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2024 (9) TMI 759 - HC - GSTChallenge to SCN u/s 74 of the Central/Gujarat Goods and Services Tax Act, 2017 as being wholly without jurisdiction - classification of the product manufactured by the petitioner under HSN 19059040 instead of HSN 19059030 - Levy of GST - HELD THAT - In view of the minutes of the meeting of GST Council and circular dated 1st August, 2023, question arises at to what rate the GST is payable by the petitioners upto 22.07.2023 as both the GST Council as well as the Board were of the opinion to regularise the issue for the past period on as is where is basis meaning thereby whatever situation was prevailing with regard to the status of payment of GST by the petitioners shall continue to prevail upto 22.07.2023 and the petitioners have claimed their product to be exempt from GST, therefore, the petitioners cannot be subjected to levy of GST in order to regularise their returns which have been filed at Nil rate of GST. It appears that the respondents have misinterpreted the words as is basis by issuing the impugned notices to levy GST at 18% on applicability of Tariff Item No. 19059030 ignoring the binding decision of Gujarat Appellate Authority for Advance Ruling under section 103 of the GST Act. When the petitioners have claimed exemption under the Tariff Item no. 19059040 by claiming exemption to pay GST on the product manufactured by them, the same is required to be regularised on as is basis as per the minutes of the meeting of GST Council as well as the notification issued by the Board on 1st August, 2023 coupled with binding ruling of appellate authority of advance ruling. The impugned notice dated 7.02.2024 issued under section 74 of the GST Act are hereby quashed and set aside. The respondents are directed to regularise the past returns filed by the petitioners on as is basis accepting the same as it is filed at Nil rate upto 22.07.2023. Petition allowed.
Issues Involved:
1. Jurisdiction of the show cause notice. 2. Classification of the product under the GST Act. 3. Applicability of GST rate on unfried fryums. 4. Binding nature of Advance Ruling Appellate Authority's order. 5. Interpretation of "as is" basis for past GST returns. Detailed Analysis: 1. Jurisdiction of the Show Cause Notice: The petitioners challenged the show cause notice dated 07.02.2024 under section 74 of the GST Act as being wholly without jurisdiction. They argued that the notice was issued to levy GST at 18% on unfried fryums, which they classified under HSN 19059040 instead of HSN 19059030. The court found that the notice was without jurisdiction as it ignored the binding decision of the Advance Ruling Appellate Authority. 2. Classification of the Product under the GST Act: The main issue was whether unfried fryums should be classified under HSN 19059040 (exempt from GST) or HSN 19059030 (subject to 18% GST). The petitioners argued that their product, similar to papad, should be classified under HSN 19059040. The court referred to the Gujarat Appellate Authority for Advance Ruling's decision, which classified the product under HSN 19059040, considering the ingredients, manufacturing process, and common parlance understanding. 3. Applicability of GST Rate on Unfried Fryums: The petitioners contended that the GST rate applicable to their product should be 5% as per the circular dated 1st August 2023, which regularized the past period on an "as is" basis. The court noted that the GST Council, in its 50th meeting, had recommended reducing the GST rate to 5% and regularizing past transactions on an "as is" basis due to genuine doubts regarding the classification. 4. Binding Nature of Advance Ruling Appellate Authority's Order: The petitioners argued that the Advance Ruling Appellate Authority's order, which classified their product under HSN 19059040, was binding under section 103 of the GST Act. The court upheld this argument, stating that the binding nature of the Advance Ruling Appellate Authority's order must be followed by the jurisdictional officer. 5. Interpretation of "As Is" Basis for Past GST Returns: The court interpreted the "as is" basis mentioned in the circular dated 1st August 2023 to mean that the past GST returns filed by the petitioners at Nil rate should be regularized as they are. The court found that the respondents had misinterpreted this phrase by issuing notices to levy GST at 18%, ignoring the binding decision of the Advance Ruling Appellate Authority. Conclusion: The court allowed the petitions, quashing the impugned notice dated 07.02.2024 issued under section 74 of the GST Act. The respondents were directed to regularize the past returns filed by the petitioners on an "as is" basis, accepting them at Nil rate up to 22.07.2023. The court emphasized the binding nature of the Advance Ruling Appellate Authority's order and the correct interpretation of the "as is" basis for past GST returns.
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