Azam Laminators Private Limited Vs Additional Director (Madras High Court)
5% GST on Nizam Pakku – Issuance of SCN and disputing position settled by SC and Binding AAAR Ruling tantamount to clear abuse of Law: Madras High Court
The Madras High Court has struck down a Show Cause Notice (SCN) issued to M/s Azam Laminators Pvt. Ltd. seeking to reclassify “Nizam Pakku” (scented betel nut) from Chapter 08 to Chapter 21 of the Customs Tariff Act (CTA) under the GST regime. The Court held that classification had already attained finality in the assessee’s own case through a Supreme Court ruling under the Central Excise regime, later reaffirmed by CESTAT, and further upheld by an unchallenged order of the Tamil Nadu Appellate Authority for Advance Ruling (AAAR) classifying the product under CTH 08028090 at 5% GST.
Rejecting the Department’s argument that GST’s shift from “manufacture” to “supply” justified reclassification, the Court ruled that classification depends on the nature of the product, not the taxable event. It also found the reliance on CBIC Circular No. 163/19/2021-GST misplaced, as it related to “Supari” and not sweetened/scented betel nuts.
Terming the SCN a clear abuse of process — since there was no change in the product’s character, tariff entries, or law — the Court quashed the notice, reiterating that even at the SCN stage, writ jurisdiction can be invoked where proceedings are without jurisdiction or constitute an abuse of law.
