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2023 (11) TMI 1302 - HC - GSTClassification of fish meal - Applicability of GST exemption for fish meal as provided under Sl. No. 102 of Exemption Notification vide Notification No. 2/2017 dated 28.06.2017 - HELD THAT - The description of goods in Sl. No. 102 of Notification No. 2 of 2017 includes Tariff Headings 2302, 2304, 2305, 2306, 2308 and 2309 and after the corrigendum dated 27.07.2017, includes Tariff Heading 2301, and there is no change in the description of goods. It is to be noted that the description of goods found in Sl. No. 103 of Notification No. 1 of 2017 under Tariff Heading 2301 attracts GST of 5%. The products manufactured by writ petitioners fall under Tariff Heading 2301 which is found in Sl. No. 103 of Notification 1 of 2017. Therefore, the product manufactured by the writ petitioners is not exempted and it attracts GST of 5%. Since all goods with the description including fish meal under Heading 2301 attract GST of 5%, the petitioners cannot dispute the fact that products manufactured by them attract GST of 5% but for the Notification No. 2/2017 dated 28.06.2017. Therefore, even according to the petitioners, but for Notification No. 2/2017 dated 28.06.2017 along with corrigendum, they are liable to pay GST of 5% for the products manufactured by them. By issuance of corrigendum dated 27.07.2017, the Tariff Heading 2301 was also included in the exemption notification dated 28.06.2017 for the first time. However, the description of goods in Notification No. 2/2017 dated 28.06.2017 is not changed. From the description of goods in Tariff Heading in Sl. No. 102 as per the Notification No. 2/2017 dated 28.06.2017, this Court is unable to accept the contention of the learned counsel for the writ petitioners that the product manufactured by the writ petitioners would also come under the description of goods aquatic feed including shrimp feed or prawn feed or poultry feed, etc. , as it is admitted that the petitioners' product is not used as an aquatic feed and it is being supplied to the manufacturers of aquatic feed. This Court is unable to sustain the order of learned Single Judge holding that the petitioners supply fish meal as a finished product and therefore, they fall under Sl. No. 102 of Notification No. 2 of 2017 within Tariff Heading 2301. The term including in the description of goods cannot be interpreted to include even fish meal in powder form, when it is not sold as aquatic feed. Reliance placed upon the judgment of the Hon'ble Supreme Court in RAMALA SAHKARI CHINI MILLS LTD, UP VERSUS CCE MEERUT 2010 (11) TMI 34 - SUPREME COURT for the proposition that the word include should be given wide interpretation, as by employing the said word, the legislature intends to bring in, by legal fiction, something within accepted connotation of the substantive part, this Court is unable to apply the principles in the said judgment interpreting the word include , for the reason that the description of goods found in Tariff Heading 2301 attracting GST of 5% is intact - The learned Single Judge failed to consider the position that the levy of duty or exemption is only in respect of goods specified in Column (3) of Schedule and the goods which are not given by description cannot be assumed or included in the exemption notification. It is true that fish meal in powdered form comes under Tariff Heading 2306 is exempted. When it is unfit for human consumption, it can be included only under Tariff Heading 2301. Therefore, the observation of learned Single Judge that fish meal in powder form comes under two Tariff Headings, namely 2301 and 2309, is not warranted, especially when it is not the case of writ petitioners that the goods manufactured by them falls under Tariff Heading 2309. This Court in the present situation finds that the Circular which is more in the nature of clarification is required to bring uniformity. In the absence of a clarificatory order, any one will be misled and the clarificatory impugned Circular clarifying the previous notification is justified and as held by the Constitution Bench of the Hon'ble Supreme Court in Dilip Kumar's case 2018 (7) TMI 1826 - SUPREME COURT , the interpretation in favour of Revenue is taken. The order of the learned Single Judge is set aside - Appeal allowed.
Issues Involved:
1. Classification of "fish meal" under GST notifications. 2. Applicability of GST exemption for "fish meal." 3. Jurisdiction and authority to issue clarificatory circulars. 4. Interpretation of exemption notifications and their applicability. Issue 1: Classification of "fish meal" under GST notifications The core issue revolves around the classification of "fish meal" under the GST regime. The impugned Circular dated 31.12.2018 clarified that "fish meal" falls under Sl. No. 103 of Notification No. 1/2017, attracting a 5% GST rate. The petitioners contended that "fish meal" should be classified under Sl. No. 102 of Notification No. 2/2017, which grants an exemption. The court analyzed the notifications, noting that "fish meal" is listed under Tariff Heading 2301, which is included in both Sl. No. 103 and Sl. No. 102. However, the description under Sl. No. 102 pertains to aquatic feed, which the court found does not encompass "fish meal" as manufactured by the petitioners. The court concluded that "fish meal" in powder form, unfit for human consumption, is correctly classified under Tariff Heading 2301, attracting a 5% GST rate. Issue 2: Applicability of GST exemption for "fish meal" The petitioners argued that "fish meal" should be exempt from GST, as it is used in manufacturing aquatic feed, which is exempt under Sl. No. 102 of Notification No. 2/2017. The court rejected this argument, stating that the exemption applies to finished aquatic feed products, not raw materials like "fish meal." The court emphasized that "fish meal" is not directly used as aquatic feed but as an ingredient, and thus does not qualify for exemption under the said notification. Issue 3: Jurisdiction and authority to issue clarificatory circulars The petitioners challenged the authority of the 2nd appellant to issue the clarificatory Circular, arguing it was beyond jurisdiction and contrary to the GST Council's decisions. The court upheld the Circular, stating that it was issued to clarify the applicability of GST rates and ensure uniformity. The court noted that the Circular did not alter the tax levy but clarified existing notifications, which is within the jurisdiction of the authority. Issue 4: Interpretation of exemption notifications and their applicability The court referred to the Supreme Court's judgment in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company, which mandates strict interpretation of exemption notifications. The burden of proving eligibility for exemption lies with the assessee. The court found no ambiguity in the notifications and emphasized that exemptions should be interpreted in favor of the revenue. Consequently, the court held that the petitioners' interpretation, seeking exemption for "fish meal," was unfounded and upheld the Circular's clarification. Conclusion: The court allowed the writ appeals, setting aside the learned Single Judge's order and dismissing the writ petitions. It concluded that "fish meal" in powder form, unfit for human consumption, is subject to a 5% GST rate under Sl. No. 103 of Notification No. 1/2017, and does not qualify for exemption under Sl. No. 102 of Notification No. 2/2017. The court affirmed the authority's jurisdiction to issue the clarificatory Circular, which aligns with the principles of strict interpretation of exemption notifications.
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