2025-VIL-452-BOM
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SGST High Court Cases

GST - Compensation Cess, Ground Clearance, Laden vs Unladen Condition – Issue of Show cause notice alleging short-payment of Compensation Cess - Respondents contended that the Petitioner's vehicles were covered under Sr. No. 52B of the Cess Notification, which attracted Compensation Cess at 22%, as the vehicles had a ground clearance of 170mm or above in an unladen state. The Petitioner argued that the ground clearance should be measured in a laden condition, and under this, the vehicles attracted Compensation Cess at 20% under Sr. No. 52A - Whether the ground clearance for the purpose of determining the applicable Compensation Cess rate should be measured in a laden or unladen condition – HELD - Prior to the amendment made by Notification No. 3/2023-Compensetion Cess (Rate) dated 26th July, 2023, the law was silent on whether the ground clearance should be measured in a laden or unladen condition. The Petitioner had been measuring the ground clearance in a laden condition, which was in line with industry practice, regulatory requirements, and the decision of the AAAR Ruling in the case of Tata Motors Ltd. - the GST Council had, in its 50th meeting, agreed to amend the entry 52B of the Cess Notification to clarify that for the purposes of the Cess Notification, "Ground Clearance" means ground clearance in an unladen condition. This amendment was given effect from 26th July, 2023. The Board, based on the recommendation of the GST Council, also issued a Circular clarifying that the amendment made by Notification No. 3/2023-CC (Rate) dated 26th July, 2023 would apply only to supplies made on or after 26th July, 2023 - For the disputed period from September 2017 to July 2022, the ground clearance of the motor vehicles for the purpose of determining the applicable Cess rate under the Cess Notification had to be considered in a laden condition, as was being done by the petitioner. Accordingly, the "ground clearance" as measured under entry 52B of the Cess Notification means in a "laden condition" prior to 23.07.2023 - the impugned order is quashed and the writ petition is allowed
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