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In a landmark decision, the Gujarat High Court, presiding over the case of Vimal Agro Products Pvt. Ltd. v. Union of India [R/Special Civil Application 21700/2022 dated April 24, 2024], affirmed that the tax on Mango Pulp is appropriately levied at a rate of 12 percent from the inception of the GST regime. This ruling underscores the significance of Circular No. 179/11/2022-GST dated 3.8.2022, hereafter referred to as “the Impugned Circular,” which elucidates that Notification No. 6/2022 dated 13th July 2022, commonly known as “the Impugned Notification,” merely clarifies the applicability of GST at 12 percent to mango pulp, following the insertion of “Mangoes (other than mangoes, sliced, dried)” after Guava in the notification.

Facts:

Vimal Agro Products Pvt. Ltd. (“the Petitioner”) is engaged in the supply of “Mango Pulp” to hundred percent export-oriented unit which further exports the pulp outside the country after minor processing/re-packing.

The Petitioner discharged tax liability at the rate of 5 percent on the supply of mango pulp supplied by the Petitioner which was in pulp form of the sliced mangoes. However, the Revenue Department (“the Respondent”) decided to clarify that there is a third category of mangoes in HSN 0804 other than fresh and dried mangoes which were always intended to be taxed at the rate of 12 percent for which it was suggested that new entry should be introduced in Schedule for 12 percent tax rate.

Thereafter, on the basis of the recommendation made by the GST Council, the Impugned Notification which was issued by inserting Entry No. 16 of Schedule-II of Notification No. 1/2017-Central Tax (Rate) dated 28.6.2017 (“the Goods Rate Notification”) wherein after the Guava the words and brackets “Mangoes (other than mangoes, sliced, dried)” were inserted.

The Respondent vide the Impugned Circular clarified that the tax on mango pulp would be leviable to attract GST at the rate of 12 percent. Further, the Respondent issued the Show Cause Notice (“the Impugned SCN”) claiming that the Petitioner is liable to pay GST at the rate of 18 percent by virtue of residuary entry no. 453 of Schedule-III of the Goods Rate Notification as the mango pulp was not classified in any other category during the period from July 1, 2017, to July 18, 2022, and hence, was sought to be recovered from the Petitioner.

Aggrieved by the Impugned SCN issued, the Petitioner filed a writ petition before the Hon’ble High Court.

Issue:

Whether tax is leviable at the rate of 12 percent on Mango Pulp from the beginning of GST regime?

Held:

The Hon’ble Gujarat High Court in the case of R/Special Civil Application 21700/2022 held as under:

  • Observed that, the Impugned Notification and Circular is not in the nature of amending the tax rate by increasing the tax rate with retrospective effect.
  • Noted that, the Impugned Circular states that the Notification only further clarifies that mango pulp attracts GST at the rate of 12 percent as after the Guava the words and brackets “Mangoes (other than mangoes, sliced, dried)” were inserted vide the Notification
  • Opined that, the Petitioner is liable to pay GST at the rate of 12 percent and not 5 percent as per Entry No. 16 of the Schedule II of the Goods Rate Notification from July 1, 2017, and also is not liable to pay tax at the rate of 18 percent as per residuary entry no. 453 of Schedule-III of the Goods Rate Notification.
  • Held that, the Impugned Show Cause Notice is quashed.

Our Comments:

The Hon’ble Andhra Pradesh High Court in the case of Shri Varsha Foods Products India Pvt Ltd vs Assistant Commissioner (ST) [Writ Petition No. 13934 of 2023 dated September 06, 2023] wherein the Hon’ble High Court relying upon the judgment of Division Bench in the case of M/s. Foods and Inns Ltd. v. Union of India and Others [Writ Petition No. 17267/2022 dated September 14, 2022] also held that, the GST on Mango Pulp would be leviable at the rate of 12 percent from the inception of GST i.e. July 1, 2017.

Relevant Provision:

Entry No. 16 of the Goods Rate Notification:

“Schedule II – 6%

S. No. Chapter / Heading / Subheading / Tariff item Description of Goods
16. 0804 Dates (soft or hard), figs, pineapples, avocados, guavas , mangoes (other than mangoes sliced, dried) and mangosteens, dried.”

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(Author can be reached at info@a2ztaxcorp.com)

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