A clarificatory Circular issued under Section 168 of the Act cannot override the exemption provided under the Notification, which is a statutory notification issued by the Central Government by exercising its powers under Section 11(1) of the CGST Act. The product of the petitioners ie. fish meal is totally exempt.
Taxability on Fish meal –– Circular No.80/54/2018-GST dated 31.12.2018 ––The petitioner is a manufacturer of fish meal, which comes in powder form. The respondent issued Circular No.80/54/2018-GST dated 31.12.2018, which stated that the fish meal and other raw material used for making cattle / poultry / aquatic feed cannot be said to be exempted within the meaning of Exemption Notification No.2/17 under Sl.No.102. The revenue took a stand that the product of the petitioners i.e. fish meal is not exempted, therefore, tax are to be levied on these items at the rate of 5%. The court observed that such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the Act, 2017. The impugned clarificatory Circular cannot override the exemption provided under the notifications. If at all the exemption provided by the Central Government in issuing the Exemption Notification No.2/17 is to be revisited or reviewed and certain items have to be taken away from the purview of exemption, such exercise shall be undertaken either by the Parliament by making a law as has been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the Act, 2017 or under Section 6(1) of the IGST Act, 2017, as under such exercise of powers only those Exemption Notifications No.2/17 as well as the Amendment Notification No.28/2017 were issued, and only then, such kind of amendment could be made. But no such attempt since has been made either by the Parliament or by the Central Government, by issuing a mere Circular exercising the powers under Section 168 of the Act, 2017, such kind of right already vested, to get exemption, on the assessee, cannot be taken away by way of a clarificatory Circular, that too issued only to the benefit of the officials and staff of the department. The Court further observed that the impugned Circular would not stand in the legal scrutiny.
Held that:- The Hon’ble High Court set aside the clarification issued in the impugned Circular dated 31.12.2018.
A clarificatory Circular issued under Section 168 of the Act cannot override the exemption provided under the Notification, which is a statutory notification issued by the Central Government by exercising its powers under Section 11(1) of the CGST Act. The product of the petitioners ie. fish meal is totally exempt.
Taxability on Fish meal –– Circular No.80/54/2018-GST dated 31.12.2018 ––The petitioner is a manufacturer of fish meal, which comes in powder form. The respondent issued Circular No.80/54/2018-GST dated 31.12.2018, which stated that the fish meal and other raw material used for making cattle / poultry / aquatic feed cannot be said to be exempted within the meaning of Exemption Notification No.2/17 under Sl.No.102. The revenue took a stand that the product of the petitioners i.e. fish meal is not exempted, therefore, tax are to be levied on these items at the rate of 5%. The court observed that such kind of exemptions cannot be taken away or done away by issuing clarificatory Circulars by the Board, in exercise of its powers under Section 168 of the Act, 2017. The impugned clarificatory Circular cannot override the exemption provided under the notifications. If at all the exemption provided by the Central Government in issuing the Exemption Notification No.2/17 is to be revisited or reviewed and certain items have to be taken away from the purview of exemption, such exercise shall be undertaken either by the Parliament by making a law as has been done in Finance Act, 2020 or by the Central Government by exercising their powers either under Section 11(1) of the Act, 2017 or under Section 6(1) of the IGST Act, 2017, as under such exercise of powers only those Exemption Notifications No.2/17 as well as the Amendment Notification No.28/2017 were issued, and only then, such kind of amendment could be made. But no such attempt since has been made either by the Parliament or by the Central Government, by issuing a mere Circular exercising the powers under Section 168 of the Act, 2017, such kind of right already vested, to get exemption, on the assessee, cannot be taken away by way of a clarificatory Circular, that too issued only to the benefit of the officials and staff of the department. The Court further observed that the impugned Circular would not stand in the legal scrutiny.
Held that:- The Hon’ble High Court set aside the clarification issued in the impugned Circular dated 31.12.2018.