Haryana Ayurvedic Drugs Manufacturers Association (Hadma) vs. Central Goods And Service Tax And Ors

Held

The Court noted that the petitioner had submitted a representation regarding the re-classification of AUS ingredient based sanitizers. The respondent, on instructions, submitted that this representation would be forwarded to the GST Council for appropriate consideration in accordance with law. The Court disposed of the writ petition with the hope that the GST Council would consider the matter at the earliest, given its importance. The Court did not decide on the merits of the classification dispute itself but directed the representation to be processed. No specific finding was given on whether the sanitizers were correctly classified or what the applicable GST rate should be; these issues were left for the GST Council's consideration.

Facts

The petitioner, Haryana Ayurvedic Drugs Manufacturers Association (HADMA), filed a writ petition challenging show cause notices issued by taxation authorities to manufacturers of "AUS ingredients-bases sanitizer". The authorities proposed to levy GST at 18% under HSN Code 3808-94, classifying the product as "alcohol based sanitizer". The petitioner contended that their sanitizers are Ayurvedic/Unani/Sidha (AUS) ingredient based and should attract GST at 12%. They had submitted a representation on July 27, 2020, to the respondents regarding this re-classification, but no action was taken. The respondents sought time to obtain instructions regarding the representation.

Key Issues

1. Whether the show cause notices issued by the respondent-authority, proposing to levy GST at 18% under HSN Code 3808-94 on "AUS ingredients-bases sanitizer" by misclassifying them as "alcohol based sanitizer", are legally sustainable? (Question of law and fact, turning on classification of goods under GST law). Petitioner's arguments: The petitioner argued that the impugned show cause notices were wrongly issued as the sanitizers manufactured by them are AUS ingredient based and distinct from alcohol-based sanitizers. They contended that their products fall under the 12% GST bracket, not the 18% proposed by the authorities. They relied on their representation dated July 27, 2020, to the respondents, highlighting the lack of action on it. Revenue's arguments: The revenue, through its counsel, submitted that the representation dated July 27, 2020, if already submitted, would be forwarded to the GST Council for appropriate consideration in accordance with law.