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2021-TIOL-2119-HC-MAD-GST
Jenefa India Vs UoI
GST - Fish meal -Classification - Writ petition is filed for issuance of Writ of Certiorari to call for the records in the proceedings in clarification contained in paragraph No.4 of Circular No. 80/54/2018-GST dated 31.12.2018 issued by the first respondent and quash the same. Facts : Petitioner is a manufacturer of fish meal which comes in powder form -They contend that whatever be the usage of the finished product, namely “fish meal”, it is only a finished product and it is covered under the two entries i.e. 2301 & 2309 - Therefore, since both entries find place in Sl.No.102 of the Exemption Notification, the said product of the petitioners are totally exempted - That till the issuance of the exemption notification 2/2017-CTR as well as the corrigendum and amendment notification 28/2017-CTR, there has been no quarrel but the trouble started only by issuance of Circular 80/54/2018-GST dated 31.12.2018 wherein it is clarified that the “fish meal” and other raw material used for making cattle / poultry / aquatic feed cannot be said to be exempted within the meaning of Exemption Notification No.2/2017 under Sl.No.102 - By virtue of this Circular, the revenue has taken a stand that, the product of the petitioners i.e. fish meal, since is also to be used as a raw material for the purpose of making cattle / poultry / aquatic feed, which is not exempted, therefore, tax are to be levied on these items at the rate of 5% and accordingly, they inspected the premises of the petitioners' factories and demanded the tax and pursuant to which, the officials from Directorate General of GST Intelligence [DGGI] had issued summons that there would be an enquiry proceedings conducted in the name of judicial proceedings within the meaning of Section 193 and Section 228 of the Indian Penal Code and,therefore, they should appear before the officer concerned of the DGGI i.e. Directorate General of GST Intelligence - Petitioner has, therefore, challenged the impugned Circular dated 31.12.2018.
Held:
+ If at all anything is to be taken away from the purview of such exemption already provided under those entries, it is for the Central Government to come to the rescue of the Revenue by issuing further amendment to the Exemption Notification No.2/2017-CTR as amended by the Amendment Notification No.28/2017-CTR and they can issue a fresh or additional amendment, showing the proper intention of the Central Government to take away the exemption provided in any particular type of goods or product covered under the four entries referred to. Such an action has not been taken by the Central Government so far. [para 19]
+ Section 168(1) makes it clear that, only for the purpose of uniformity in the implementation of the Act, orders or directions to the Central Tax Officers, as deem fit, may be issued by the Board. Therefore, most probably, such kind of orders, instructions or directions must be procedural in nature, not substantive in nature. [para 21] + The exemption provided by the Central Government by exercising its powers either under Section 11(1) of CGST Act, 2017 or under Section 6(1) of IGST Act, 2017 are the substantive right provided to the stake-holders by giving such exemption. Therefore, such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the CGST Act, 2017. [para 22]
+ Therefore, for the said reason also, this Court feels that the impugned clarificatory Circular cannot override the exemption provided under the notifications referred to above. [para 23]
+ Nowhere in the said judgment in Dilip Kumar case [ 2018-TIOL-302-SC-Cus-LB ], the Supreme Court has held that the inputs for animal feed are different from the animal feed. [para 26]
+ This issue never figured in the decision in Dilip Kumar case, where the larger principle of law alone was considered ... Therefore, the reason cited by the Board in paragraph 4.2. of the impugned Circular being one of the reasons to issue this clarification is also untenable and, therefore, for that reason also, the respondent / Revenue cannot sustain the impugned Circular. [para 27]
+ In the Finance Act, 2020, by Section 132, the Parliament thought it fit to give exemption from levying the Central Tax in respect of supply of fish meal falling under heading 2301 during the period commencing from the first day of July, 2017 and ending with 30 th day of September, 2019. [para 28]
+ If at all the exemption provided by the Central Government in issuing the Exemption Notification No.2/2017-CTR is to be revisited or reviewed and certain items have to be taken away from the purview of exemption, such exercise shall be undertaken either by the Parliament by making a law as has been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the CGST Act, 2017 or under Section 6(1) of the IGST Act, 2017, as under such exercise of powers only those Exemption Notifications No.2/2017 as well as the Amendment Notification No.28/2017 were issued, and only then, such kind of amendment could be made. [para 30] + However, no such attempt since has been made either by the Parliament or by the Central Government, by issuing a mere Circular exercising the powers under Section 168 of the CGST Act, 2017, such kind of right already vested, to get exemption, on the assessee, cannot be taken away by way of a clarificatory Circular, that too issued only to the benefit of the officials and staff of the department, as culled out from the language used in Section 168 of the Act. Therefore, for that reason also this Court feels that the impugned Circular would not stand in the legal scrutiny. [para 31]
+ Court feels that the impugned Circular insofar as Clause (ii) of the same, namely, fish meal and other raw materials used for making cattle / poultry / aquatic feed is concerned, is unsustainable and, therefore, insofar as the said product is concerned, whatever the clarification issued in the impugned Circular dated 31.12.2018 is set aside. As a sequel, the petitioners, so long as they make a finished product fish meal from their manufacturing units, can enjoy the benefit of exemption as provided under Sl.No.102 of Exemption Notification No.2/2017-CTR dated 28.06.2017. Therefore, all consequential actions, if any taken on the part of the Revenue against the petitioners pursuant to the impugned Circular, would not stand in the legal scrutiny. Therefore, they are also declared to be invalid. [para 32]
- Writ petitions allowed: MADRAS HIGH COURT
2021-TIOL-246-AAR-GST
Fine Electro Coating
GST - The applicant is engaged in rendering premium CED Coating and Powder Coating services - The applicant also undertakes metal finishing coating services for various products and further offers (a) CED Coating for Metallic Components & auto parts (b) Coating on General Industrial equipments - The applicant approached the AAR, seeking to know if the process of CED Coating (Cathodic Electro Deposition) and Powder Coating, would be treated as service as per Schedule II & whether such activity would qualify as job work - The applicant also sought to know if the provisions of Notification No. 20/2019 Central Tax (Rate) , wherein GST rate on job work is reduced to 6%, would apply onto the applicant.
Held - The activity of the applicant fits the definition of Job work under the present law - Further in terms of the Apex court's ruling in Maruti Suzuki Limited Vs. CCE, New Delhi , activity of coating is only a process undertaken on goods - Therefore the activity undertaken by the applicant is covered under the definition of Job work' - Moreover, the provisions of Notification No.20/2019 Central Tax (Rate) are applicable onto the assessee: AAR
- Application disposed off: AAR
2021-TIOL-31-AAAR-GST
Unique Aqua Systems
GST - On an application filed, the AAR had held that the Supply provided by the applicant to the recipient i.e. The Greater Chennai Corporation based on the agreement to provide RO Plant and undertake O&M of the same, being not a "Pure service" but a composite supply of goods & services, they are not eligible for benefit of exemption provided at Serial No. 3 of Notification No. 12/2017-Central Tax (Rate) - Appeal filed before the AAAR. Held: Member (SGST) In the present case, inasmuch as the contract provides for separate payment terms for supply and installation and for O&M and the times of supply of the two are distinctly different, they will have to be treated as two distinct supplies in one contract, not constituting either a composite supply or a mixed supply - Each of the two supplies will have to be taxed at relevant rates - Therefore, it is not material whether the supply and installation is made prior to or after the introduction of GST - Either way, O&M component of the contract will have to be treated as a distinct supply and taxed accordingly - Service, being supply of water would also squarely fall within the serial no.3 of notification 12/2017-CTR and be exempt from tax. Held: Member (CGST) In the case at hand, the contractual obligation in respect of the contract furnished before the original authority is for supply, installation, commissioning followed by Operation & Maintenance (O&M) for a period of 5 years - There is an obligation composed of multiple performances that can be separately rendered and the appellant is obligated to perform, both the supply, installation, commissioning of the RO plant ‘and' Operation & Maintenance of the RO plant for five years after commissioning - Therefore, these supplies are in ‘conjunction' and are ‘composite services' - The definition of ‘composite supply' does not state that the 'time of supply' of individual constituent supply should be the same or at least closer to each other - The contention that the O&M portion of the contract has only transitioned into the GST regime and, therefore, only that portion which has transitioned into GST is relevant is not legally tenable - Change of taxation regime does not change the nature of the contract and only the measure/levy undergoes change - Therefore, the operation involving supply of water on undertaking purification process by operating the plant and supply of RFID cards during the O&M period is not a supply of ‘pure service' - Even the O&M part of the subject contract is not supply of ‘Pure services', therefore, the appellant is not eligible for exemption at sl. no.3 of 12/2017-CTR. Conclusion: Issue not answered - In view of the difference in opinion between the two Members constituting the AAAR, in view of s.101(3) of the Act, it is to be deemed that no ruling is issued in respect of the question under appeal: AAAR
- Difference of opinion: AAAR |
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