Madras High Court
Unknown vs Jenefa India on 3 November, 2023
Author: S.S. Sundar
Bench: S.S. Sundar, D. Bharatha Chakravarthy
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Reserved on : 18.08.2023
Pronounced on : 03.11.2023
CORAM :
THE HONOURABLE MR. JUSTICE S.S. SUNDAR
AND
THE HONOURABLE MR. JUSTICE D. BHARATHA CHAKRAVARTHY
W.A.(MD) Nos.112 to 116 of 2022,
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
and
C.M.P.(MD) Nos.1134, 1136 to 1139 of 2022 &
W.M.P.(MD) Nos.1123, 3578, 3580,
8815, 8816, 19842 & 19843 of 2022
1.Union of India,
Represented by its Secretary,
Ministry of Finance, Department of Revenue,
(Central Board of Indirect Taxes & Customs),
Central Secretariat,
New Delhi – 110 001.
2.Tax Research Unit,
Represented by its Secretary,
Ministry of Finance, Department of Revenue,
Central Secretariat,
New Delhi – 110 001.
Page 1 of 40
https://www.mhc.tn.gov.in/judis
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
3.Commissioner of CGST & Central Excise,
Office of the Commissioner of CGST & Central Excise,
Central Revenue Buildings, Bibikulam,
Madurai – 625 002. ... Appellants
in all Writ Appeals
Vs.
Jenefa India,
Represented by its Proprietor R.Venkatesh,
1/54 B, Indira Colony, Vannarpettai,
Tirunelveli – 627 003. ... Respondent
in W.A.No.112 of 2022
Sanchary Marine Products and Transporters Pvt. Ltd.,
Represented by its Director,
120, Sayalgudi, Tharakudi Road,
Iruveli Village, Ramanathapuram – 623 120. ... Respondent
in W.A.No.113 of 2022
Hameed Marine (P) Ltd.,
Represented by its Managing Director,
27, Rasak Road, Edalakudy,
Nagercoil – 629 002. ... Respondent
in W.A.No.114 of 2022
Finley Marine Products,
Represented by its Partner Antony Arasangamani,
222 F, Ettayapuram Road, Kovilpatti,
Tuticorin – 628 501. ... Respondent
in W.A.No.115 of 2022
Page 2 of 40
https://www.mhc.tn.gov.in/judis
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
Pearl City Marine Products Pvt. Ltd.,
Represented by its Managing Director,
Pallakulam Village, Vilathikulam Taluk,
Tuticorin District. ... Respondent
in W.A.No.116 of 2022
Prayer : Writ Appeals in W.A.Nos.112 to 116 of 2022 filed under Clause 15 of
the Letters Patent as against the order dated 05.10.2021 passed in W.P.(MD)
Nos.16770, 16776, 16772, 16775 & 16773 of 2019 on the file of this Court.
For Appellants : Mr.AR.L.Sundaresan
Additional Solicitor General of India
assisted by Mr.N.Dilip Kumar
Senior Standing Counsel for Central Excise
in all Writ Appeals
For Respondent : Mr.Joseph Prabhakar
in all Writ Appeals
NPM Associates,
Represented by its Managing Partner Mr.Firoz A A
26/KM NH 7A, Chettimallanpatti Village,
Ellainayakkanpatti P.O., Srivaikundam Taluk,
Tuticorin District.
PIN 628 851. ... Petitioner
in W.P.No.1279 of 2022
Marvest Aqua Protein Pvt. Ltd.,
Page 3 of 40
https://www.mhc.tn.gov.in/judis
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
Represented by its Company Director Mr.Muhammed Ashraf K
No.23/13D, Uthamacholapuram,
Narimanam Post,
Nagapattinam – 611 002. ... Petitioner
in W.P.No.4171 of 2022
Rehoboth Fish Meal and Oil Plant
Represented by its Partner J. Sudeep Fernando,
109/1, M.Shanmugapuram, Vilathikulam Taluk,
Thoothukudi – 628 901. ... Petitioner
in W.P.No.12421 of 2022
Marksmen Aquatic Products LLP
Represented by its Designated Partner,
Door No.6/84, Vadakkukariseri,
Thoothukudi,
Tamil Nadu – 628 851. ... Petitioner
in W.P.No.25733 of 2022
Vs.
1.Union of India,
Represented by its Secretary,
Ministry of Finance, Department of Revenue,
Central Secretariat, New Delhi – 110 001.
2.Tax Research Unit,
Ministry of Finance,
Department of Revenue, Central Secretariat,
New Delhi – 110 001.
3.Commissioner of CGST & Central Excise,
Office of the Commissioner of CGST & Central Excise,
Page 4 of 40
https://www.mhc.tn.gov.in/judis
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
Central Revenue Buildings,
Bibikulam,
Madurai – 625 002. ... Respondents
in W.P.Nos.1279, 12421
& 25733 of 2022
1.Union of India,
Represented by its Secretary,
Ministry of Finance, Department of Revenue,
Central Secretariat, New Delhi – 110 001.
2.Tax Research Unit,
Ministry of Finance,
Department of Revenue, Central Secretariat,
New Delhi – 110 001.
3.Commissioner of CGST & Central Excise,
Office of the Commissioner of CGST & Central Excise,
No.1, Williams Road, Contonment,
Tiruchirapalli – 620 001. ... Respondents
in W.P.No.4171 of 2022
Common Prayer : Writ Petitions filed under Article 226 of the Constitution of
India for issuance of a Writ of Certiorari to call for the records in the
proceedings of the 2nd respondent in clarification contained in Paragraph No.4
of Circular No.80/54/2018-GST dated 31.12.2018 issued by the 2nd respondent
and quash the same as arbitrary and illegal.
For Petitioner : Mr.Joseph Prabhakar
in all Writ Petitions
For Respondents : Mr.AR.L.Sundaresan
Page 5 of 40
https://www.mhc.tn.gov.in/judis
W.A.(MD) Nos.112 to 116 of 2022 &
W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
Additional Solicitor General of India
assisted by Mr.N.Dilip Kumar
Senior Standing Counsel for Central Excise
in all Writ Petitions
COMMON JUDGMENT
(Judgment was delivered by S.S. SUNDAR, J.) Since common issues arise for consideration in all these writ appeals and writ petitions, all these writ appeals and writ petitions are disposed of by this common judgment.
2.The petitioners in all these four writ petitions are manufacturers of fish meal in powder form. The respondent in all these writ appeals are also manufacturers of “fish meal (in powder form)”. The respondent in all the writ appeals have earlier filed writ petitions in W.P.Nos.16770, 16772, 16773, 16775 and 16776 of 2019 for issuance of a Writ of Certiorari to call for the records in relation to the proceedings of the 1st appellant, namely, the Circular issued by the Central Board of Indirect Taxes and Customs, New Delhi, dated 31.12.2018, insofar as it relates to Paragraph No.4 and to quash the same. The prayer in all the five writ petitions referred above are same as in the four writ petitions which Page 6 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 are also disposed of by this common judgment.
3.The impugned Circular has been issued to clarify that fish meals, meat cum bone meal (MBM) etc., attract GST of 5% under Sl.No.103 in Notification No.1/2017-Central Tax (Rate) dated 28.06.2017. The learned Single Judge of this Court quashed the clarification issued by the impugned Circular dated 31.12.2018 and as a sequel, held that the writ petitioners, so long as they make a finished product “fish meal” from their manufacturing units, can enjoy the benefit of exemption as provided under Sl.No.102 of Exemption Notification vide Notification No.2/2017 dated 28.06.2017.
4.Challenging the common order of the learned Single Judge, allowing the first batch of writ petitions, the respondents in the writ petitions/Revenue have preferred the writ appeals in W.A.Nos.112 to 116 of 2022. After the writ petitions were allowed by the learned Single Judge, four more writ petitions which are also included in this batch were filed by similarly placed persons who are also manufacturing “fish meal (in powder form)”. At the request of the learned counsel appearing on either side, the writ petitions were also tagged Page 7 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 along with the writ appeals and are disposed of by this common judgment.
5.It is the common case of all the petitioners in all the writ petitions that they are the manufacturers of “fish meal” which is supplied mainly to the manufacturers of aquatic feed, poultry feed or prawn feed. The product “fish meal” produced by the petitioners comes in powdered form. All the writ petitioners are registered under the Goods and Services Tax (hereinafter referred to as GST) Department, within the jurisdiction of the 3rd appellant.
6.It is the common case of petitioners in all the writ petitions that they procure fresh fish and the fish procured by them is processed by taking them into a steam cooker and steam boiled in the plant. The steam boiled fish is then sent to the squeezer and the solid part of the fish is transferred then into a dryer to remove the excessive moisture. The moisture removed material (fish) is pulverised and the resultant material in powder form of fish meal is packed in sacks by the petitioners for sale to prawn feed or aquatic feed manufacturers. This is the case of writ petitioners in all the writ petitions. Page 8 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022
7.GST was introduced in India with effect from 01.07.2017. Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 was issued notifying the rates of GST for all the goods. Schedule 1 of the Notification refers to Tariff Item/Heading and the Description of Goods which attracts 2.5% of Central Tax. Sl.No.103 of Schedule 1 of the said notification contains the following details :
S.No. Chapter/Hearing/Sub- Description of Goods heading/Tariff Item 103 2301 Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption, greaves From the notification, it is seen that Sl.No.103 of the notification would attract GST of 5%.
8.In exercise of powers under Section 11 of the Central Goods and Services Tax Act, 2017 (“CGST Act” for brevity), Notification No.2/2017- Central Tax (Rate), dated 28.06.2017, was issued granting exemption for goods, the description of which is specified in Column 3 of the Schedule to Notification No.2/2017. The entry relating to Sl.No.102 with Tariff Items, Sub- heading and Description of Goods reads as follows : Page 9 of 40
https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 S.No. Chapter/Hearing/Sub- Description of Goods heading/Tariff Item 102 2302, 2304, 2305, 2306, Aquatic feed including shrimp feed and 2308, 2309 prawn feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake.
9.It is also admitted that a Corrigendum dated 27.07.2017 was issued to the above notification dated 28.06.2017, whereby, Heading 2301 was added to Sl.No.102 of the notification. On the effect of the Corrigendum, the Entry in Sl.No.102 as per the notification dated 28.06.2017 should read as follows :
S.No. Chapter/Hearing/Sub- Description of Goods heading/Tariff Item 102 2301 - 2302, 2304, 2305, Aquatic feed including shrimp feed and 2306, 2308, 2309 prawn feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake.
10.By a subsequent notification in Notification No.28/2017-Central Tax (Rate) dated 22.09.2017, the goods classifiable under Tariff Headings 2304, 2305 and 2306 were removed from Sl.No.102 of the exemption notification dated 28.06.2017. After removal of Headings with effect from 22.09.2017, till today, entry vide Sl.No.102 of Notification No.2/2017 dated 28.06.2017 reads Page 10 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 as follows :
S.No. Chapter/Hearing/Sub- Description of Goods heading/Tariff Item 102 2301, 2302, 2308, 2309 Aquatic feed including shrimp feed and prawn feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake.
11.It is to be noted that the Tariff Heading 2301 is found in Sl.No.103 of Schedule 1 of Notification No.1/2017 attracting GST of 5% as well in Sl.No. 102 of the Notification No.2/2017 granting exemption even though there is no change in description of goods.
12.It is in this context, the 2nd appellant issued a Circular vide Circular No.80/54/2018-GST, dated 31.12.2018, clarifying a few issues relating to rate of tax and exemption under GST. Para No.4 of the Circular dated 31.12.2018 reads as follows :
“4.Applicable GST rate on Fish meal and other raw materials used for making cattle/poultry/aquatic feed :
4.1.Representations have been received seeking clarification regarding GST rate applicable on the other raw materials/inputs used for making cattle/poultry/aquatic feed. The classification Page 11 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 dispute here is between the following two entries in the two notifications. The details are as under :
Notification Tariff Line Description Rate
S.No.102 of 2301, Aquatic feed including shrimp feed and NIL
notification No. 2302, prawn feed, poultry feed & cattle feed,
2/2017-Central Tax 2308, 2309 including grss, hay & straw, supplement & (Rate) dated husk of pulses, concentrates & additives, 28.06.2017 wheat bran & de-oiled cake.
S.No.103 of 2301 Flours, meals and pellets, of meat or meat 5% notification No. offal, of fish or of crustaceans, molluscs or 1/2017-Central Tax other aquatic invertebrates, unfit for human (Rate), dated consumption, greaves 28.06.2017 4.2.A number of raw materials such as fish meal falling under heading 2301, meat and bone meal also falling under heading 2301, oil cakes of various oil seeds, soya seeds, bran, sharps, residue of starch and all other goods falling under headings 2302, 2303, 2304, etc. are used to manufacture/formulation of, aquatic feed, animal feed, cattle feed, poultry feed, etc. These raw materials/inputs cannot be directly used for feeding animal and cattle. The Larger Bench of the Hon'ble Supreme Court in the Commissioner of Customs (Import), Mumbai v. Dilip Kumar [2018 (361) E.L.T. 577] has laid down that inputs for animal feed are different from the animal feed. Said S.No.102 covers the prepared aquatic/poultry/cattle feed falling under headings 2309 and 2301. This entry does not apply to raw material/inputs like fish meals or meat cum bone meal (MBM) falling under heading 2301.
Page 12 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 4.3.It is accordingly clarified that fish meals, meat cum bone meal (MBM) etc., attract 5% GST under S.No.103 in notification No.1/2017-Central Tax (Rate), dated 28.06.2017.”
13.It is the case of the writ petitioners that, prior to introduction of GST with effect from 1st July, 2017, fish meal was fully and unconditionally exempted from Central Excise Duty and VAT under the Tamil Nadu Value Added Tax Act, 2006. Stating that the Circular No.80, dated 31.12.2018, had brought about a complete change, it is stated by the petitioners that the 2nd appellant has no jurisdiction to issue a clarification relating to classification, which is quite contrary to the notification issued pursuant to the decision of the GST Council. Referring to the decision of Hon'ble Supreme Court in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company reported in 2018 (361) E.L.T. 577 (S.C.) which is in relation to the general principles to be followed on the interpretation of Tariff Headings, one of the main grounds raised in the writ petitions is that the judgment of the Hon'ble Supreme Court is not relevant in the context and that therefore, the impugned Page 13 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 order relying upon the judgment of the Hon'ble Supreme Court for the case relating to export cannot be relied upon for the purpose of classification, as the judgment of the Hon'ble Supreme Court was one in relation to interpretation of exemption notification and the Supreme Court was not required to go into the question of classification.
14.Since Sl.No.102 of the Notification No.2/2017 includes not only aquatic feed but also items like grass, hay, supplement, concentrates and additives, it is contended by the writ petitioners that fish meal manufactured by the petitioners, which is also used in the manufacture of aquatic feed as a supplement or additive, should be treated as one falling under Sl.No.102 of Notification No.2/2017. In this context, it is further stated in the writ petitions that fish meal can also be used as aquatic feed, even though fish meal is used for manufacture of aquatic feed as one of the ingredients of aquatic feed.
15.On the above factual premises, the petitioners have raised the following grounds :
A) “It is submitted that fresh fish was exempt from Central Excise Duty and VAT before introduction of GST on Page 14 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 01.07.2017. Similarly, Aquatic Feed like Shrimp Feed and Prawn Feed were also exempt from Central Excise Duty and VAT all along, before introduction of GST on 01.07.2017. Admittedly, Fish Meal is the principal and primary raw material both in terms of physical composition and in terms of value, for manufacture of aquatic feed like shrimp feed and prawn feed.
B) Post GST, fresh fish continues to be exempt from GST. Further, exemption has been granted for Aquatic Feed under GST in terms of Entry Sl. No. 102 of Notification 2/2017 dated 28.06.2017 (as corrected by corrigendum and as amended). More importantly, items such as feed supplements, feed additives and concentrates used in the manufacture of Aquatic Feed also continue to be unconditionally exempt under the GST regime by virtue of Entry Sl. No. 102 of Notification 2/2017 dated 28.06.2017. C) In this background, it is quite evident that the intention of the legislature is to grant exemption for Aquatic Feed such as shrimp feed and prawn feed and other items such as feed supplements, feed additives and the concentrates for manufacture of Aquatic Feed. In fact, Aquatic Feed is consumed by Fish which is again exempt from tax, completing a full circle where the items in the entire circle are exempt from GST today and were always exempt from Page 15 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 Central Excise Duty and VAT earlier. Therefore, there is absolutely no reason how and why Fish Meal alone could be subjected to tax when the sole ingredient for manufacture of fishmeal, namely, Fish and the sole final product manufactured out of fishmeal, namely, Aquatic Feed continue to be exempted under GST. Therefore clearly, the impugned circular dated 31.12.2018 has been issued without application of mind, without analyzing the relevant entries in the GST schedule and without appreciating the nature and the use of the product in question.
D) It is submitted that the impugned Circular dated 31.12.2018 so far as it relates to Paragraph No.4 of the said Circular, has been issued without jurisdiction and without authority of law.
E) It is submitted that the 2nd respondent does not have jurisdiction to issue any clarification relating to classification or applicability of any exemption Notification. Therefore, it is submitted that the impugned Circular dated 31.12.2018 is without authority of law and without jurisdiction.
F) It is submitted that the impugned Circular dated 31.12.2018 so far as it relates to Paragraph No.4 of the said Circular is ex-facie illegal since the clarification is contrary to the legal position as regards the position of applicability of Page 16 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 exemption for Fish Meal.
G) The 2nd Respondent issued Circular dated 31.12.2018 by relying on the decision of the Supreme Court in Dilip Kumar and Company's case wherein the Supreme Court referred to Aquatic Feed and Feed Supplements only in its opening discussions till Paragraph No. 9. Whereas, there is no reference to "Aquatic Feed" and "Feed Supplements" at all from Paragraph No. 10 till the conclusion in Paragraph No. 52 of the said decision. Hence, the 2nd Respondent had grossly erred in relying on the decision of the Supreme Court in this regard. Therefore, the clarification contained in Paragraph No.4 of the impugned Circular dated 31.12.2018 is liable to be quashed.”
16.A detailed counter affidavit was filed by the appellants in all the first batch of writ petitions. The case of the appellants who are the respondents in these writ petitions is that the goods manufactured by the petitioners, if cleared as a prepared aquatic feed, can be given exemption along with shrimp feed, prawn feed, poultry feed and cattle feed; and that, the fish meal manufactured by the petitioners which is not cleared as animal/aquatic/poultry/cattle feed are Page 17 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 not exempted. It was pointed out in the counter affidavit that fish meal found under the Heading 2301 attracts GST of 5% and it is intact. Since fish meal as an ingredient is not found in the exemption notification, it is stated that the exemption is available only to aquatic feed including shrimp feed, prawn feed, poultry feed and cattle feed, etc., and the product manufactured by the petitioners is not exempted. In the counter affidavit, a distinction was made between the “additives or supplements” and “raw material” for the manufacture of good which are brought under the Heading 2302. In the counter affidavit, it is pointed out that the notifications are very clear and it was never the intention of the GST Council to exempt fish meal from GST, as fish meal in powder form unfit for human consumption falls only under the Entry 2301. It is reiterated that there is no room for any ambiguity and it is only due to the Heading Code appearing in both the Entries, a clarification was required. Sum and substance, it was pointed out that the clarification is not in deviation or in conflict with the previous notification dated 28.06.2017 and therefore, the petitioners' product cannot be given exemption.
17.In the counter affidavit, the circumstances under which clarification Page 18 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 was issued by the impugned Circular, is also narrated. Stating that the Circular does not change the levy of tax in any way in respect of description of goods and only clarifies the Entry in Sl.No.102 of the Notification for removal of doubts, it is further contended that even the clarification was with due approval of GST Council.
18.The learned Single Judge, after extracting the pleadings and relevant Entries in the Notifications, and considering the arguments on both sides elaborately, failed to accept the contention of the appellants/Revenue to the effect that the fish meal, which is only sold to another manufacturer to prepare the feed for cattle, poultry, etc., and which is only used as a raw material for aquatic feed or poultry feed, etc., cannot be treated as exempted. The learned Single Judge gave an interpretation that fish meal in the form of finished product, which is used for feeding fish including prawn, etc., even if it is in powder form, is exempted. The learned Single Judge was of the view that, merely because such a finished product of fish meal is being utilised for the purpose of manufacturing animal feed or poultry feed, etc., it cannot be stated that fish meal is only a raw material and not a finished product. The learned Page 19 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 Single Judge found that the intention of the Revenue is to exempt fish meal as a finished product even if it is used as raw material for making aquatic feed or cattle feed. Learned Judge pointed out that Tariff Heading 2309 is wholly exempted vide Notification No.2/2017 and found that fish meal in powdered form is found as a commodity under Tariff Heading 2309/90 32. Pointing out that fish meal in powder form is also referred to under Tariff Item 2301 - 20 11, learned Single Jude held that flours, meals and pellets of fish unfit for human consumption is also exempted. In other words, learned Single Judge held that fish meal in the form of finished product used for feeding the fish and prawn, etc., and fish meal in powder form are exempted. Learned Judge observed that fish meal would not lose its character merely because it is used as a raw material in industries to prepare animal feed.
19.The learned Single Judge then considered the scope of Section 168 of the Central Goods and Services Tax Act, 2017 and held that the exemption granted by the previous Notification cannot be taken away or done away by issuing clarificatory Circular. In other words, it was held by the learned Single Judge that the impugned clarificatory Circular cannot overwrite the exemption Page 20 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 provided under the statutory notifications issued earlier by the Government. The learned Single Judge then dealt with the judgment of the Hon'ble Supreme Court in Dhilip Kumar's case (supra) and held that the said judgment is not germane to the decision of the 2nd appellant to clarify the notification by way of the impugned Circular.
20.Learned Additional Solicitor General appearing for the Revenue/appellants in the writ appeal and respondents in the writ petitions, referred to the chronology of events and submitted that, as per Article 279-A of the amended Constitution, the GST Council is empowered to make recommendations to the Union and State Government on issues relating to GST. It is pointed out that, on the recommendations of the 14th Meeting of the GST Council held on 18th and 19th May, 2017, the Board has issued Notification No. 1/2017-C.T.(Rate), dated 28.06.2017, prescribing the rates of tax in respect of specified goods based on their classification, upon introduction of GST with effect from 01.07.2017. It is pointed out by the learned Additional Solicitor General that the notification vide Notification No.2/2017-C.T.(Rate), dated 28.06.2017, was issued by the Government providing for exemption from tax in Page 21 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 respect of goods listed thereunder. He pointed out that, though the Tariff Heading 2301 is found both in Sl.No.103 of Notification No.1/2017 (attracting GST at 5%) and in Sl.No.102 of Notification No.2 dated 28.06.2017 (exempted from GST), the description of commodities in the notification did not undergo any change. Since a clarification was required from the officials regarding applicability of tax on fish meal used as a raw material in aquatic feed, it is stated by learned Additional Solicitor General that the GST Council, in its 29 th Meeting held on 04.08.2018, directed the Fitment Committee to clarify the applicability of rate of 5% tax on fish meal. It is further stated that the Fitment Committee clarified the applicability of GST @ 5% on fish meal and made its recommendations for issuance of clarification that fish meal which is an input used to manufacture aquatic feed, cattle feed, poultry feed, etc., is not covered by Sl.No.102 of the Notification vide Notification No.2/2017 dated 28.06.2017. Since the distinction was made between fish meal as a raw material used for making aquatic feed or cattle feed, etc., and fish meal as an aquatic feed without any addition of other ingredients, the learned Additional Solicitor General submitted that the recommendations of the Fitment Committee was justified and pointed out that the GST Council had agreed to the proposal of the Fitment Page 22 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 Committee as per the Minutes of the 31st Meeting of the GST Council. It is further submitted that, based on the approval of the GST, Board has issued the impugned Circular No.80/54/2018-GST, dated 31.12.2018.
21.The learned Additional Solicitor General submitted further that the only usage of fish meal, as pointed out and admitted by every petitioner, is just as an ingredient for the manufacture of aquatic feed, poultry feed, etc., and the petitioners have admitted that fish meal is not supplied or sold as an aquatic feed. Referring to the further fact that the fish meal is not included for direct consumption and it is unfit for human consumption, the learned Additional Solicitor General submitted that fish meal manufactured by the petitioners falls only under Sl.No.103 with Tariff Heading 2301, attracting GST of 5%.
22.The learned Additional Solicitor General relied upon the General Rules for the Interpretation of the Harmonized System. He pointed out that the description of an article or group of articles under the Tariff Heading should be taken as such and one cannot misread any notification issued by GST Council merely on the basis of the Tariff Heading. In other words, referring to the fact Page 23 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 that the description of articles has never undergone any change by the exemption notification, the interpretation of the Board should be preferred even if there is any discrepancy. Learned Additional Solicitor General pointed out all the writ petitioners have classified and self assessed their goods only under Tariff Heading 2301 and not under Tariff Heading 2309 and submitted that the conclusion reached by learned Single Judge by referring to Tariff Heading 2309 is erroneous.
23.The learned Additional Solicitor General also relied upon a few judgments of the Hon'ble Supreme Court, particularly the judgment of the Constitution Bench of the Hon'ble Supreme Court in Dilip Kumar's case (supra), wherein, the Hon'ble Supreme Court has ruled in favour of Revenue. The learned Additional Solicitor General submitted further that mere mention of the word “including” cannot be read to include raw materials or inputs or ingredients in Entry in Sl.No.102 of the Notification No.2/2017 dated 28.06.2017 and that the word “including” would only mean an aquatic feed or poultry feed or cattle feed of all types but, not fish meal falling under Tariff Code 2301, which is not used as aquatic feed or poultry feed or cattle feed or Page 24 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 can be treated as additives or concentrates or supplements. He also submitted that “supplements” would only mean any other addition which is negligible like minerals and vitamins. The learned Additional Solicitor General submitted that the reason as to why Heading 2301 was added under Sl.No.102 of the Notification No.2/2017 dated 28.06.2017 was to extend the benefits of any products that are covered under Heading 2301, if they are directly consumed as aquatic feed or shrimp feed or poultry feed, etc. Since fish meal as an input or an ingredient of aquatic feed is admitted in this case, the learned Additional Solicitor General submitted that the whole product manufactured by writ petitioners attracts GST of 5%. Referring to the fact that all the fish meal suppliers are being charged with GST at 5% with effect from 01.10.2019 including the writ petitioners and the respondents in the appeals, the learned Additional Solicitor General submitted that majority of manufacturers of fish meal have accepted the position and are paying GST @ 5% throughout India.
24.The learned Additional Solicitor General submitted that the learned Single Judge committed a grave error by holding that fish meal is an aquatic food and by concluding that entire goods manufactured by writ petitioners are Page 25 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 exempted due to inclusion of Heading 2301 in the exemption notification No. 2/2017 dated 28.06.2017. He also pointed out that the decision of the learned Single Judge holding fish meal manufactured by writ petitioners as a “finished product”, is unwarranted and confusing, particularly when the writ petitioners have categorically admitted that fish meal supplied by them is used as a raw material and not as a finished product or as a feed. The learned Additional Solicitor General stated that fish meal, which is not being used as a feed or is not used as an aquatic feed or prawn feed, cannot be taken as a finished product.
25.The learned Additional Solicitor General also relied upon the judgment of the Hon'ble Supreme Court in State of Maharashtra v. Shri Vile Parle Kelvani Mandal and others reported in (2022) 2 SCC 725 for the proposition that the assessee cannot rely on ambiguity or doubt to claim benefit of exemption.
26.As against the submissions of the learned Additional Solicitor General, the learned counsel appearing for the respondents in the writ appeals as well the Page 26 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 writ petitioners which are clubbed along with the writ appeals, submitted that the power to grant exemption is available only to the Government when it is necessary in the public interest and that by the impugned Circular, the exemption granted to the petitioners' product “fish meal” has been withdrawn quite contrary to the notification vide Notification No.2/2017 dated 28.06.2017. The learned counsel appearing for the writ petitioners raised a legal submission that, if the clarification by the impugned Circular is contrary to the notification by Notification No.2/2017 dated 28.06.2017, merely because the clarification had the approval of GST Council or approval by the Government will be of no legal consequence to save the notification. In other words, it is contended that, once this Court held that the clarificatory Circular is contrary to Notification No.2/2017 dated 28.06.2017, the same is liable to be quashed on the ground of lack of jurisdiction and competency.
27.The learned counsel for the writ petitioners submitted that Section 166 of the CGST Act, 2017, contemplates laying of every Notification issued by the Government before each House of the Parliament for a total period of 30 days and that the GST Law envisages the procedure for insertion of an explanation in Page 27 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 a notification under Section 11(3) of the CGST Act, 2017. Therefore, it was pointed out by the learned counsel appearing for the writ petitioners that the Central Board of Customs and Indirect Taxes, under Section 168 of CGST Act, 2017, has limited the powers to issue any instruction or direction for the purpose of uniformity in the implementation of CGST Act, 2017. It was pointed out that the appellants cannot rely upon the recommendations of the Fitment Committee to sustain the impugned Circular, which is not clarificatory but contrary to the Notification No.2/2017 dated 28.06.2017. The learned counsel then submitted that fish meal in powder form finds a place both under Tariff Heading 2301 as well as Tariff Heading 2309 of the Customs Tariff Act, 1975 and it was only after 01.05.2022, the nomenclature under Chapter 2309 has been changed to “fish feed in powder form”. He also submitted that the nomenclature under Chapter 2309 as on 31.12.2018 is relevant.
28.Finally, the learned counsel appearing for the writ petitioners submitted that fish meal can also be used as feed. Since use of fish meal as a fish feed will result in depletion of fish resources of the sea, the fish meal is used as an essential ingredient in aquatic feed. The learned counsel appearing Page 28 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 for the writ petitioners further pointed out that the aquatic feed cannot be manufactured without fish meal, since its mineral profile and marine protein content is so vital for the feed.
29.This Court heard the learned Additional Solicitor General appearing for the appellants/Revenue at length and the learned counsel appearing for the writ petitioners in all these batch of cases.
30.From the writ petitions, it is clear that the writ petitioners in all these cases have admitted in unequivocal terms that they are manufacturing “fish meal (in powder form)” and they sell fish meal in the powder form to aquatic feed or prawn feed manufacturers.
31.After the corrigendum pursuant to the Notification No.2/2017 dated 28.06.2017, the entry in Sl.No.102 is seen from the following table : Page 29 of 40
https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 S.No. Chapter/Hearing/ Description of Goods Sub-heading/Tariff Item 102 2301, 2302, 2308, Aquatic feed including shrimp feed and prawn 2309 feed, poultry feed & cattle feed, including grss, hay & straw, supplement & husk of pulses, concentrates & additives, wheat bran & de-oiled cake.
Whereas, Sl.No.103 of Notification 1 of 2017, which relates to Chapter Heading 2301 contains goods with the following description :
“Flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrates, unfit for human consumption, greaves.” In other words, the description of goods in Sl.No.102 of Notification No.2 of 2017 includes Tariff Headings 2302, 2304, 2305, 2306, 2308 and 2309 and after the corrigendum dated 27.07.2017, includes Tariff Heading 2301, and there is no change in the description of goods. It is to be noted that the description of goods found in Sl.No.103 of Notification No.1 of 2017 under Tariff Heading 2301 attracts GST of 5%. The description of goods found in Tariff Heading 2301 corresponding to Sl.No.103 are as follows :Page 30 of 40
https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 “flours, meals and pellets, of meat or meat offal, of fish or of crustaceans, molluscs or other aquatic invertebrate, unfit for human consumption, greaves.” The products manufactured by writ petitioners fall under Tariff Heading 2301 which is found in Sl.No.103 of Notification 1 of 2017. Therefore, the product manufactured by the writ petitioners is not exempted and it attracts GST of 5%. Since all goods with the description including “fish meal” under Heading 2301 attract GST of 5%, the petitioners cannot dispute the fact that products manufactured by them attract GST of 5% but for the Notification No.2/2017 dated 28.06.2017. Therefore, even according to the petitioners, but for Notification No.2/2017 dated 28.06.2017 along with corrigendum, they are liable to pay GST of 5% for the products manufactured by them. By issuance of corrigendum dated 27.07.2017, the Tariff Heading 2301 was also included in the exemption notification dated 28.06.2017 for the first time. However, the description of goods in Notification No.2/2017 dated 28.06.2017 is not changed. In other words, fish meal or any other goods which falls under the description of goods under Tariff Heading 2301 shown in Notification No.1 of 2017 are not included in the description of goods under the Tariff Heading 2302, etc., in Sl.No.102 of Notification No.2 of 2017. The Notifications 1 and 2 Page 31 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 of 2017 dated 28.06.2017 specify rates of Tax or exemption in respect of goods specified. The notifications, whether to levy tax or to exempt, refers to goods, the description of which is specified in the corresponding entry in Column (3) of the Schedule. Therefore, even in the absence of any clarification, it cannot be said that the product manufactured by writ petitioners, namely fish meal in powder form, unfit for human consumption, is entitled to exemption. Broadly, from the description of goods in Tariff Heading in Sl.No.102 as per the Notification No.2/2017 dated 28.06.2017, this Court is unable to accept the contention of the learned counsel for the writ petitioners that the product manufactured by the writ petitioners would also come under the description of goods “aquatic feed including shrimp feed or prawn feed or poultry feed, etc.”, as it is admitted that the petitioners' product is not used as an aquatic feed and it is being supplied to the manufacturers of aquatic feed.
32.This Court is unable to discard the submissions of the learned Additional Solicitor General appearing for the Revenue regarding the classification of goods and the nomenclature as per the principles found in the General Rules for the Interpretation. From the reading of the two notifications, Page 32 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 fish meal, unfit for human consumption, is found only in Sl.No.103 of Notification No.1 of 2017 and not found in Sl.No.102 of Notification No.2 of 2017. When Sl.No.102 of Notification No.2 of 2017 refers to description of goods which are exempted from GST, inclusion of Tariff Heading 2301 in both notifications requires a clarification or an explanation. The only plausible explanation is that the Government has granted exemption to the goods falling under Tariff Heading 2301 only if fish meal (in powder form) manufactured by the writ petitioners is sold as an aquatic food or shrimp feed or prawn feed without an addition of other ingredients. We are unable to find any explanation for charging the goods with a description found in Tariff Heading 2301 as per Sl.No.103 with GST of 5%. So long as the Tariff Heading 2301 with the description of goods as found in Sl.No.103 in Notification No.1 of 2017 is not amended or altered and the goods found in Tariff Heading 2301 attracts GST of 5%, this Court is unable to accept the arguments of learned counsel appearing for the writ petitioners that the goods manufactured by the writ petitioners in powder form does not attract GST of 5%. Harmonious reading of notifications will indicate that fish meal in powder form, unfit for human consumption and which is not an aquatic feed or sold as an aquatic feed attracts GST at 5% and is Page 33 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 not exempted.
33.This Court is unable to sustain the order of learned Single Judge holding that the petitioners supply fish meal as a finished product and therefore, they fall under Sl.No.102 of Notification No.2 of 2017 within Tariff Heading 2301. The term “including” in the description of goods cannot be interpreted to include even fish meal in powder form, when it is not sold as aquatic feed.
34.Though the learned counsel for the petitioners relied upon the judgment of the Hon'ble Supreme Court in Ramala Sahkari Chini Mills Ltd. v.
Commissioner of Customs and Excise, Meerut-I reported in 2010 (260) E.L.T. 321 (S.C.) for the proposition that the word “include” should be given wide interpretation, as by employing the said word, the legislature intends to bring in, by legal fiction, something within accepted connotation of the substantive part, this Court is unable to apply the principles in the said judgment interpreting the word “include”, for the reason that the description of goods found in Tariff Heading 2301 attracting GST of 5% is intact. Without an amendment or a clarification to include Tariff Heading 2301, it is rather improbable to accept the Page 34 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 submissions of the learned counsel appearing for the writ petitioners for the proposition that the fish meal in powder form, manufactured by the writ petitioners which is found in Sl.No.103 of Notification No.1 of 2017 is exempted from GST. Such an interpretation would be quite contrary to the plain language employed in the notifications which is unambiguous to denote that tax is levied only on the goods as shown in Column (3) of Schedule. Since Tariff Heading 2301 is also specified in the notification giving exemption to certain goods, a clarification is required. It is to be noted that Tariff Heading 2301 specifically refers to fish meal, unfit for human consumption, in powder form, which is manufactured by writ petitioners. The learned Single Judge failed to consider the position that the levy of duty or exemption is only in respect of goods specified in Column (3) of Schedule and the goods which are not given by description cannot be assumed or included in the exemption notification. It is true that fish meal in powdered form comes under Tariff Heading 2306 is exempted. When it is unfit for human consumption, it can be included only under Tariff Heading 2301. Therefore, the observation of learned Single Judge that fish meal in powder form comes under two Tariff Headings, namely 2301 and 2309, is not warranted, especially when it is not the case of Page 35 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 writ petitioners that the goods manufactured by them falls under Tariff Heading 2309.
35.The Hon'ble Supreme Court, in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company reported in 2018 (361) E.L.T. 577 (S.C.), has held as follows :
“52.To sum up, we answer the reference holding as under -
(1) Exemption notification should be interpreted strictly;
the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.
(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.
(3) The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands over-ruled.”
36.The same principle is reiterated by the Hon'ble Supreme Court in a few more judgments later. In view of the law declared by the Hon'ble Supreme Page 36 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 Court, this Court in the present situation finds that the Circular which is more in the nature of clarification is required to bring uniformity. In the absence of a clarificatory order, any one will be misled and the clarificatory impugned Circular clarifying the previous notification is justified and as held by the Constitution Bench of the Hon'ble Supreme Court in Dilip Kumar's case (supra), the interpretation in favour of Revenue is taken.
37.As a result, all the writ appeals are allowed and the order of the learned Single Judge in W.P.(MD) Nos.16770, 16772, 16773, 16775 & 16776 of 2019, dated 05.10.2021, is set aside. All the writ petitions which are subject matter of these writ appeals, as well the writ petitions captioned in this common order, stand dismissed. No costs. Consequently, connected miscellaneous petitions are closed.
(S.S.S.R., J.) (D.B.C., J.) 03.11.2023 mkn Internet : Yes Index : Yes / No Speaking order / Nonspeaking order Neutral Citation : Yes / No Page 37 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 To
1.The Secretary, Union of India, Ministry of Finance, Department of Revenue, (Central Board of Indirect Taxes & Customs), Central Secretariat, New Delhi – 110 001.
2.The Secretary, Tax Research Unit, Ministry of Finance, Department of Revenue, Central Secretariat, New Delhi – 110 001.
3.The Commissioner of CGST & Central Excise, Office of the Commissioner of CGST & Central Excise, Central Revenue Buildings, Bibikulam, Madurai – 625 002.
4.The Commissioner of CGST & Central Excise, Office of the Commissioner of CGST & Central Excise, No.1, Williams Road, Contonment, Tiruchirapalli – 620 001.
Page 38 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 S.S. SUNDAR, J.
and D. BHARATHA CHAKRAVARTHY, J.
mkn Common Judgment in W.A.(MD) Nos.112 to 116 of 2022, W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 Page 39 of 40 https://www.mhc.tn.gov.in/judis W.A.(MD) Nos.112 to 116 of 2022 & W.P.(MD) Nos.1279, 4171, 12421 & 25733 of 2022 03.11.2023 Page 40 of 40 https://www.mhc.tn.gov.in/judis