a betel nut product manufacturer, chose to classify the product under Chapter 21 despite the possibility of Chapter 8 classification. However, a Supreme Court decision favored Chapter 8 classification for similar products. Post-GST, Chapter 21 products are taxed higher than Chapter 8 products, leading to a dispute over the applicable tax rate. The petitioner sought fair treatment and argued for parity with other products under lower tax rates.

Maintainability Issue:
The court expressed doubts on the writ petition's maintainability due to the premature approach by the petitioner before any formal order from the respondent. The respondent's communication indicated a predetermined intent to classify the petitioner's product under Chapter 21 for taxation at higher rates. Despite no show cause notice issued, the court acknowledged the respondent's inclination towards Chapter 21 classification.

Taxation Rate Issue:
The petitioner emphasized similarity between their product and others taxed at lower rates under Chapter 8. The petitioner aimed for equal treatment based on Article 141 of the Constitution. The court agreed that past conduct should not serve as an estoppel, allowing the respondent to proceed with the demand without considering the petitioner's previous classification choice. The judgment granted a clean slate approach for the issue, emphasizing fairness and non-bias in the taxation process.

Conclusion:
The judgment addressed the classification, taxation rates, maintainability, and estoppel issues concerning the petitioner's betel nut product. It highlighted the need for fair treatment, disregarding past conduct as a barrier to equitable taxation. The court's decision allowed the respondent to proceed with the demand while ensuring a neutral stance on the petitioner's past choices, promoting a just and unbiased resolution.