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TMI Blog2024 (11) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... den was on the Respondents to establish this aspect. The Respondents have failed to discharge this burden. However, even though it is assumed that the impugned Press Release is an instance of the exercise of executive power by the Union still, the question is whether, in the purported exercise of such executive power, the Union is competent to direct judicial and quasi-judicial authorities to decide the issue of classification of products in a particular manner - Though there may not be a very distinct line separating legislative and executive functions, still the line separating the judicial functions from the executive and legislative functions is fairly clear. The executive cannot transgress on the functions within the exclusive province of the judicial or even quasi-judicial authorities. In the STATE OF JHARKHAND AND ANR VERSUS GOVIND SINGH [ 2004 (12) TMI 667 - SUPREME COURT ] the Hon ble Supreme Court has explained that after enacting a law or Act, the Legislature becomes functus officio so far as that particular Act is concerned, and it cannot itself interpret it. No doubt, the Legislature retains the power to amend or repeal the law so made and can also declare its meaning, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand rubs/sanitisers and antiseptics. The Petitioner claims that such hand rubs/sanitisers and antiseptics are used as pharmaceutical aid (solvent) or as antibacterial/antisepsis solutions in the hospitals and have been sold as a medicament under the erstwhile excise/VAT regime as well as the GST regime. The Petitioner claims that the products they deal with have been consistently classified under HSN 3004. 4. The first Respondent has, however, issued a Press Release dated 15.07.2020 purporting to classify alcohol-based hand sanitisers, which would include hand sanitisers that the Petitioner deals in as disinfectants , thereby attracting a GST rate of 18%. This press release issued by the Ministry of Finance, Union of India, is in Exhibit B (page 124) of this petition. 5. Based upon the above Press Release, the second Respondent issued a show cause notice cum demand notice dated 17.04.2023 requiring the Petitioner to show cause why the differential tax/duties along with interest and penalties be not recovered from the Petitioner alleging alcohol-based hand rubs/sanitisers and antiseptics were not medicaments but were disinfectants exigible to tax at the rate of 18% per annum. 6. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fiable under HSN 3004. 10. Mr Raichandani relied on Reckitt Benckiser India Ltd. Vs CCT 2023 (384) E.L.T. 616 (S.C.), to submit that the Hon ble Supreme Court had already classified Dettol antiseptic liquid as a medicament under HSN Code 3004 and since the Petitioner s products were not different, this precedent was binding on the Respondents. He submitted that the impugned Press Release takes a position contrary to the binding precedent of the Hon ble Supreme Court and, therefore, is manifestly arbitrary and liable to be struck down. 11. Based on the above contentions, Mr Raichandani submitted that the impugned Press Release and the impugned show cause notice cum demand notice may therefore be quashed and set aside. RESPONDENTS CONTENTIONS 12. Respondents Nos. 1 and 2 filed an affidavit on 19.01.2024, and Respondent No.3 filed an affidavit on 10.10.2023. They opposed the filing of this petition because the adjudication has yet to be completed. They submit that should the adjudication confirm the show cause notice and the tax demand, the Petitioner has the remedy of appeal. The affidavit cited dictionary definitions, statutory provisions, and precedents to support its contention th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, we propose to concern ourselves with the validity of the impugned Press Release dated 15.07.2020, by which the Ministry of Finance, Union of India, purporting to exercise its executive powers, virtually issued a fiat to the adjudicatory judicial and quasi-judicial authority to classify all alcohol-based hand sanitisers as disinfectants attracting a GST rate of 18%. The Judicial and quasi-judicial authorities under the Act may not be able to decide on the validity or otherwise of such a press release. The argument about alternate remedies will, therefore, not apply regarding the challenge to the impugned press release. 19. The impugned Press Release at Exhibit-B (page 124) to this petition reads as follows:- Ministry of Finance Clarification on issue of GST rate on alcohol based hand sanitizers Posted On: 15 JUL 2020 4:46PM by PIB Delhi The issue of GST rate on alcohol based hand sanitizers has been reported in few sections of media. It is stated that hand sanitizers attract GST at the rate of 18%. Sanitizers are disinfectants like soaps, anti-bacterial liquids, dettol etc which all attract duty standard rate of 18% under the GST regime. The GST rates on various items are deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Press Release, does not indicate that the same is relatable to either Article 73 or Article 77 of the Constitution. Though that, by itself, may not be a ground to strike down the impugned Press Release, still, in the absence of any such indication or compliance with the provisions of Article 77 of the Constitution, we cannot simply accept that the impugned Press Release is indeed an instance of the exercise of executive power by the Union. In the absence of any compliance with the requirements of Article 77, the burden was on the Respondents to establish this aspect. The Respondents have failed to discharge this burden. 24. However, even though it is assumed that the impugned Press Release is an instance of the exercise of executive power by the Union still, the question is whether, in the purported exercise of such executive power, the Union is competent to direct judicial and quasi-judicial authorities to decide the issue of classification of products in a particular manner. We cannot lightly accept that the Union, in the exercise of executive power, has such authority because the issue of classification, which is essentially an issue of interpretation, must be undertaken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or executive instruction meant to influence or, worse still, require the judicial or quasi-judicial authorities under the Act to exercise their judicial or quasi-judicial functions in a particular manner would interfere with their judicial or quasi-judicial functions. This cannot be allowed. The executive powers of the Union do not extend to this. 28. In the case of Parle Agro Pvt. Ltd. (supra), the challenge was to the decision of the GST Council classifying flavoured milk under HS Code No.2202 instead of HS Code No. 0402. The argument was that such classification by the GST Council was contrary to the decision of the Hon ble Supreme Court in CCE Vs Amrit Food (2015) 63 taxmann.com 153 . The learned single Judge of the Madras High Court held that though the Goods and Services Tax Council may be a Constitutional body still, it is a recommendatory body. By referring to Union of India Vs Mohit Minerals (P) Ltd. (2022) 138 taxmann.com 331 , the Court held that the recommendations of the GST Council are not binding on the Union and States. Besides, the Court held that while a GST Council may recommend rates of taxation , it does not have the power to determine the classification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Commissioner of Income Tax, A.P.-I, Hyderabad Vs Autofin Limited 1984 SCC OnLine AP 330 , the Division Bench of Andhra Pradesh High Court held that the Circular issued by the Ministry of Law, Justice and Company Affairs cannot be said to have been issued under any provision of the I.T. Act or the Rules. It cannot override or qualify the statutory provisions without being issued under a statutory authority. The Circular is accordingly liable to be ignored. A Circular issued by the Ministry of Law, Justice and Company Affairs does not stand on the same footing as a Circular of the CBDT issued under Section 119 of the Act, which section empowers the Board to issue appropriate orders, instructions and directions as it may deem fit for the proper administration of the Act. Indeed, this Circular has not even been issued by the Ministry of Finance, which can be said to be directly concerned with implementing the I.T. Act. 32. The Division Bench of the Andhra Pradesh High Court took note of the decision of the Calcutta High Court in Tarak Nath Paul Vs CWT (1983) 142 ITR 468 in which it was held that such press notes or circulars issued by the Ministry of Finance, not having been issued u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o empowered, exercise judicial functions in a limited way. The executive Government, however, can never go against the provisions of the Constitution or of any law. 35. Even applying the above principles, it is apparent that where the Legislature, after enacting a law, is functus officio in matters of interpretation of such law, the executive cannot claim such power when, admittedly, the executive power of the Union is only coextensive with its legislative powers. The interpretation of a law is within the province of the judiciary, and to that extent, the doctrine of separation of powers would apply. This is also not a case where the Union of India has claimed to be empowered to exercise judicial function in a limited way. Therefore, based on Rai Sahib Ram Jawaya Kapur (supra), the impugned Press Release cannot be saved. 36. In Bengal Iron Corporation (supra), again relied upon by Mr Subir Kumar, it was held that even the interpretation contained in the administrative instructions is not binding on Courts. The Court observed that so far as clarifications or Circulars issued by the Central Government and/or State Government are concerned, they represent merely their understanding of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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