M/S Shri Krishna Oil And General Mills vs. Union Of INDIA, Ministry Of Consumer Affairs, Through Its Secretary

Facts

The petitioners, M/s Shri Krishna Oil And General Mills and others, filed a writ petition under Articles 226/227 of the Constitution of India challenging a letter dated 08.03.2024 issued by the Food Corporation of India (FCI), Regional Office, Punjab. This letter clarified that FCI would pay GST at 5% on Fortified Rice Kernel (FRK) for Kharif Marketing Season 2023-24. The petitioners contended that while Ministry of Finance instructions/circulars indicated GST on FRK should be 5%, manufacturers had charged 18%. These manufacturers were notified by the State of Punjab to supply FRK to rice millers. The petitioners sought to set aside the FCI's clarification.

Held

The Court did not decide the substantive issue regarding the correct GST rate applicable to Fortified Rice Kernel (FRK) or the validity of the Food Corporation of India's clarification. Instead, upon being informed by the petitioners' counsel that they were eligible for a refund if tax had been wrongly paid and had not yet filed any refund application, the petitioners sought permission to withdraw the petition. The Court granted this permission, with liberty to file a refund application before the competent authority. Therefore, no finding was reached on the legal sustainability of the FCI's letter or the GST rate dispute. The operative direction was to dismiss the petition as withdrawn with liberty to pursue refund.

Key Issues

1. Whether the clarification issued by the Food Corporation of India on 08.03.2024, stating that GST would be paid at 5% on Fortified Rice Kernel (FRK) for Kharif Marketing Season 2023-24, is legally sustainable, considering the petitioners' claim that manufacturers charged 18% GST on FRK contrary to Ministry of Finance instructions. Petitioner's contention: The petitioners argued that Ministry of Finance instructions/circulars mandated a 5% GST rate on FRK, but manufacturers had incorrectly charged 18%. They sought to set aside the FCI's letter which indicated a 5% payment, implying a dispute over the correct rate applicable or the implications of the FCI's payment rate. Revenue/State's contention: The judgment does not record any specific arguments made by the respondents (Union of India and others, including Food Corporation of India) regarding the GST rate on FRK or the validity of the impugned letter. The court confronted the petitioners with the possibility of a refund if tax was wrongly paid.