The Hon’ble Delhi High Court in the case of Association of Technical Textiles Manufacturers and Processors & Anr. V. Union of India & ors. [W.P.(C) 5933/2019 dated November 16, 2023]held that, the respondents could not draw attention to any provision of the Central Goods and Services Tax, 2017 (CGST Act), in terms of which the Tax Research Unit (TRU) could be said to have been clothed with the authority or jurisdiction to render a clarification, with respect to the classification of goods and articles. That power clearly appears to stand conferred upon the Board exclusively. We are thus of the considered opinion that no authority vested in the TRU to issue the clarification impugned before us. Thus, in the absence of a conferral of any power upon the TRU, or it being recognized as being statutorily enabled to issue any clarification or directive under Section 168 of the CGST Act, Circular No. 80/54/2018-GST dated December 31, 2018, is liable to be quashed and set aside on this ground alone and thus, the writ petition shall stand allowed.
Association of Technical Textiles Manufacturers and Processors and ANR. (Petitioners) filed writ petition before the Delhi High Court aggrieved by Circular No. 80/54/2018-GST dated December 31, 2018 (Impugned Circular), issued by the TRU clarifying that polypropylene woven and non-woven bags including those laminated with Biaxially Oriented Polypropylene are classifiable under Chapter 39 of First Schedule with the Tariff Heading 3923 of the Customs Tariff Act, 1975 (Customs Tariff Act). The Petitioners contend that polypropylene non-woven fabric is a textile, which is classifiable under Chapter 56 with Tariff Heading 5603 of the Customs Tariff Act.
Further, the Petitioners drew attention to Section 168 of the CGST Act and submitted that provision, the power to issue orders, instructions, or directions to Central Tax Officers stands vested exclusively in the Central Board of Indirect Taxes and Customs (CBIC), and even if clarification about classification were to be issued under the CGST Act, the same could have been achieved only by way of a directive issued by the CBIC and none other.
Whether circular issued by the TRU stands vested under the CGST Act?
The Hon’ble Delhi High Court in the case of W.P.(C) 5933/2019 held as under:
Conclusion: The court’s decision underscores the importance of statutory authority in the issuance of GST circulars related to goods classification. Taxpayers and stakeholders should remain vigilant about the source of such circulars to ensure compliance with statutory provisions. The verdict leaves the classification issue open for consideration by the competent authority through appropriate proceedings.
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