2024 (3) TMI 218 - HC - GST

Classification of goods - Harpic Disinfectant Toilet Cleaner - Lizol Disinfectant Toilet Cleaner - to be classified under Item 31 of the Fourth Schedule to the Tamil Nadu Goods and Services Tax Act, 2017 or in terms of Item 87 of the Third Schedule to the TNGST Act for the period 01.07.2017 to 13.11.2017 - non-application of mind - violation of principles of natural justice - HELD THAT - On a close reading of the impugned order of assessment, it is found that though detailed objections under various Heads have been made by the petitioner the impugned order of assessment has not dealt with the same. It is fundamental that any quasi judicial order ought to be made taking into account all factors that are relevant while eschewing the irrelevant. The fact that the impugned order of assessment do not even refer to several aspects raised in the objection indicates that the same has been made without applying its mind to the objections made. It is trite law that when objections are raised a duty is cast on the assessing authority to apply its mind to the objections and deal with each one of them. Failure to do so would vitiate the order of assessment on the ground of non-application of mind. Secondly, the impugned orders of assessment for the first time reveals that the entire proposal have been made on the basis of the proposal received from the enforcement wing authorities. Since, it is only in the impugned order of assessment it was disclosed for the first time about the fact that proposal had been received from the enforcement wing authorities, the petitioner's was disabled from submitting their objections on the above aspect. The impugned order of assessment suffers from the vice of non-application of mind to the objection and also non-disclosure of the fact the proposal have been received from the enforcement wing thereby the impugned order of assessment stands vitiated - the impugned order of assessment is set aside - Petition disposed off.

Summary

Issues:
The judgment involves a challenge to the classification of "Harpic Disinfectant Toilet Cleaner" and "Lizol Disinfectant Toilet Cleaner" under the Tamil Nadu Goods and Services Tax Act, 2017, for the period from July 2017 to November 2017.

Details of the Judgment:

Issue 1: Classification Dispute
The petitioner, engaged in the manufacture and supply of cleaning products, contested the assessment treating Harpic and Lizol under Item 31 of the Fourth Schedule, attracting a 14% tax rate, instead of the petitioner's classification under Item 87 of the Third Schedule, liable for a 9% tax rate. The petitioner's objections included historical acceptance of the products as disinfectants under previous tax laws, certifications from authorities, and common understanding among consumers. The High Court noted that the impugned order failed to address the petitioner's objections comprehensively, indicating a lack of due consideration. Moreover, the reliance on a proposal from enforcement authorities without prior disclosure deprived the petitioner of a fair chance to respond. Consequently, the Court set aside the assessment, granting the Respondent the opportunity to reevaluate the classification with proper consideration and disclosure within four months.

Conclusion:
The High Court of Madras found the impugned order of assessment lacking in due consideration of the petitioner's objections and non-disclosure of the enforcement wing's proposal, thereby setting aside the assessment and providing the Respondent with an opportunity to reassess the classification within a specified timeframe.