M/S. Agsar Match Industries vs. The Assistant Commissioner Of CGST And Central Excise

Held

The Court allowed the Writ Petition and set aside the impugned order dated 04.09.2023. The matter was remanded back to the respondent for fresh consideration. The reasoning was based on the submission made by the learned Standing Counsel for the respondent, who expressed willingness to re-consider the petitioner's case. The Court directed the respondent to take a decision afresh within a period of eight weeks from the date of receipt of a copy of the order. No order as to costs was made. The issue of correct classification and the consequent tax liability, interest, and penalty was not decided on merits but was to be re-examined by the respondent.

Facts

The petitioner, M/s. Agsar Match Industries, filed a writ petition challenging an order dated 04.09.2023 passed by the Assistant Commissioner of CGST & Central Excise, Tuticorin Division. The impugned order demanded Rs. 1,72,26,554/- as short payment of GST, along with interest and penalty, for the period from July 2017 to September 2021. The petitioner, a manufacturer of Red Oxide Powder and other Colour Oxide Powders, had classified these goods under HSN Codes 2601 and 2530 respectively, paying GST at 5%. The respondent issued a show cause notice proposing to levy GST at 18% on these products, citing a different classification. The petitioner provided an explanation, which was allegedly overlooked by the respondent in passing the impugned order.

Key Issues

1. Whether the classification of Red Oxide Powder and other Colour Oxide Powders under HSN Codes 2601 and 2530, attracting a GST rate of 5%, is correct, or if the classification proposed by the respondent, attracting a GST rate of 18%, is legally sustainable under the CGST Act, 2017 and TNGST Act, 2017? Petitioner's contention: The petitioner argued that their products were correctly classified under HSN Codes 2601 and 2530, attracting a 5% GST rate, and that the respondent overlooked their explanation in issuing the impugned order. They relied on the historical classification under the Central Excise Act and the adoption of HSN codes under GST. Respondent's contention: The respondent, through their Standing Counsel, indicated a willingness to reconsider the case of the petitioner, based on written instructions from the Superintendent (Legal), Tirunelveli Sub-Commissionerate.