2022 (6) TMI 254 - HC - GST

Constitutional Validity of Section 103(1)(b) of the GST Acts - violative of Section 103(1)(b) of the GST Acts or not - Levy of GST on fryums/papad - HELD THAT - Prima facie, it appears that the Appellate Authority took the view that the Papad are known in the market as fryums and not Papad . There is a further challenge to the constitutional validity of Section 103(1)(b) of the GST Act on the ground that the same is manifestly arbitrary and violative of Articles 14 and 19(1)(g) respectively of the Constitution. The constitutional validity of Section 103(1) (b) of the Act is already made a subject matter of challenge in the case of J.K. PAPAD INDUSTRIES VERSUS UNION OF INDIA 2021 (11) TMI 155 - GUJARAT HIGH COURT . In the said writ application, a Co-ordinate Bench of this Court has issued Notice and the matter is to come up on 08.06.2022 for hearing. Let Notice be issued to the respondents, returnable on 15.06.2022.

Summary

Issues:
Challenge to Section 103(1)(b) of GST Acts | Binding nature of advance ruling appellate orders | Jurisdiction of authorities in issuing show cause notice | Classification of products under GST | Initiation of proceedings under Section 74 of GST Acts | Constitutional validity of Section 103(1)(b) of GST Act

Analysis:
1. Challenge to Section 103(1)(b) of GST Acts: The writ applicants sought to declare Section 103(1)(b) of the GST Acts as discriminatory and arbitrary, violating constitutional articles. The challenge was based on the grounds of discrimination and violation of fundamental rights under the Constitution.

2. Binding nature of advance ruling appellate orders: The writ applicants requested a declaration that advance ruling appellate orders for other taxable persons with similar facts are binding on subordinate authorities. This issue raised the question of the binding nature of such orders on authorities under the Chief Commissioners of CGST and SGST.

3. Jurisdiction in issuing show cause notice: The show cause notice issued by the Deputy Director of GST Intelligence was challenged as being without jurisdiction, arbitrary, and illegal. The notice demanded payment of IGST, CGST, and SGST amounts along with interest and penalties, raising concerns about the authority's jurisdiction in initiating such proceedings.

4. Classification of products under GST: The classification of the products manufactured by the writ applicants came into question, specifically regarding whether they could be classified as "Papad" under the exemption notification. The dispute arose from the differing interpretations of the product by the writ applicants and the GST authorities.

5. Initiation of proceedings under Section 74 of GST Acts: The writ applicants contested the initiation of proceedings against them under Section 74 of the GST Acts as being without jurisdiction, arbitrary, and illegal. This issue focused on the legality and jurisdiction of initiating proceedings under Section 74 against the writ applicants.

6. Constitutional validity of Section 103(1)(b) of GST Act: The constitutional validity of Section 103(1)(b) of the GST Act was challenged on the grounds of being arbitrary and violating constitutional articles. The issue highlighted the ongoing challenge to the constitutional validity of this section in a separate case before the court.

In summary, the judgment addressed multiple issues including challenges to specific sections of the GST Acts, the binding nature of advance ruling appellate orders, jurisdiction in issuing show cause notices, product classification under GST, initiation of proceedings under Section 74, and the constitutional validity of Section 103(1)(b) of the GST Act. The court issued notices and interim orders based on the arguments presented by the parties and the relevance of previous rulings and challenges to the constitutional validity of the GST Act.