The burden of proof for product classification lies with the taxing authority, and mere assertions without evidence are insufficient to justify classification decisions.

JUDGMENT :

T.S. SIVAGNANAM, C.J. :

1. These two appeals are directed against a common judgment and order in WPO 588 of 2019 and WPO 235 of 2021. By the impugned order the learned Single Bench has substantially considered the factual matrix and recorded various findings which all enured in favour of the appellant/assessee.

2. The appellant is aggrieved on account of the fact that the learned Single Bench though recorded findings on merits in favour of the appellant/assesee, and was satisfied that the order of the Appellate Authority was to be set aside and remanded the matter for de novo consideration.

3. Aggrieved by such portion of the order the appellant/writ petitioners have preferred this appeal.

4. It is a matter of record that the respondents have not preferred any appeal as against these findings recorded by the learned Single Bench which are in favour of the appellant, which we are required to see as to whether the case requires to be remanded for reassessment/de novo consideration or not.

5. The appellant/assessee filed refund application under Section 54(3) of the West Bengal Goods and Services Act, 2017 (the Act) of Income Tax Act, 1961 accumulated due to inverted tax structure for two different periods which are not in dispute. The adjudicating authority has noted the manufacturing process adopted by the assessee and held that the classification of Non-Woven Fabric and PPSB Bed Sheets as manufactured from the said Non-Woven Fabric is not correct and it shall file under HSN in Chapter 39.

6. With this reasoning the application filed for refund arising due to inverted duty structure was rejected.

7. Aggrieved by such order the assessee preferred an appeal under Section 107(1) of the Act before the Joint Commissioner, West Bengal State Tax.

8. The first issue which was considered by the Appellate Authority is whether Non-Woven Fabric which made from filament and how the said manmade filament are made from polypropylene granules. We need not examine this issue in appeal as the Appellate Authority agreed with the assessee’s submissions and finding was rendered in favour of the assessee holding that non-wovens, whether or not impregnated, coated, covered or laminated of manmade filament, is rightly classifiable in Chapter 56 under HSN and 75603 and GST should be charged at 12% instead of 18%.

9. This finding has attained finality as the revenue has not challenged the same. The second aspect was with regard to the classification of the PPSB Bed Sheets. The assessee’s case was that PPSB Bed Sheets are produced in a finished state by processing the Non-Woven Fabric which are manufactured by the assessee and that the assessee does not consume PP Granules directly into the manufacturing of bed sheets, instead Non-Woven Fabric manufactured from PP Granules is used in the manufacture of PPSB Bed Sheets. The Non-Woven Fabric as manufactured by them is then cut, shielded/stitched on four sides to give it different shape, size and quality of bed sheets. Therefore, the assessee declared the said product should be classified in Chapter 63 and HSN Code 63041390 and submitted the return charging 5% GST on its sale value. The appellate authority did not accept the submission of the assessee on the solitary ground that in the Customs and Central Excise Tariff Act articles made up Chapter 56 to 62 do not cover in Chapter 63 and, therefore, the appellate authority held that PPSB Bed Sheets should be considered in Chapter 5603 at par with Non-Woven Fabric and to be taxed @12% instead of 5% as claimed by the assessee. Accordingly, the order rejecting the refund application was modified to the extent indicated above. However, the appellate authority did not issue any order for interest which is statutorily payable.

10. Aggrieved by the same, the assessee preferred a writ petition before this Court in WPO/588/2019. By order dated 10th January, 2023 the writ petition was dismissed on the ground that the issues raised by the assessee in the writ petition