Ayurvedic Drugs Manufacturers Association (Admah) vs. Department Of Ayush Govt. Of Haryana And Ors

Held

The Court held that no interference was warranted at the present stage. The reasoning was that a show cause notice had been issued to the members of the petitioner's association pursuant to the decision taken in the impugned agenda item. The Court emphasized that this show cause notice, even though not directly under challenge, ought to be responded to by the petitioner's members. Such a response would lead to a formal adjudication of the matter. Therefore, the Court declined to make any observations on the merits of the classification or the GST rate applicable to ayurveda sanitizer ingredients. The ratio decidendi is that matters requiring classification and determination of tax rates, especially when a show cause notice has been issued, should first undergo the statutory adjudication process before the High Court intervenes via a writ petition. The operative direction was to dispose of the writ petition, implicitly directing the petitioner's members to respond to the show cause notice.

Facts

The Ayurvedic Drugs Manufacturers Association, the petitioner, filed a writ petition before the Punjab & Haryana High Court. The petitioner sought to quash agenda item (7i) from the 42nd CGST Council meeting held on October 5th and 12th, 2020. The core grievance was that ayurveda sanitizer ingredients were classified under tariff item 38089400, attracting an 18% GST, whereas the petitioner contended it should be 12%. The respondents are the Department of Ayush, Government of Haryana, and others. The Court noted that a show cause notice had been issued to the members of the petitioner's association pursuant to the CGST Council's decision, although this notice was not under challenge in the present petition.

Key Issues

1. Whether the classification of ayurveda sanitizer ingredients under tariff item 38089400, attracting 18% GST, is legally sustainable, considering the petitioner's contention that it should attract 12% GST? (Question of law) Petitioner's Arguments: The petitioner argued that ayurveda sanitizer ingredients should be taxed at 12% GST, implying a challenge to the classification that led to the 18% GST rate. They sought to quash the relevant agenda item of the CGST Council meeting. Respondents' Arguments: The respondents, through Sr. Standing Counsel Mr. Rishabh Kapoor, did not explicitly present arguments on the merits of the classification or the GST rate. However, their stance, as indicated by the Court's decision, was that the matter should proceed through the established adjudication process. The Court noted that a show cause notice had been issued, implying the revenue's position that the matter requires formal determination.