Srichakra Milk Products LLP vs. Deputy Assistant Commissioner (St)

Held

The High Court allowed all the writ petitions. The Court held that flavoured milk should be taxed under tariff heading No. 0402 9990. This decision was based on a previous judgment of the same Court dated 10.12.2024 in W.P.No. 254 of 2024, where the Court had considered the material placed before it and concluded that flavoured milk falls under tariff heading No. 402 and ought to be taxed accordingly. Consequently, all orders passed by the revenue authorities to the contrary were set aside. The Assessing Authority was directed to redo the assessments in accordance with the Court's directions. The Court also noted that interlocutory applications, if any, pending in these matters stood closed. No order as to costs was made.

Facts

These writ petitions involved multiple petitioners, including M/s. Srichakra Milk Products LLP and M/s. Sangam Milk Producer Company Limited, challenging orders passed by various GST and Commercial Tax authorities. The core dispute revolved around the classification and tax rate applicable to flavoured milk. Specifically, petitioners argued that flavoured milk should be taxed under HSN Code 0402 9990 at 5% (2.5% CGST and 2.5% SGST) as per specific notifications. The impugned orders, passed for various tax periods ranging from April 2019-March 2020 to July 2017-March 2018, and even pre-GST periods under APVAT Act, classified flavoured milk under a different tariff heading, leading to higher tax demands. Petitioners also challenged the procedural validity of some orders, citing lack of proper signatures. The tax periods under dispute varied across the petitions.

Key Issues

1. Whether flavoured milk should be classified under HSN Code 0402 9990 and taxed at 5% (CGST 2.5%, SGST 2.5%) as contended by the petitioners, or under tariff heading 2202 9930 as determined by the revenue authorities, based on Notification No. 1/2017-Central Tax (Rate) and G.O.Ms.No.258? Petitioner's arguments: The petitioners contended that flavoured milk squarely falls under HSN Code 0402 9990, which is specifically covered by the aforementioned notification and G.O., attracting a 5% tax rate. They argued that the impugned orders misclassifying the product and demanding higher taxes were illegal and contrary to law. In some instances, petitioners also challenged the validity of the orders due to the absence of proper manual or digital signatures. Revenue's arguments: The revenue authorities, through their counsel, argued for the classification of flavoured milk under tariff heading 2202 9930, implying a different tax treatment. Specific arguments from the revenue side regarding the classification and validity of the orders are not explicitly detailed in the provided text, but their actions in passing the impugned orders indicate their stance on the taxability and classification.