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2024 (5) TMI 266 - HC - GSTApplicable rate of tax (GST) - Classification of goods - mango pulp supplied to 100% Export Oriented Unit which further exports such pulp outside the country after minor processing / re-packing - to be classified under residuary entry No. 453 or not - HELD THAT - Prior to the 22nd meeting of the GST Council, so far as mango sliced and dried are concerned, the GST rate was applicable at 12% from 1st July 2017 as per Notification No. 1/2017 in Schedule II which was reduced to 5% as per recommendations of the GST Council as per Notification No. 34/2017 dated 13th October 2017. While the GST Council in its 47th meeting has clarified that only mangoes sliced and dried are liable to reduction of rate of tax at the rate of 5% from 12% and therefore, to clarify that mangoes other than sliced and dried, the third category of entry was inserted in the category vide Entry No. 16 of Schedule II as per Notification No. 6/2022 dated 18th July 2022. Therefore, for all purposes and intention Entry of rate of 12% would govern the product mango pulp , which was not specifically included in Entry No. 30A, which provides for mango sliced, dried. The impugned circular dated 3rd August 2022 only clarifies the insertion of Entry No. 16 vide Notification No. 6/2022 and therefore, the argument and contention raised by the petitioner that by the impugned circular, the GST rate of 12% sought to be introduced is without any basis. For mango pulp , the GST rate was 12% from 1st July 2017 as per Notification No. 1/2017 - The mango pulp was not included in the Entry No. 30A of the Schedule II, which came into effect by Notification No. 34/2017. Therefore, there was a need for clarification by the GST Council in its 47th meeting held on 28th June 2022 to clarify that the third category of mango in HSN 0804 other than fresh and dried mangoes are required to be clarified to be taxed at the rate of 12%. The impugned Notification and circular are not in the nature of amending the tax rate with increasing the tax rate with retrospective effect. In fact, they are clarificatory so far as the product mango pulp is concerned, as admittedly, Entry No. 30A does not include the mango pulp . Therefore, the stand of the respondents that mango pulp would fall in the residuary category as the same was not included either in the Notification No. 1/2017 or covered by the Entry No. 30A is also not as per clarification made by the GST Council. Therefore, the respondents are also not justified to apply rate of 18% GST as per residuary Entry No. 453 as mango pulp would be falling under HSN 0804, which broadly categorized fresh and dried mangoes. Therefore, naturally, mango pulp would go with the mango sliced, dried and would be covered by mango sliced, dried attracting 12% rate prior to Notification No. 34/17. The GST Council has only clarified that the third category of mangoes other than mango sliced and dried would attract 12% of GST. Therefore, the contention of the respondents to tax on mango pulp at 18% is also not tenable. The case of the petitioners that word mango was removed from Entry No. 16, the petitioners would be liable to pay tax at 5% on mango sliced and dried as the mango pulp is neither mangosteens nor dried as per Serial No. 16 in Schedule II under Chapter Heading 0804 nor the petitioners are entitled to exempted category as per Serial No. 51 of exemption Notification No. 2/2017, which pertains to mango fresh is very attractive at the first blush, however, considering the Notification nos. 1/2017, 34/0217 and 6/2022 together, the mango pulp , as per the recommendations of the GST Council, was to be taxed at the rate of 12% only as the same would not be falling in Entry No. 30A as mango sliced or dried. There is no retrospective amendment of Entry No. 16, but the same is clarificatory only inserted by Notification No. 6/2022 and the impugned circular dated 3rd August 2022 where Entry No. 16 in Schedule II has included mangoes other than sliced, dried which includes mango pulp. Therefore rate can be said to be reduced from 12% to 5% only on mango sliced, dried and rate of 12% would continue to be applied to mangoes other than mangoes sliced, dried as per notification no. 6/22 as per the clarification of the GST Council as per minutes of the 47 th meeting - the GST Council has clarified in its 47th meeting that tax rate would continue to apply at 12% other than mango sliced, dried for which the GST rate was reduced to 5% as per the recommendations of 27th meeting of the GST Council. The petitioner is, therefore, liable to pay GST at the rate of 12% as per Entry no. 16 from 01.07.2017 and not 5% as per Entry No. 30A, which provides for mangoes sliced, dried only. The contention of the petitioners that there was an amendment to the rate Notification with effect from 18th July 2022 is not tenable. As such the Notification is only clarificatory and would apply with effect from 1st July 2017 as per Notification No. 1/2017. It is true that Section 9 of the CGST Act does not grant power to amend the rate Notification - The contention of the petitioner that as per HSN 0804, mango pulp would be covered by mangoes as per General Chapter Note, which includes fruits and dates, and therefore, only mangoes other than fresh mangoes is required to considered and as mango pulp is not a fresh mango and would be covered by entry No. 30A mango sliced, dried is not tenable in view of clarification made by the GST Council in its 47th meeting, wherein it is clearly mentioned that only mangoes sliced, dried would attract GST at 5% and remaining mango would be attracted GST at 12%. Therefore, the Notification No. 6/2022 is only inserting the word mango other than mango sliced, dried so as to clarify that all mangoes would fall in the same category other than mango sliced, dried . Thus, as mango pulp would fall under the third category of mangoes (other than mango sliced, dried) would be liable to levy at the rate of 12% as per Entry No. 16 which was amended so as to clarify the intention of council to continue to levy GST at 12% on mangoes (other than mango sliced, dried) which would include mango pulp from 1st July 2017. The impugned show cause notice is hereby quashed and set aside and the petitioners would be liable to pay GST at the rate of 12% from 1st July 2017 on the product mango pulp and not at the rate of 5% (as claimed by the petitioners) or 18% (as claimed by the respondents) for the period from 01.07 2017 to 18.07.2022 - petition allowed in part.
Issues Involved:
1. Classification and applicable GST rate for "mango pulp". 2. Validity and retrospective application of GST notifications and circulars. 3. Interpretation of HSN codes and GST tariff notifications. Summary: 1. Classification and Applicable GST Rate for "Mango Pulp": The petitioners supplied "mango pulp" to a 100% Export Oriented Unit. They paid GST at 5% based on their interpretation that "mango pulp" falls under the category of "mangoes sliced, dried" (Entry 30A of Schedule I, Notification No. 34/2017). The CBIC Helpdesk also confirmed this rate. However, the respondents argued that "mango pulp" was not specifically classified and thus fell under the residuary entry attracting 18% GST. The court concluded that "mango pulp" falls under a third category of mangoes (other than fresh and dried) and is subject to 12% GST as clarified by the GST Council in its 47th meeting and Notification No. 6/2022. 2. Validity and Retrospective Application of GST Notifications and Circulars: The petitioners contended that the circular dated 3rd August 2022 and Notification No. 6/2022, which clarified the GST rate for "mango pulp" at 12%, could not be applied retrospectively. The court held that these were clarificatory in nature and did not retrospectively amend the tax rate. The court referenced several Supreme Court decisions, emphasizing that substantive legislative changes cannot be retrospective unless expressly provided. 3. Interpretation of HSN Codes and GST Tariff Notifications: The court analyzed the relevant HSN codes and GST notifications. It noted that HSN 0804 includes mangoes, fresh or dried, and that "mango pulp" did not fit neatly into either category. The court agreed with the respondents that the GST tariff is based on HSN codes, which must be interpreted alongside the Customs Tariff Act. The court concluded that "mango pulp" falls under the third category of mangoes, attracting 12% GST, as clarified in the 47th GST Council meeting and subsequent notifications. Conclusion: The court quashed the impugned show cause notice and ruled that the petitioners are liable to pay GST at 12% on "mango pulp" from 1st July 2017 to 18th July 2022, rejecting the claims for 5% or 18% GST. The court emphasized that the clarifications provided by the GST Council and subsequent notifications were not retrospective amendments but clarifications of existing tax rates.
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