Gujarat High Court
Harshad Mango Products Pvt. Ltd vs Union Of India on 23 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 21124 of 2023
With
R/SPECIAL CIVIL APPLICATION NO. 177 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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HARSHAD MANGO PRODUCTS PVT. LTD. & ANR.
Versus
UNION OF INDIA & ORS.
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Appearance:
UCHIT N SHETH(7336) for the Petitioner(s) No. 1,2
MS HETVI H SANCHETI(5618) for the Respondent(s) No. 3
NOTICE SERVED for the Respondent(s) No. 1,2
NOTICE SERVED BY DS for the Respondent(s) No. 4
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 23/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE D.N.RAY)
1. Heard learned advocate Mr. Uchit N. Sheth for the Petitioners and learned advocate Ms. Hetvi H. Sancheti for the Respondent No. 3.
2. Both these petitions are preferred with a common issue and Page 1 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined the prayers made therein are also common. Both these petitions were heard analogously and are being disposed of by this common judgment and order.
3. Rule returnable forthwith. Learned advocate Ms.Hetvi H. Sancheti waives service of notice of rule for the Respondent No.3. Having regard to the short controversy, both the petitions are taken up for hearing. For the sake of convenience, Special Civil Application No. 21124 of 2023 is treated as the lead matter and the facts thereof are recorded hereinbelow for the purpose of this common judgment and order.
4. The brief facts of the case are as follows:
4.1 The Petitioner No. 1 is a private limited company engaged, inter alia, in the business of procuring mangoes, processing the same into pulp, and effecting sales thereof both in the domestic market and by way of export.
4.2 On 28.06.2017, in exercise of powers conferred under Sections Page 2 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined 9 and 11 of the Central Goods and Services Tax Act, 2017 (hereinafter, "the CGST Act"), the Government issued Notification No. 1/2017-Central Tax (Rate), prescribing the applicable rates of tax on goods. Simultaneously, Notification No. 2/2017-Central Tax (Rate) was also issued, enumerating goods that were exempt from tax.
4.3 It is relevant to note that the classification and corresponding tax rates under the said notifications are based on the Harmonized System of Nomenclature (hereinafter referred to as "HSN"), as notified by the World Customs Organization. Each taxable or exempted good is identified with a corresponding HSN code. 4.4 Chapter 8 of HSN is concerning Edible Fruits and Nuts. The General Chapter Note of the said Chapter expressly states as under:
"Fruits and nuts of this Chapter may be whole, sliced, chopped, shredded, stoned, pulped, grated, peeled or shelled."
Heading 0804, which includes mangoes reads as under:
"0804 Dates, figs, pineapples, avocados, guavas, mangoes and mangosteens, fresh or dried".Page 3 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025
NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined 4.5 Accordingly, under the HSN scheme, mangoes are categorized into two primary classifications, namely, "fresh" and "dried". Pursuant to the implementation of the GST regime from 01.07.2017, fresh mangoes were included in the exemption list vide Notification No. 2/2017, whereas dried mangoes were placed in Schedule II of Notification No. 1/2017, attracting tax at the rate of 6% CGST and 6% SGST.
4.6 In the 22nd meeting of the GST Council held on 06.06.2017, a decision was taken to reduce the tax rate applicable to sliced and dried mangoes from 12% to 5%, inter alia, on the ground that mango flour was taxable at 5%.
4.7 Consequent to the said decision, the entry pertaining to dried mangoes was deleted from Schedule II, and a new Entry No. 30A was inserted in Schedule I under Notification No. 1/2017-Central Tax (Rate), prescribing a concessional rate of 2.5% CGST + 2.5% SGST for "Mangoes, sliced and dried".
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NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined 4.8 It is the case of the Petitioner that the product supplied by it i.e., mango pulp is essentially derived from sliced mangoes, and accordingly, the Petitioner discharged its tax liability under the said Entry No. 30A at the rate of 5% GST (2.5% CGST + 2.5% SGST). 4.9 Subsequently, the jurisdictional authority, Respondent No. 3, issued a show cause notice questioning the classification adopted by the Petitioner in respect of mango pulp. The Petitioner submitted a detailed response, contending that mango pulp was appropriately classifiable under Entry 30A and taxable at 5%. 4.10 Thereafter, in the 47th GST Council Meeting held on 28th and 29th June 2022, it was observed that a third category of mango products existed under HSN 0804 distinct from "fresh" and "dried" and that such category was always intended to be taxed at 12%. To effectuate such clarification, a new entry was proposed to be introduced under Schedule II prescribing a tax rate of 12%. 4.11 In furtherance of the said recommendation, Entry No. 16 was inserted into Schedule II of Notification No. 1/2017-Central Tax Page 5 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined (Rate), describing the category as "mangoes other than mangoes sliced, dried", attracting tax at the rate of 6% CGST and 6% SGST. 4.12 Subsequently, the Central Board of Indirect Taxes and Customs (CBIC) issued Circular No. 179/11/2022-GST dated 03.08.2022. Paragraph 4 of the said Circular pertaining to classification of mangoes reads as under:
"4. Mangoes under CTH 0804 including mango pulp, but other than fresh mangoes and sliced, dried mangoes, attract GST at 12% rate:
4.1 Representations have been received seeking clarification regarding the applicable GST rate on different forms of Mangoes including Mango Pulp.
4.2 On the basis of the recommendation of the GST Council in its 22nd Meeting, the GST rate on 'Mangoes sliced, dried', falling under heading 0804, was reduced from 12% to 5% [S. No. 30A of Schedule I of notification No. 1/2017-
Central Tax (Rate) dated the 28th June, 2017]. However, the GST rate on all forms of dried mangoes (other than sliced and dried mangoes), falling under heading 0804, including mango pulp, was always meant to be at the rate of 12%. 4.3 Accordingly, it is hereby clarified that mangoes, fresh falling under heading 0804 are exempt; Mangoes, sliced and dried, falling under 0804 are chargeable to a concessional rate of 5%; while all other forms of dried mango, including Mango pulp, attract GST at the rate of 12%. To bring absolute clarity, the relevant entry at S. No. 16 of Schedule- II of notification no. 1/2017-Central Tax (Rate), dated 28th June, 2017, has been amended vide notification No. 6/2022- Central Tax (Rate), dated the 13th July, 2022. Page 6 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025
NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined 4.4 Fresh mangoes, falling under heading 0804, continue to remain exempt from GST [S. No. 51 of notification No. 2/2017-Central Tax (Rate), dated the 28th June, 2017]." 4.13 The Petitioner contends that the revenue authorities are relying upon the aforesaid Circular to initiate recovery proceedings and finalize the classification of mango pulp at a higher rate. It is further stated that, insofar as exports are concerned, the shipping bills pertaining to the export of mango pulp have already been assessed by the customs authorities at the rate of 5% IGST.
5. Aggrieved by the issuance of the said Circular, the Petitioner has invoked the writ jurisdiction of this Court under Article 226 of the Constitution of India, challenging paragraph 4 of Circular No. 179/11/2022-GST dated 03.08.2022, with the following prayers:
"A. This Hon'ble Court may be pleased to strike down and declare para 4 of Circular No. 179/11/2022-GST dated 03.08.2022 issued under Section 168 of the CGST Act to be ultra-vires Section 9 of the CGST Act read with Entry No. 30A of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 as well as Entry No. 51 of Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017 as well as manifestly arbitrary, confiscatory and violating Articles 14 and 19(1)(g) of the Constitution of India (Annexed at Annexure A);Page 7 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025
NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined B. This Hon'ble Court may be pleased to hold and declare that mango pulp was classifiable under Entry 30A of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 attracting tax at the rate of 2.5% CGST + 2.5% SGST up to 18.07.2022 (Annexed at Annexure A);
C. Without prejudice to the above and in the alternative, in any case it may please be declared that tax cannot be imposed on mango pulp beyond the tax rate of 6% CGST +6% SGST even for the period prior to 18.07.2022;
D. This Hon'ble Court may be pleased to issue a writ of mandamus or writ in the nature of mandamus or any other appropriate writ or order quashing and setting aside impugned show cause notice issued under Section 74 of the GST Acts (annexed at Annexure H);
E. Pending notice, admission and final hearing of this petition, this Hon'ble Court may be pleased to restrain the Respondents from passing any adjudication order or making coercive recovery in respect of classification of mango pulp under the CGST Act for the period from 01.07.2017 to 17.07.2022 pursuant to impugned notice (annexed at Annexure H);
F. Ex parte ad interim relief in terms of prayer E may kindly be granted;
G. Such further relief(s) as deemed fit in the facts and circumstances of the case may kindly be granted in the interest of justice for which act of kindness your petitioners shall forever pray."
6. Mr. Uchit N.Sheth, learned Counsel for the Petitioners has submitted that there are only two category of mangoes in HSN0804 (1) fresh, and, (2) dry. At the time of implementation of the GST Page 8 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined regime, while fresh mangoes were listed in the exemption Notifications, the rate of tax for dry mangoes was notified at 12%. Thereafter, the GST Counsel decided to reduce the tax rate for dry mangoes from 12% to 5% due to the fact that the rate of tax on mango flour, which is the product manufactured from dried mango was 5%. However, the entry in the rate schedule of 5% contained the phrase "Mango sliced, dried" since mango pulp was a form of sliced mango, the petitioners were paying tax at the rate of 5% on mango pulp even though the fresh mango continue to be exempt. Thus, there were only two rates of tax prescribed for HSN0804 nil and 5%. The amendment to the rate Notifications on 13.07.2022 is made prospective with effect from 18.07.2022. However, the impugned Circular which artificially carves out third category of mango being "dried mangoes (other than slices and dried mangoes), falling under heading 0804, including mango pulp", that too retrospectively, is contrary to HSN0804. Therefore, Paragraph No.4 of the impugned Circular is ultra vires to the rate Notifications and deserves to be struck down.
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NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined
7. Mr. Sheth, learned advocate further relied upon the decision of this Court in the case of Vimal Agro Product Pvt. Ltd. and another Vs. Union of India and others passed in Special Civil Application No.21700 of 2022 (CAV Common Judgment dated 24.04.2024).
8. Ms. Hetvi H.Sancheti, learned advocate appearing for the Respondent No.3 is unable to contradict the applicability of the decision of this Court in Vimal Agro (Supra) to the facts of the petitioners' case.
9. DISCUSSION & FINDINGS :-
9.1 In Vimal Agro (Supra), this Court has held as under :-
[42] In other words, the GST Council has clarified in its 47th meeting that tax rate would continue to apply at 12% other than "mango sliced, dried" for which the GST rate was reduced to 5% as per the recommendations of 27th meeting of the GST Council.
[43] The petitioner is, therefore, liable to pay GST at the rate of 12% as per Entry no. 16 from 01.07.2017 and not 5% as per Entry No.30A, which provides for "mangoes sliced, dried" only. The contention of the petitioners that there was an amendment to the rate Notification with effect from 18th July 2022 is not tenable. As such the Notification is only clarificatory and would apply with effect from 1st July 2017 as per Notification No.1/2017. It is true that Section 9 of the CGST Act does not grant power to amend the Page 10 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined rate Notification. However, in the facts of the case, as analyzed above, the GST Council has only clarified that mangoes (other than mangoes sliced, dried) would attract GST rate at 12% and not 5% and hence, it cannot be said that there is amendment of rate of GST from 5% to 12% by the impugned Notification as well as the circular. The contention of the petitioner that as per HSN 0804, "mango pulp" would be covered by mangoes as per General Chapter Note, which includes fruits and dates, and therefore, only mangoes other than fresh mangoes is required to considered and as "mango pulp" is not a fresh mango and would be covered by entry no.30A "mango sliced, dried" is not tenable in view of clarification made by the GST Council in its 47th meeting, wherein it is clearly mentioned that only "mangoes sliced, dried" would attract GST at 5% and remaining mango would be attracted GST at 12%. Therefore, the Notification No.6/2022 is only inserting the word "mango" other than mango sliced, dried so as to clarify that all mangoes would fall in the same category other than "mango sliced, dried".
[44] With regard to the contention of the petitioner that the CBIC Board cannot resile from its opinion, it is to be noted that E-mail dated 19th October 2018 is only in response to the query raised by the petitioner without there being any analysis or the clarification from the GST Council. Once the GST Council has clarified that the mangoes (other than mangoes sliced, dried) would attract 12% GST and would not attract reduced rate at 5% as recommended by the GST Council in its 22nd meeting, therefore the petitioners would be governed by the GST rate at 12%. The contention of the respondents that the GST would be liable to be charged at 18% on the ground of residuary entry, is also not tenable as explained here in above.
[45] In view of the above discussion, as "mango pulp" would fall under the third category of "mangoes (other than mango sliced, dried)" would be liable to levy at the rate of 12% as per Entry No.16 which was amended so as to clarify the intention of council to continue to levy GST at 12% on "mangoes (other than mango sliced, dried)" which would include "mango pulp" from 1st July 2017. [46] For the foregoing reasons, both these petitions are partly allowed. The impugned show cause notice is hereby quashed and set aside and the petitioners would be liable to pay Page 11 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025 NEUTRAL CITATION C/SCA/21124/2023 JUDGMENT DATED: 23/04/2025 undefined GST at the rate of 12% from 1st July 2017 on the product "mango pulp" and not at the rate of 5% (as claimed by the petitioners) or 18% (as claimed by the respondents) for the period from 01.07 2017 to 18.07.2022. Rule is made absolute to the aforesaid extent.
No order as to costs.
10. We find that the controversy in the present petitions is identical to the issues which were decided in Vimal Agro and therefore the aforesaid decision in Vimal Agro will be squarely applicable to the present petitions. Accordingly, it is clarified that the petitioners would be liable to pay GST on the product "Mango pulp" at the rate of 12% from 1st July, 2017 and not at the rate of 5% (as claimed by the petitioners) or 18% (as claimed by the Respondents ) for the period 01.07.2017 to 18.07.2022. The present petitions are therefore partially succeed and are consequently partly allowed. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (D.N.RAY,J) BINA SHAH Page 12 of 12 Uploaded by BINA SHAH(HC00353) on Wed May 21 2025 Downloaded on : Fri May 23 21:36:43 IST 2025