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TMI Blog2024 (9) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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. - HONOURABLE MR. JUSTICE BHARGAV D. KARIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese products of different shape are directly fed into drying machine to be dried. Thereafter they are cooled by passing through cooling conveyor. The finished products are packed in bag or carton and then sold. 3) It is the case of the petitioner that prior to 1.7.2017 the Fryums were covered under the entry for Papad under the Gujarat Value Added Tax act, 2003 as per the judgment of the Gujarat Value Added Tax Tribunal in case of Avadh Food Products v. State of Gujarat (judgment dated 26.02.2015 rendered in First Appeal No.1 of 2015) which was followed by the Tribunal in case of Swethin Food Products v. State of Gujarat reported in 2016 GSTB 296. 4) It is the case of the petitioner that when the GST regime was implemented with effect from 1.7.2017, there was confusion prevailing in the State of Gujarat with regard to classification of Fryums , however, a manufacturing unit by the name of M/s Sonal Product filed an application for advance ruling under section 97 of the GST Act seeking ruling on applicable rate of tax on supply of Papad of different shapes and sizes which were commonly known as unfried fryums wherein it was held that unfried fryums are not papad and therefore, exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rd of Indirect Taxes and Customs issued circular dated 1st August, 2023. 14) It is the case of the petitioner that despite such express clarification and direction by GST Council as well as Central Board of Indirect Taxes and customs, the respondent authority issued intimation in Form GST DRC-01A proposing to demand tax on unfried fryums for the past period from 1.7.2017 to 31.3.2020. 15) The petitioner therefore, vide reply dated 27.9.2023 relying upon the circular dated 1st August, 2023 requested for closure of the proceedings. 16) The respondent authority however, issued the impugned show cause notice dated 7.2.2024 proposing to demand tax with interest and penalty on supply of unfried fryums at the rate of 18% for the past period i.e. from 1.7.2017 to 31.3.2019. 17) Being aggrieved by the impugned notice, the petitioner has preferred the present petition. 9. Learned advocate Mr. Uchit Sheth for the petitioners submitted that in view of the circular dated 1st August, 2023, the controversy which was prevailing has now been reduced to payment of GST @ 5% instead of 18% as sought to be levied by the impugned show cause notice. 10. It was submitted that para 2.2 of the Circular No.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in context of VAT Act to contend that fryums are classifiable under the entry of Papad and such judgments were accepted and had attained finality. It was therefore, submitted that even though both the judgments were rendered in context of VAT Act, dispute was identical inasmuch as whether fryums can be considered as Papad or not. It was further submitted that such binding judgments are required to be followed and applied in territorial jurisdiction and contrary view sought to be taken by the adjudicating authority by issuing the impugned notification is without jurisdiction. 15. It was submitted that reliance placed on para no. 5 of circular dated 13.01.2023 issued by the Central Board of Indirect Taxes and Customs in the impugned notice is contrary to Entry No.96 of Notification No.2/2017-Central Tax (Rate) dated 28.06.2017 as the Board has ignored the specific entry for Papad by whatever name it is known qua HSN 1905 in Entry 96 of Notification No.2/2017 Central Tax (Rate) and its interpretation by orders of the Gujarat Advance Ruling Appellate Authority in various cases relating to unfried fryums. It was therefore, submitted that the petitioners are not liable to pay any GST on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Act on different parameters which cannot be applied to the provisions under the GST Act wherein the product in question has more specific classification entry under Tariff item no. 19059030 which is for extruded or expanded product. 20. Learned advocate Ms. Hetavi Sancheti further submitted that the petitioners have misinterpreted the Notification dated 1st August, 2023 for regularizing the past transaction on as is basis. It was further submitted that phrase as is has to be read in the context of the facts of the case of classifying the product manufactured by the petitioners under Tariff Item No. 19059030 attracting GST at 18% had the petitioners mentioned correctly in the extrusion process before the Appellate Authority. It was therefore, submitted that the petitioners have misled the Appellate Authority of Advance Ruling by suppressing that the product in question had gone through extrusion process and that they had extrusion machines installed in their factory and therefore, the product manufactured by them would be covered by Tariff Item No. 19059030 attracting GST @ 18%. 21. Learned advocate Ms. Sancheti also referred to decision of Kerala VAT Tribunal under Kerala Value A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant (different shape and size Papad) are more or less similar. 42.2 The manufacturing process of the products under consideration has been submitted by the appellant. It has been submitted that ingredients are mixed in machine with water and oil, dough is prepared and passed through die of different shapes and size to manufacture different shapes and size of papad and then dried through various stages. The product of the appellant, thus prepared, is thin and wafer like product. At this stage, the product is not ready for consumption. Though, traditionally Papad has been prepared manually, in round shape. However, when ingredients and process are similar in case of PAPAD and impugned product, then the product in question is nothing but a kind of PAPAD irrespective of their shape and sizes. 42.3 As submitted by the appellant, when the consumer desires to eat the said products of the appellant, the said products are required to be fried or roasted before consumption. Thus, these products are not meant to be eaten without frying or roasting. 42.4 The products under consideration become crispy when these products are fried or roasted. 42.5 The products of the appellant has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Papad however are similar to Papad in respect of the ingredient, manufacturing process and use. 45. Further, in entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017, the description of the product is PAPAD by whatever name called . To understand the term whatever name called the principle of Noscitur a sociis is to be applied. As per the said principle, the meaning of an unclear word or phrase must be determined by the words that surround it. In other terms, the meaning of a word must be judged by the company that it keeps. Therefore, in this entry, only a product called by name of PAPAD would not be covered but all types of product which are similar to PAPAD in respect of ingredient, manufacturing process, use and common parlance would be covered irrespective of their shape and size and even name. As such, the appellant's product is similar to the traditional round shaped Papad in all respect, therefore, we are of the view that the impugned product i.e. different shapes and sizes of papad is eligible to be covered under entry No. 96 of Notification No. 02/2017-CT (Rate) dated 28.06.2017. 46. Gujarat Authority of Advance Ruling in their ruling has ruled that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Tariff Act, 1975 as classified by the GAAR. 48. Taking all these aspects into consideration as discussed above, we hold that the product 'different shapes and sizes Papad' involved in the present case merit classification under Tariff heading No. 19059040 of the Customs Tariff Act, 1975. As we have already held that the product in question is classifiable under CTH No. 1905 of the Customs Tariff Act, 1975, the said CTH No. 1905 is covered under entry No. 96 of Notification No. 02/20178-CT (Rate) dated 28.06.2017 and accordingly chargeable to NIL rate of Goods and Services Tax. 26. It appears that in case of other petitioners, the Appellate Authority of Advance Ruling has arrived at a contrary decision and therefore, the petitions were filed before this Court in the years 2021 and 2022. 27. Be that as it may, in the 48th meeting of GST council, it was clarified that the snack pellets such as fryums which are manufactured through the process of extrusion, are appropriately classifiable under Tariff Item No. 19059030 which covers the goods with description Extruded or expanded products, savoury or salted and thereby attract GST at the rate of 18% vide Sr. No.16 of Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extrusion, the issue for past period upto 27.7.2023 is hereby regularized on as is basis. 30. In view of above 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. 31. 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. 32. Therefore, when the petitioners have claimed exemption under the Tariff Item no. 19059040 by claiming exemption to pay GST on the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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