Shree Girraj Food Products Vs Union of India and 7 others (Allahabad High Court)
In a significant development, the Allahabad High Court has ordered an interim stay on the recovery of a substantial Goods and Services Tax (GST) demand of ₹16.85 crore, along with interest and penalty, against Shree Girraj Food Products. The demand arose from an alleged incorrect classification of savoury snack products.
The case, Shree Girraj Food Products Vs Union of India and 7 others, stems from an inspection conducted in 2018 under Section 67 of the SGST/CGST Act, 2017. At that time, State Tax Officers examined the manufacturing process of all products, and no demand was raised regarding the applicability of 18% GST, as the petitioner was consistently paying GST at 12%.
The dispute intensified following a clarification from the GST Council, which led to a CBIC Circular dated January 13, 2023. This circular indicated that the petitioner’s products were appropriately classifiable under tariff item 1905 90 30, attracting an 18% GST rate as per Serial No. 16 of Schedule III of Notification No. 1/2017 – Central Tax (Rate) dated June 28, 2017.
Subsequently, Circulars dated July 27, 2023, and August 1, 2023, were issued, inserting Serial No. 99B into the June 28, 2017 Notification and regularizing the issue for the past period concerning un-fried or un-cooked snack pellets. Based on these circulars, a fresh inspection under Section 67 was conducted, leading to a show cause notice under Section 74 of the Act. The notice proposed the aforementioned demand, alleging that the petitioner had wilfully suppressed the classification of its final product, namely extruded or expanded savoury or salted snack products, under tariff item 2106 90 99 (12% GST) instead of tariff item 1905 90 30 (18% GST).
