2025-VIL-1358-GUJ
  1. Home
  2. 2025-VIL-1358-GUJ

SGST High Court Cases

GST - Classification of Tobacco Products - Classification of non-fermented, non-liquored crushed tobacco leaves packed in small retail pouches as "Chewing tobacco" under Tariff Heading 2403 or "Unmanufactured tobacco" under Tariff Heading 2401 – Petitioner classifying the product under Tariff Heading 2401 as "unmanufactured tobacco" during the excise regime and continued the same classification under the GST regime - Dept issued SCNs and passed orders classifying the petitioners' product as "chewing tobacco" under Tariff Heading 2403 instead of 2401 – Demand of differential GST and Compensation Cess - Whether the respondents are justified in classifying non-fermented, non-liquored crushed tobacco leaves in small retail pouches as "chewing tobacco" under Tariff Heading 2403 instead of "unmanufactured tobacco" under Tariff Heading 2401 – HELD - The definition of "manufacture" under Section 2(72) of the CGST Act, 2017 is different from the definition under the Central Excise Act. While under the Central Excise Act, the petitioners' process of repacking the tobacco leaves in small retail pouches without adding any ingredients was considered as "unmanufactured tobacco" classifiable under Tariff Heading 2401, whereas the definition of "manufacture" under the GST Act means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use and the term "manufacture" shall be construed accordingly - The tobacco leaves in gunny bags procured by the petitioners which is a raw material is processed by the petitioner by drying, cleaning, sieving, sizing, cutting and packing the tobacco leaves in small retail pouches for the purpose of chewing resulted in the emergence of a new product with a distinct name, character and use, i.e., "chewing tobacco". This would fall within the description of "chewing tobacco" under Tariff Heading 2403 as per the Explanatory Notes to the HSN – the provisions of the Cigarettes And Other Tobacco Products (Prohibition Of Advertisement And Regulation Of Trade And Commerce, Production, Supply And Administration) Act, 2003 (‘Copta’) also shows that what is sold by the petitioners is “chewing tobacco” and merely because no ingredients are added, it would not be “unmanufactured tobacco” falling under Tariff Heading No. 2401 2090 - The respondents are justified in classifying the petitioners' product as "chewing tobacco" under Tariff Heading 2403 based on the definition of "manufacture" in the GST Act and the Explanatory Notes, and the petitioners would be liable to pay GST and Compensation Cess applicable to that classification. However, the impugned order to the extent that the show cause notice and order should be treated as having been issued under Section 73 of the CGST Act instead of Section 74, as the extended period of limitation under Section 74 cannot be invoked - The Respondents are directed to pass the order giving effect after recomputing the amount payable as GST considering the SCNs and the impugned order-in-original as having been passed under section 73(9) of the CGST Act without considering the extended period of limitation from July, 2017 onwards - The petitions are partly allowed
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Tax Vista

Your Weekly Tax Recap

By Kasi Viswanathan V

Weekly Summary

VIL Video

GSTR-9 & GSTR-9C of FY24-25
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?