Gyankeer Tobacco Products Pvt. Ltd. Vs Additional Commissioner (Rajasthan High Court)
Show Cause Notice Based on Allegations Earlier Rejected by AAR Held Unsustainable by Rajasthan High Court; Advance Ruling Binding on GST Authorities Unless Fresh Facts Emerge; Rajasthan High Court Sets Aside ₹195 Crore GST Notice Because No Fresh Material Was Found; Reopening Concluded GST Classification Dispute Without New Evidence Violates Law; Section 74 Proceedings Cannot Be Invoked Without Proof of Willful Suppression; GST Authorities Cannot Circumvent Binding Advance Ruling Through Fresh Show Cause Notices; Rajasthan High Court Allows Writ Against Show Cause Notice Due to Patent Lack of Jurisdiction.
In Gyankeer Tobacco Products Pvt. Ltd. Vs Additional Commissioner, the Rajasthan High Court allowed the writ petition challenging two show cause notices dated 8 August 2024 issued under Section 74 of the Central Goods and Services Tax Act, 2017 and Section 11A read with Sections 11AA and 11AC of the Central Excise Act, 1944. The notices proposed demand of GST amounting to ₹195.06 crore and Central Excise Duty amounting to ₹71.34 crore along with interest and equivalent penalty.
The petitioner had earlier approached the Rajasthan Authority for Advance Ruling (AAR) seeking classification of its product “Keer Kokil,” described as unmanufactured tobacco pre-mixed with lime along with aroma and menthol. The petitioner disclosed before the AAR that the product was prepared either manually or through machines. The jurisdictional officer also submitted comments stating that addition of aroma and menthol did not change the nature of the tobacco product. Based on these facts, the AAR passed an Advance Ruling on 1 June 2022 classifying the product as “unmanufactured tobacco” under CTH 24012090 attracting GST at 28% and Compensation Cess at 71%.
