SGST High Court Cases

GST - Classification of “flavoured milk” – Power of GST Council to determine classification of goods or services – Power and jurisdiction of GST Council to recommend classification of “Flavoured Milk” under HS Code 2202 instead of HS Code 0402 – HELD – The GST Council in its meeting held on 22.12.2018 has concluded that flavoured milk is classifiable under HSN Code 2202 and thereby has suggested that flavoured milk will be liable to tax at 12% GST. Consequently, flavoured milk will be classifiable under Heading 2202 of HSN - The function of the GST is not to determine the classification under the provisions of the Customs Tariff Act, 1975 - The recommendation of the GST Council is recommendatory. It is not binding on the Government as evident from a reading of Article 279-A(4) of the Constitution of India - GST Council has wrongly clarified that “Flavoured Milk” is classifiable under heading 2202 of Harmonious System of Nomenclature (HSN) based on Chapter Note 1 to Heading 0402 - “Flavoured Milk” made out of dairy milk from milch cattle/diary animals cannot come within the purview of Chapter 22 of the Customs Tariff Act, 1975 - classifications adopted in the respective Notifications issued by the Government under the Central Excise Act, 1944 r/w Central Excise Tariff Act, 1985 are not relevant for determining the correct classification under the new GST regime. “Flavoured Milk” has to be classified only under Heading 0402 of the Customs Tariff Act, 1975 and not under Heading 2202 of the Customs Tariff Act, 1975 - although the contention of the petitioner for the relief based on the decision of the Hon’ble Supreme Court in CCE vs Amrit Food cannot be accepted, nevertheless, the petitioner is entitled to relief and it held that “Flavoured Milk” merits classification under residuary Sub Heading 0402 99 90 of the Customs Tariff Act, 1975 - Having adopted classification of ‘Goods’ and ‘Services’ under the First Schedule to the Customs Tariff Act, 1975, the GST Council cannot impose a wrong classification of “Flavoured Milk” as a “Beverage Containing Milk” under the residuary item as “Non-Alcoholic Beverages” under Sub Heading 2202 90 30 of the Customs Tariff Act, 1975 - the impugned recommendation of the GST Council cannot be upheld and it held that classification ought to have been independently determined by the Assessing Officer - It is left open for the Government to issue a fresh Notification for amending Entry Nos.8 & 50 to Notification No.1/2017-CT(Rate) dated 28.06.2017 to tweak the rate of tax, recognizing the well settled principle of law that in taxing matter, latitude can be given to the authorities while fixing the rate of tax - The Central Government can either tweak the rate on the recommendation of the GST Council or by itself – the writ petition is allowed

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