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2024 (8) TMI 646 - HC - GSTClassification of goods - RhizoMyx - Rhizo Myco - to be classified under Chapter Heading 3002 of the First Schedule to the Customs Tariff Act 1975 or not - rate of GST - HELD THAT - It is apparent from the impugned order dated 08.03.2021 that the bio-fertilizers produced by the petitioner are held to be classified under Chapter 3002 whereas in the order dated 20.07.2021 passed by the Appellate Authority the bio-fertilizers are held to be classified under Chapter 3105 in case of IN RE M/S. G.B. AGRO INDUSTRIES 2021 (10) TMI 59 - APPELLATE AUTHORITY FOR ADVANCE RULING GUJARAT . Thus there are contradictory findings arrived at by the Appellate Authority pertaining to the classification of the bio-fertilizers produced by the petitioner and the other manufacturer i.e. M/s. GB Agro Industries. It is also pertinent to note that the GST rate applicable for the Chapter 3105/3101 is 5% whereas the rate applicable for Chapter 3002 is of 12%. Thus the petitioner is at loss by approaching before the Advance Ruling Authority more particularly when the Appellate Authority in the case of M/s. GB Agro Industries has taken a contradictory view than that in case of the petitioner by applying Chapter 3105/3101 having GST rate of 5% whereas in case of the petitioner the bio-fertilizers are held to be classified under Chapter 3002 having GST rate of 12%. Thus there is an anomaly in the impugned order passed by the Appellate Authority of the Advance Ruling. The impugned order dated 08.03.2021 passed in case of the petitioner by the Appellate Authority is hereby quashed and set aside and the matter is remanded back to the Appellate Authority to consider de novo afresh in accordance with law after giving opportunity of hearing to the petitioner - Petition disposed off by way of remand.
Issues Involved:
1. Classification of products "RhizoMyx" and "RhizoMyco" under GST. 2. Contradictory decisions by the Appellate Authority regarding classification. 3. Applicable GST rate for the products in question. Detailed Analysis: 1. Classification of Products "RhizoMyx" and "RhizoMyco" under GST: The petitioner sought to classify "RhizoMyx" and "RhizoMyco" under Chapter Heading 3101, attracting a GST rate of 5%. The products were described as mycorrhizal biofertilizers designed to enhance crop growth, containing endomycorrhizal fungal spores and other organic-based ingredients. The Gujarat Authority for Advance Ruling (GAAR) initially classified these products under Chapter Heading 3002, attracting a GST rate of 12%, as "bio-fertilizers produced by culturing of micro-organisms." This classification was affirmed by the Appellate Authority on 08.03.2021, which held that the products are "biofertilizers" and distinct from "animal or vegetable fertilizers or organic fertilizers," thus not covered under Chapter Heading 3101. 2. Contradictory Decisions by the Appellate Authority Regarding Classification: The petitioner highlighted a contradictory decision by the Appellate Authority in the case of M/s. GB Agro Industries, where similar products were classified under Chapter 3105, attracting a GST rate of 5%. The Appellate Authority in that case reasoned that the products, although biofertilizers, should be classified under Chapter 3105 because they contained a mixture of animal, vegetable, and mineral components. This contradiction was acknowledged by both the petitioner's advocate and the respondents' advocates, leading to the argument that the petitioner's case should be reconsidered in light of the M/s. GB Agro Industries decision. 3. Applicable GST Rate for the Products in Question: The GST rate for products classified under Chapter 3105/3101 is 5%, whereas for products under Chapter 3002, it is 12%. The petitioner argued that the classification under Chapter 3002 resulted in a higher tax burden, creating an inconsistency given the different classification for similar products by another manufacturer. The court noted this anomaly and the financial disadvantage to the petitioner due to the higher GST rate. Conclusion: The court found that the Appellate Authority had indeed issued contradictory rulings on similar products, leading to an inconsistency in the applicable GST rates. Consequently, the court quashed the impugned order dated 08.03.2021 and remanded the matter back to the Appellate Authority for a fresh decision. The Appellate Authority was directed to reconsider the petitioner's case de novo, in accordance with the law, and after giving the petitioner an opportunity to be heard, taking into account the reasoning applied in the M/s. GB Agro Industries case. Disposition: The petition was disposed of with the directive for the Appellate Authority to re-evaluate the classification of the petitioner's products, ensuring consistency and fairness in the application of GST rates. Notice was discharged.
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