The correct classification of goods under GST supported by the principle of predominant use; extended periods for tax recovery are not justified when classification is historically accepted.

COMMON ORDER :

C. SARAVANAN, J.

By this Common Order, all these Writ Petitions are being disposed of after hearing the learned counsel for the Petitioner and the learned Special Government Pleader for the Respondent.

2. In these Writ Petitions, the Petitioner has challenged the impugned Assessment Orders passed under Section 74 of the respective GST Enactments as detailed below:-

FACTS OF THE CASE:-

3. The Petitioner is engaged in the business of manufacture and supply of various automotive parts including ‘Gas Compressors’ which are used as parts of Air Conditioners in Motor Vehicles which are classified under Chapter 87 of Section XVII of the Customs Tariff Act, 1975. The Petitioner adopted the following classification for the following goods manufactured by them for the purpose of payment of GST under Section 9 of the respective GST Enactments:-

4. The present dispute is confined to the correct rate of tax on ‘Gas Compressors’ manufactured by the Petitioner for being used in Air-Conditioners in Motor Vehicles.

5. The classification under the GST regime for the purpose of determining the rate of tax is dependent on the classification in the Customs Tariff Act, 1975 as there is no standalone Enactment under the respective GST Regime for the purpose of classification, unlike Central Excise Tariff Act, 1985 and the Customs Tariff Act, 1975. Under Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017 issued under Section 9 of the respective GST Enactments, reference is made to the classification in the First Schedule to the Customs Tariff Act, 1975.

6. As per Clause (iii) and (iv) to Explanation to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017, “Tariff Item”, “Sub- Heading”, “Heading” and “Chapter” shall mean respectively a Tariff Item, Sub-Heading, Heading and Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 and the Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule shall, so far as may be, apply to the interpretation of this Notification.

7. For the sake of clarity, Clauses (iii) and (iv) to Explanation to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 are reproduced below:-

8. Thus, for determining the correct classification of goods for the purpose of payment of tax under the respective GST Enactments, the classification in the Customs Tariff Act, 1975, the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act, 1975 including the Section and Chapter Notes and the General Explanatory Notes of the First Schedule are relevant.

9. The Petitioner classified ‘Gas Compressors’ manufactured by them under Sub-Heading 8414 80 11 as “Gas compressors: Of a kind used in air-conditioning equipment” and paid tax at 28% under Serial No. 118 to Schedule IV to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 and later at 18% under Serial No.317B to Schedule III to Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 in view of the amendment vide Notification No.41/2017 dated 15.11.2017 with effect from 15.11.2017. For the purpose of tax, the above Notification No.1/2017-Central Tax (Rate) dated 28.06.2017 is relevant.

10. The Respondent has on the other hand treated the ‘Gas Compressors’ manufactured by the Petitioner as “Parts and accessories of Motor vehicles” under Heading 8708 and has demanded tax at 28% under Serial No.170 to IV Schedule to Notification No. 1/2017 Central Tax (Rate) dated 28.06.2017.

11. The Respondent has thus concluded that the Petitioner has suppressed facts by adopting a wrong classification under Sub-Heading 841