GST Council cannot impose a wrong classification of Goods
Here is an interesting case wherein it has been held that GST Council cannot impose a wrong classification of Goods.
The case details is as under:
Madras High Court
M/s.Parle Agro Pvt. Ltd.,
Vs
Union of India.
W.P.Nos.16608 & 16613 of 2020.
The relevant part of the Judgment is as under:
118. The 3rd respondent GST Council has given a wrong recommendation. It also cannot determine the classification. Determination of classification also does not fall within the preserve of the 3rd respondent GST Council.
119. Having adopted classification of ‘Goods’ and ‘Services’ under the First Schedule to the Customs Tariff Act, 1975, the 3rd respondent GST Council cannot impose a wrong classification of “Flavoured Milk” as a “Beverage Containing Milk” under the residuary item as “NonAlcoholic Beverages” under Sub Heading 2202 90 30 of the Customs Tariff Act, 1975.
120. Therefore, the impugned recommendation of the 3rd respondent GST Council cannot be upheld. Classification ought to have been independently determined by the Assessing Officer.
121. Further, the power of the 3rd respondent GST Council is merely recommendatory. It is for the Government to fix appropriate rate on the goods that are classifiable under the Customs Tariff Act, 1975. As long as the Customs Tariff Act, 1975 is adopted for the purpose of interpretation of Notification No.1/2017-CT(Rate) dated 28.06.2017, classification has to be strictly in accordance with the classification under Customs Tariff Act, 1975, irrespective of the fact that concessions were given under the earlier regime by the Central Government under Sections 5 & 11C and Section 4A of the Central Excise Tariff Act, 1985.
122. While allowing this Writ Petition, I however leave it open for the Government to issue a fresh Notification for amending Entry Nos.8 & 50 to Notification No.1/2017-CT(Rate) dated 28.06.2017 to tweak the rate of tax, recognizing the well settled principle of law that in taxing matter, latitude can be given to the authorities while fixing the rate of tax.
123. The Central Government can either tweak the rate on the recommendation of the 3rd respondent GST Council or by itself.
124. In the result, these Writ Petitions stands allowed with the above observations.
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The copy of the order is as under:
