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2024 (8) TMI 139 - HC - GSTClassification of goods - Geo Membrane manufactured by the petitioner - to be classifed under Chapter 59 or Chapter 39 of the Tariff? - HELD THAT - This issue is no more res-integra in view of the decision of the Coordinate Bench of this Court in case of MESSERS CTM TECHNICAL TEXTILES LTD VERSUS UNION OF INDIA 2020 (12) TMI 1100 - GUJARAT HIGH COURT wherein the Coordinate Bench after considering the issue of alternative remedy as well as entertainability of the writ petition with regard to merits of the case, has held 'The matter is remitted to the respondent no.2 for fresh consideration of all the issues discussed.' It is not deemed fit to reiterate the same and adopting the same reasoning, we hold that the product manufactured by the petitioner being Geo Membrane is classifiable would fall under Chapter 59 and not under Chapter 39 as held by the respondent No. 4 the Gujarat Advance Ruling Authority relying upon the decision of the Hon ble Madhya Pradesh High Court in case of Raj Packwell Ltd. The petitioner, therefore, is liable to pay the GST @ 12% from 15.11.2017 onwards and not @ 18%. The respondent authority is, therefore, directed to apply the discounted rate of 12% of the GST on the product manufactured by the petitioner under HSN Code 59111000 of the Tariff. Petition allowed.
Issues Involved:
1. Classification of Geo Membrane under GST 2. Applicability of previous court decisions on classification 3. Discrimination in tax rates 4. Maintainability of the writ petition Issue-wise Detailed Analysis: 1. Classification of Geo Membrane under GST: The primary issue was whether Geo Membrane should be classified under Chapter 59 or Chapter 39 of the GST Tariff. The petitioner argued that Geo Membrane, being a textile fabric, should be classified under HSN Code 59111000 and taxed at 12%, while the Department classified it under HSN Code 39269090 as a plastic article, attracting 18% GST. The court considered the manufacturing process of Geo Membrane, which involves weaving HDPE tapes into fabric and then laminating it. The court noted that the product is used for technical purposes like water-proof lining of ponds and canals, reinforcing the argument that it falls under Chapter 59, which covers impregnated, coated, covered, or laminated textile fabrics. 2. Applicability of Previous Court Decisions on Classification: The court referred to its previous judgment in the case of M/s. CTM Technical Textiles Ltd., which held that similar products should be classified under Chapter 59 and not Chapter 39. The court emphasized that the decision of the Madhya Pradesh High Court in Raj Packwell Ltd. was not applicable as it dealt with HDPE tapes and sacks, not woven fabrics. The court reiterated the Supreme Court's interpretation in Porritts & Spencer (Asia) Ltd., which defined textiles as any woven fabric, regardless of the material used. This reinforced the petitioner's argument that Geo Membrane should be classified as a textile product. 3. Discrimination in Tax Rates: The petitioner argued that other manufacturers of similar products were taxed at 12%, creating a discriminatory situation where the petitioner had to pay 18% GST. The court acknowledged this discrimination, citing the principle that central levies must be uniformly applied across the country. The court referenced its earlier decision in Ralli Engine Ltd., which held that such discriminatory treatment violates Article 14 of the Constitution. 4. Maintainability of the Writ Petition: The respondent argued that the writ petition was not maintainable as the petitioner had an alternative remedy under Section 100 of the GST Act. However, the court decided to entertain the writ petition, given the broader implications of the issue and the need for uniform application of tax laws. Conclusion: The court concluded that Geo Membrane should be classified under Chapter 59 of the GST Tariff and taxed at 12%. The decision of the Gujarat Advance Ruling Authority classifying it under Chapter 39 and taxing it at 18% was set aside. The court directed the respondent authority to apply the 12% GST rate and allowed the petitioner to claim a refund for the excess GST paid, without interest. Final Order: The petition was allowed, and the rule was made absolute to the extent that the product Geo Membrane is classified under HSN Code 59111000 and taxed at 12%. The petitioner is entitled to a refund of the excess GST paid.
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