M/S. Tulya Beverages Private Limited vs. The Commissioner Of GST And Central Excise

Held

The Court held that the impugned order was passed after considering the Petitioner's response, oral objections, and submitted documents. The Revenue had analyzed export invoices and export details, which indicated the Petitioner had previously adopted HSN 22029930 for products like 'Badam Milk' and for all export products between January 2021 and October 2021. The Court found that the Petitioner had not established a grave error in the exercise of jurisdiction or a violation of principles of natural justice that would warrant direct intervention under Article 226. Therefore, the Court concluded that the Petitioner's grievance, which primarily concerns the classification of their products, should be addressed through the statutory appellate mechanism. The Court explicitly stated that the Petitioner had not been able to establish grounds for approaching the High Court directly.

Facts

M/s. Tulya Beverages Private Limited (Petitioner) manufactures and supplies flavored milk drinks and fruit-based drinks. The Directorate General of GST Intelligence (DGGI) investigated the Petitioner, alleging incorrect classification of flavored milk drinks. The DGGI contended that the Petitioner wrongly classified these products under HSN 0403 (attracting 5% GST) instead of HSN 22029930 (attracting 12% GST), resulting in a short payment of 7% GST from July 1, 2017. The Petitioner had submitted explanations and attended personal hearings. The Assistant Commissioner of GST & Central Excise (2nd Respondent) passed an assessment order dated March 29, 2023, which the Petitioner seeks to quash. The Petitioner argues their products are dairy-based milk drinks, supported by a test report, and a dispute over classification warrants High Court intervention. The Revenue argues for an alternative appellate remedy under Section 107 of the Act.

Key Issues

1. Whether the classification of flavored milk drinks under HSN 0403 (dairy products) or HSN 22029930 (water-based beverages) is a question of fact that requires adjudication by the appellate authority, thus barring writ jurisdiction under Article 226 of the Constitution of India, as argued by the Revenue, or if the dispute regarding classification, supported by a test report, warrants High Court interference, as argued by the Petitioner. Petitioner's Contention: The Petitioner argued that their flavored milk drinks are predominantly milk-based (over 87%) with minimal additions of sweeteners and flavors. They presented a test report from ARS Food Testing Laboratory indicating the products are not water-based, thus supporting classification under Chapter 4. They contended that a serious dispute regarding classification justifies High Court intervention under Article 226. Revenue's Contention: The Revenue argued that the Petitioner has an effective alternative remedy of appeal under Section 107 of the GST Act. They contended that the dispute over classification is a matter for the appellate authority and not for a Writ Court. The Revenue also pointed out that the Petitioner themselves admitted classification under Chapter 22 in the past and for exports.