GST - Whether Marine paint is a 'part' of ship - Petitioner is mixing up legality with mechanics - Scrutiny in writ jurisdiction of orders passed by AAR/AAAR is minimal: HC

GST - If Officer wishes to initiate proceedings for cancellation of registration, he must issue a notice as specified in Rule 21 and in form GST REG-17 and not in form GST REG-31: HC

Cus - View Sonic IFP6550-2/65' & 75' Interactive Display System are not mere display monitors & cannot be classified as such under CTH 8528 as Monitors; correct classification is CTH 8471 41 90 as canvassed by importer: CESTAT

GST - Rajasthan Housing Board is covered under definition of 'Governmental Authority' and services provided by them such as permission for building construction etc. is exempted: AAR

GST - Supply of services for plantation of mangrove seeds and seedlings in coastal areas is not Support service to agriculture; attracts GST @18%: AAAR

2022-TIOL-1609-HC-MUM-GST

Jotun India Pvt Ltd Vs UoI

GST - Petitioner manufactures and supplies marine paint for use on the hull of the ships - Petitioner applied for an advance ruling seeking that the said marine paints should be considered as a part of the ship/vessel and should be classified accordingly - That is, covered at Sr. no. 252 of Schedule I of notification 1/2017-CTR and attract GST @5% - However, both the Advance Ruling Authority and the Appellate Authority rejected the interpretation of the petitioner and held that marine paint cannot be classified as a part of the ship - Therefore the present petition.

Held:

+ The legislative scheme indicates that the advance ruling is distinct from the appeal and revision. 

+ No appeal is provided against the Appellate Authority's order.

+ This legislative scheme has to be kept in mind when the applicant challenges the order passed by the Authorities invoking writ jurisdiction. The Court will have to be mindful of the fact that the advance ruling is binding in a limited sense.  [para 10, 11]

+ The Division Bench [in JSW Energy Ltd.  2019-TIOL-1236-HC-MUM-GST observed that merely because the appeal is not provided, the writ Court cannot assume appellate jurisdiction and examine the challenge on merits. [para 12]

+ There is no ground raised of breach of principles of natural justice on account of not giving an opportunity of being heard. All points put forth by the Petitioner as to why anti-fouling paint should be considered as part of the ship were taken into consideration, and the Authority and the Appellate Authority took a particular view of the matter. [para 17]

+ Both the Authorities concluded that just because, as per the Merchant Shipping Act, the marine paint is mandatory to be applied, it does not become part of the ship. This is a considered opinion reached by both Authorities. To arrive at this conclusion, both the Authorities have adopted the approach required for the classification of the goods in the context of the application of tax, and the Authorities have not widened the enquiry to ascertain various issues sought to be raised by the Petitioner as regards the legality of sailing of the vessel without the marine paint. [para 22]

+ The Petitioner is mixing up legality with mechanics. The Authorities have rightly focused only on the first aspect as that was the scope of enquiry before them. Once the Authorities correctly adopted that approach, the issue of whether the ship was permitted in law to sail in view of the statutory provisions was an issue outside the enquiry of the Authorities. There is no error in the principle adopted by the Authorities that a part is one without which the whole cannot function and then applying that to the Petitioner's case. This is the only enquiry that both the Authorities had to undertake and they have rightly undertaken the same. There is no dispute  that a ship can enter the water and sail without the marine/anti-fouling paint. [para 24]

+ View taken by the Authority and Appellate Authority is based on the material placed before it. 

+ The Petitioner seeks to convert this limited enquiry in respect of Advance Ruling into an appellate enquiry, which is not permissible to be undertaken in writ jurisdiction. The scrutiny in writ jurisdiction of the orders passed by the Authority and the Appellate Authority is minimal. 

+ The Petitioner, who sought an advance ruling as to which entry the marine paint should fall, was given full opportunity of hearing. 

+ Both the Authorities have dealt with the issue in extenso, have considered the submissions and the law cited and have taken a view in the matter which cannot be considered as suffering from fundamental error or absurd or perverse, assuming that such a test can be applied and, therefore, Bench is not inclined to interfere with the orders passed by both the Authorities.[para 29]

- Petition is dismissed: BOMBAY HIGH COURT

2022-TIOL-1608-HC-KERALA-GST

Pankaj Cottage Vs GST Officer

GST - Petitioner is aggrieved by the order cancelling his GST registration - Petitioner submits that the order appears to have been preceded by a SCN issued electronically but the same never came to his attention; that upon learning that their registration is cancelled, they applied for revocation, which too was rejected and, therefore, an appeal was filed u/s 107 but the same is pending consideration by the appellate authority - Petitioner submits that SCN should have been issued in form GST REG-17 but was apparently issued in form GST REG-31 which is the form applicable to proceedings leading to suspension of registration; that the entire proceedings must be held to be bad in law. Held: It is clear that Form GST REG-31 is one relatable to proceedings for suspension of registration and cannot be treated as a show cause notice under Rule 21 of the CGST Rules, which requires the issuance of a notice in form GST REG-17 - It is a principle at the heart of administrative law that where the law requires a thing to be done in a particular manner, it must be done in that manner alone - Therefore, the action taken by the officer by initiating proceedings in form GST REG-31 of the CGST Rules and completing the proceedings for cancellation of registration by issuing Ext.P1 order is clearly without jurisdiction - If the Officer wishes to initiate proceedings for cancellation of registration, he must issue a notice as specified in Rule 21 of the CGST Rules and in form GST REG-17 and not in form GST REG-31 - Petitioner will be required to file all defaulted returns together with tax, late fee, interest, penalty etc., within a period of two weeks from the date on which the registration of the petitioner is restored in compliance with this judgment - Writ petition is allowed: High Court

- Petition allowed: KERALA HIGH COURT

2022-TIOL-154-AAR-GST

Rajasthan Housing Board

GST - Rajasthan Housing Board is covered under the definition of "Governmental Authority" as defined in clause ( zf ) Paragraph 2 of notification no. 12/2017-Central Tax (Rate) - Services provided by the Rajasthan Housing Board, as a governmental authority, such as permission for building construction, approval of map, permission of additional Floor Area Ratio, leasing of land etc. are covered under article 243 W of the constitution and exempt as per Sl. No.4 of Notification no. 12/2017-CTR: AAR

- Application disposed of: AAR

2022-TIOL-42-AAAR-GST

Raj Mohan Seshamani

GST - AAR held that  Supply of services for plantation of mangrove seeds and seedlings in coastal areas shall be covered under Sl. No. 32 of Notification No. 11/2017- Central Tax (Rate)  having SAC 9994 and, therefore, shall attract tax @18% - Appeal filed. Held:  It is evident that the appellant is engaged in business of cultivation, planting and nurturing of mangrove seeds and seedlings for the primary purpose of environmental protection by way of enhancing biodiversity and re-establishing the ecosystem functions and such services are not related to cultivation of plants for food, fibre, fuel, raw material or other similar products - Therefore, none of the activities carried out by the appellant for the purpose as laid down in the agreement qualifies to be agriculture as claimed by him which is essential to be classified under SAC 9986 - AAAR opines that the services rendered by the appellant can be classified as 'Other environmental protection services' and not as ‘Support services to agriculture, forestry, fishing, animal husbandry' - No infirmity in the ruling pronounced by the WBAAR being that the supply of services for plantation of mangrove seeds and seedlings in coastal areas shall be covered under Serial Number 32 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 having SAC 9994 and shall attract GST @ 18% : AAAR

- Appeal dismissed: AAAR

2022-TIOL-1180-CESTAT-DEL

Ingram Micro India Pvt Ltd Vs Pr.CC

Cus - The issue at hand pertains to lassification of the goods namely (i) (View Board) View Sonic IFP6550-2/65" Interactive Display System; and (ii) (View Board)-View Sonic-IFP7550-2/75" Interactive Display System - The appellant claims that the classification would be under Customs Tariff Item CTI 8471 41 90, though, earlier at the time of self-assessment, the appellant had claimed it to be under CTI 8471 90 00 - The Department claims that it should be under CTI 8528 52 00 - The Deputy Commissioner rejected the self-assessment done by the appellant under CTI 8471 90 00 and ordered for re-assessment of the goods under CTI 8528 52 00 - The case set up by the appellant at the time of assessment was that the goods were Automatic Data Processing Machines ADPM and not Monitors and, therefore, classifiable under CTI 8471 90 00 and not under CTI 8528 52 00 - At the appellate stage, the appellant contended, on a re-consideration of the matter, that the goods were more specifically and correctly classifiable under CTI 8471 41 90 - Hence the present appeal.

Held - It would be seen from the aforesaid that Chapter Note 5(A) and the HSN Explanatory Notes to CTH 84.71 provide what should constitute an ADPM - According to the aforesaid Chapter Note 5(A), ADPM would be a machine which is capable of storing a processing program; is freely programmable; performs arithmetical computations; and can execute a processing program by logical decision during the processing without human intervention - Considering how the system works, a user can give a command to the goods and the same would be executed without any further intervention of the user - The CPU along with the operating system executes the command so given by the user by taking logical decisions during the processing run - Thus, condition no. (iv) is also satisfied - As all the four essential conditions contained in Note 5(A) to Chapter Note 84 are satisfied, the goods qualify as ADPM classifiable under CTH 8471 - The goods also have an in-built processing unit, an input unit and an output or may have separate processing, input and output unit interconnected with each other and so the requirements set out in the HSN Explanatory Notes to CTH 8471 also stand satisfied - There is no manner of doubt that the goods would merit classification under CTI 8471 41 90 as claimed by the appellant and not under CTI 8528 52 00 as claimed by the Department - The order dated 16.03.2021 challenged in Customs Appeal No. 50708 of 2021 and the order dated 11.03.2021 challenged in Customs Appeal No. 50709 of 2021 are, accordingly, set aside: CESTAT

+ The goods are capable of working as an ADPM on a standalone basis and can also be used in conjunction with other ADPM, but this would not mean that the goods would cease to be ADMP in their own right, capable of working on a standalone basis. The large size display (65 inches and 75 inches) is only a feature/specification of the product and this cannot be construed to be its function, much less its principal function. The Deputy Commissioner and the Commissioner (Appeals), therefore, committed an error in holding that the large size of display would mean that the goods are meant for display purpose to a large gathering and, therefore, in terms of Note 5(E) of Chapter Note 84, the goods would merit classification as per the specific use; (Para 24)

+ The Commissioner (Appeals) committed an error in rejecting the contention of the appellant that the goods were ADPM by taking recourse to trade parlance, namely, that buyers intending to purchase a computer will not select the goods because of the large size display and, therefore, the goods should be specified according to the use. The Commissioner (Appeals) also committed an error in holding that even if the goods are capable of being used as ADPM considering their features, they would still merit classification under CTH 8528 in view of the provisions of GRI (3)(c). There was no occasion for the Commissioner (Appeals) to apply the provisions of GRI (3) (c) as the relative Chapter Notes left no manner of doubt that the goods would merit classification under ADPM; (Para 25)

+ The goods in dispute, on the other hand, are much more than mere display devices and, therefore, cannot be classified under CTH 8528 as monitors. The HSN Explanatory Notes to CTH 8528 also mention that the viewable image sizes of the monitors do not generally exceed 30 inches and that they usually cannot be operated by a remote control. The goods, in the present case, are of 65 inches and 75 inches and do have a remote control. The goods, therefore, would not merit classification under CTH 8528;

+ What also needs to be noted is that classification of a product is determined according to the terms of the Headings and any relative section or Chapter Note. GRI (1) also provides that titles of Sections, Chapters and sub-chapters are provided for ease of reference only; for legal purposes, classification is determined according to the terms of the Headings and any relative Section or Chapter Notes. It is only when such Headings or Notes do not otherwise require that the provisions (2),(3),(4),(5) and (6) of GRI would apply. The subsequent rules can be resorted to only when no clear picture emerges by application of rule (1); (Para 29)

- Appeals allowed: DELHI CESTAT