TS-577-HC(MAD)-2023-GST] In a judgment with potentially far reaching implications, Madras HC, while allowing assessee’s writ petition vis-a-vis wrong classification of ‘flavoured milk’, goes on to observe that GST Council cannot determine ‘classification’ since it does not fall within the purview of the Council; In the instant case,
[11/11, 11:53] sekarreporter1: TS-577-HC(MAD)-2023-GST]
In a judgment with potentially far reaching implications, Madras HC, while allowing assessee’s writ petition vis-a-vis wrong classification of ‘flavoured milk’, goes on to observe that GST Council cannot determine ‘classification’ since it does not fall within the purview of the Council; In the instant case, the assessee Parle Agro filed a writ challenging the classification of ‘flavoured milk’ under HS Code No. 2202 instead of HS Code 0402, which would entitle them to a lower rate, i.e 5% GST instead of 12%; After going through the general scheme of GST law, charging section for levy thereunder, practice of adoption of classification under Customs Tariff Act, 1975, Central Excise Tariff Act, 1985, HC concludes that while the judgments cited by petitioner under erstwhile Central Excise Act cannot advance assessee’s case under the new GST regime, that ‘flavoured milk’ manufactured by petitioner is to be still classified under Tariff Heading 0402 of Customs Tariff Act, 1974 and therefore liable to 5% GST; HC peruses Note 1 to Chapter 4 of Customs Tariff Act, 1975 (that defines expression ‘milk’) as also Note 3 to Chapter 22 (that deals with beverages, spirits etc.), and on a detailed analysis of the same, observes that the expression ‘Beverages Containing Milk’ ( Sub heading 2202 90 ) has to necessarily contain alcohol of specified strength and hence ‘flavoured milk’ made out of diary milk from milch cattle/diary animals cannot come within Chatper 22 purview; HC applies principle of “Nosciter – a sociss” ( that the words must take colour from words with which they are associated ) to arrive at finding that the expression ‘Beverage Containing Milk’ can include only such beverage containing plant/seed based milk which incidentally contain alcohol of specified strength, such as coconut milk, almond milk, peanut milk, lupin milk, hazelnut milk, pistachio milk, walnut milk or seed based milk such as sesame milk, flax milk etc…. ; HC quips “It has to be therefore construed that “Beverage Containing Milk” will not include flavoured milk made out of dairy milk.” ; HC, in further important observations, holds that notifications under erstwhile Central Excise Act, 1944 classifying ‘Flavoured Milk’ as ‘Beverage Containing Milk’, were ‘erroneous’ and just because they were never contested by assessees being beneficial, doesn’t make the classification right; HC further holds that classifications adopted under erstwhile indirect tax regime, namely Excise, are not relevant for determining correct classification under the new GST regime; On classification principles, HC sums up that 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; In conclusion, HC holds that the GST Council gave a wrong recommendation and that classification ought to have been independently determined by Assessing Officer; While ruling in favour of assessee, HC however gives latitude to Govt. to issue a fresh Notification to tweak rate of tax:HC MAD
[11/11, 11:53] sekarreporter1: 👍
