2023 (9) TMI 997 - HC - GST

Rate of tax on Fruit Pulp manufactured by the petitioner - Effective date of the circular clarifying the issue of rate of GST - HELD THAT - From Circular dated 03.08.2022, it was pellucidly mentioned that including mango pulp was always meant to be at the rate of 12% . Considering such mentioning, the Division Bench of this High Court in DR. SANDEEP KUMAR GUPTA FOODS AND INNS LTD VERSUS THE UNION OF INDIA THE STATE OF ANDHRA PRADESH THE DIRECTOR GENERAL OF GOODS AND SERVICE TAX (DGGST) , THE COMMISSIONER OF CENTRAL TAX AND CUSTOMS, THE CHIEF COMMISSIONER OF STATE TAXES DEPARTMENT THE ASSISTANT COMMISSIONER OF SALES TAX, THE DEPUTY COMMISSIONER OF CENTRAL TAXES, 2022 (9) TMI 1046 - ANDHRA PRADESH HIGH COURT , which was also dealing with the case falling prior to the date of Circular, held that the petitioner therein was liable to pay GST on mango pulp at the rate 12% only and passed the order accordingly. It would show, a Division Bench of this High Court has ultimately held that since the Circular reads to the effect that the GST rate including mango pulp was always meant to be at the rate of 12%, the same has to be taken as, for all the times the rate was only 12% so far as mango pulp is concerned. The argument of learned Government Pleader that the Circular is only prospective in nature cannot be accepted. Petition allowed.

Summary

Issues:
The judgment involves setting aside an Assessment Order regarding the levy of tax on Fruit Pulp, interpreting the GST rate applicable on mango pulp, and determining the retrospective or prospective application of a Circular issued by the Government of India.

Assessment Order Set Aside:
The petitioner sought to set aside the Assessment Order passed by the 1st respondent, confirming the levy of tax on Fruit Pulp at 18% instead of 12%. The petitioner argued that a Circular clarified the GST rate for mango pulp at 12%, and a Division Bench of the High Court had previously ruled in a similar case that mango pulp should be taxed at 12%. The Court agreed with the petitioner's contention, emphasizing that the Circular had always intended mango pulp to be taxed at 12%, and therefore set aside the Assessment Order imposing tax at 18%.

Interpretation of GST Rate on Mango Pulp:
The Division Bench of the High Court addressed the question of the applicable GST rate on mango pulp, citing a Circular issued by the Government of India. The Circular specified that mango pulp falls under the category attracting GST at 12%, while fresh mangoes are exempt and sliced, dried mangoes are taxed at 5%. The Court concluded that mango pulp should be taxed at 12% based on the Circular and the recommendations of the GST Council. Consequently, the Court held that the petitioner was liable to pay GST on mango pulp at the rate of 12% and not 18%.

Retrospective vs. Prospective Application of Circular:
The Government Pleader argued that the Circular had only prospective application from 03.08.2022 and could not be applied retrospectively to tax periods from 2017-18 to 2020-21. However, the Court rejected this argument, emphasizing that the Circular clearly stated that mango pulp was always meant to be taxed at 12%. The Court held that the Circular's language indicated a consistent rate of 12% for mango pulp, leading to the conclusion that the rate had always been 12%. Therefore, the Court allowed the writ petition, setting aside the argument that the Circular had only prospective application.