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.
2. Both these petitions are preferred with a common issue and
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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
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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".
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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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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
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(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.
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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);
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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
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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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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
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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
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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
