Jenefa India Vs Union of India (Madras High Court)
Conclusion: CBIC was not empowered to issue circular in respect of fish meal used for making cattle / poultry / aquatic feed for clarification on GST rate as the power was to be exercised either by the Parliament by making a law as had been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the CGST Act, 2017 or under Section 6(1) of the IGST Act, 2017.
Held: Assessee was a manufacturer of fish meal. Till the issuance of Exemption Notification as well as Corrigendum and Amendment Notification, absolutely, there had been no quarrel. However, from the issuance of Circular No.80/54/2018-GST dated 31.12.2018, the revenue had taken a stand that, the product of assessee ie., fish meal, since was also to be used as a raw material for the purpose of making cattle / poultry / aquatic feed, which was not exempted, therefore, tax were to be levied on these items at the rate of 5% and accordingly, they inspected the premises of assessee’s factories and demanded the tax and pursuant to which, the concerned officials of the Revenue ie., from Directorate General of GST Intelligence [DGGI] had issued summons that, there would be an enquiry proceedings conducted in the name of judicial proceedings within the meaning of Section 193 and Section 228 of the Indian Penal Code. Therefore, they should appear before the officer concerned of the DGGI ie., Directorate General of GST Intelligence. Assessee contended that such a clarificatory Circular issued under Section 168 could not override the exemption provided under the Notification, which was a statutory notification issued by the Central Government by exercising its powers under Section 11(1) of the CGST Act. Therefore, on that ground also, the impugned circular could not be sustained in the scrutiny of law. It was held that if at all the exemption provided by the Central Government in issuing the Exemption Notification No.2 of 2017 was to be revisited or reviewed and certain items had to be taken away from the purview of exemption, such exercise should be undertaken either by the Parliament by making a law as had been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the CGST Act, 2017 or under Section 6(1) of the IGST Act, 2017, as under such exercise of powers only those Exemption Notification No.2 of 2017 as well as the Amendment Notification No.28/2017 were issued, and only then, such kind of amendment could be made. However, no such attempt since has been made either by the Parliament or by the Central Government, by issuing a mere Circular exercising the powers under Section 168 of the CGST Act, 2017, such kind of right already vested, to get exemption, on the assessee, could not be taken away by way of a clarificatory Circular, that too issued only to the benefit of the officials and staff of the department. Therefore, the impugned Circular was unsustainable and set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
Since the issue raised in these writ petitions is one and the same, with the consent of the learned Counsel appearing for both sides, all these writ petitions were heard together and are being disposed of by this common order. Since the facts are similar in all these cases, for the sake of convenience and for easy reference, the facts in respect of the case in W.P.(MD)No.16770 of 2019, is traversed hereunder:
1.1. That the petitioner is a manufacturer of fish meal. The fish meal produced by the petitioner comes in powder form. The petitioner is registered under the Goods and Services Tax (hereinafter referred to the GST) Department, within the jurisdiction of the third respondent and it is an assessee on the file of the officers subordinate and under the administrative control of the third respondent.
1.2. In the manufacturing process, the petitioner would procure fresh fish and it would be carried up in to the steam cooker and steam boiled in the plant. The steam boiled fish then would be sent to the squeezer and the solid part of the fish is transferred into a steam drier where the excessive moisture is removed. Then, the moisture removed material would be conveyed to the pulverizer and the resultant material would be in powder form of fish meal which would be packed in sacks for sale.
1.3. Pursuant to the GST regime with effect from 01.07.2017, the Central Government issued two notifications called Notification No.1 of 2017 Central Tax (Rate) dated 28th June, 2017, in short “Notification No.1/17”, and Notification No.2 of 2017, Central Tax (Rate) dated 28th June 2017, in short would be called as “Notification No.2 of 2017”.
1.4. In Notification No.1/17, the Rate of Tax (Schedules) for specified goods under CGST under these schedules ie., Schedule I to VI have been provided. This notification and Notification No.2 of 2017 were issued by the Central Government in exercise of their powers conferred by Sub-Section 1 of Section 9 & 11, respectively, of the Central Goods and Services Tax Act, 2017, [In short, ‘CGST Act’].
1.5. Under Notification No.1/17, for goods specified in first Schedule, the rate of tax has been fixed as 2.5% for Central share that means totally, 5%. Like that, in second Schedule goods, it is 6% ie., 12% in total. In third Schedule, it is 9% ie., 18% in total. In fourth Schedule, it is 14% ie., 28% in total. Like that, in fifth Schedule, it is 1.5% ie., 3% in total. In 6th Schedule goods, it is 0.125%, ie., 0.250% in total.
1.6. Insofar as the present issue is concerned, we may take the table for Schedule I goods alone. The goods specified in Schedule I are liable to be taxed at the rate of 5% GST.
1.7. Number of items in various serial numbers have been enumerated under schedule I, wherein Sl.No.103 is relevant, which reads thus:
