Reserved On : 19/12/2024 Pronounced On : 09/05/2025 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 6701 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 7073 of 2023 With R/SPECIAL CIVIL APPLICATION NO. 15708 of 2024 FOR APPROVAL AND SIGNATURE:

HONOURABLE MR. JUSTICE BHARGAV D. KARIA and HONOURABLE MR.JUSTICE D.N.RAY ==========================================================

Approved for Reporting Yes No ✓

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M/S. SOPARIWALA EXPORT PVT. LTD.

Versus JOINT COMMISSIONER, CGST AND CENTRAL EXCISE & ORS.

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Appearance:

MR V SRIDHARAN, SENIOR ADVOCATE WITH MR ANAND NAINAWATI(5970) for the Petitioner(s) No. 1(SCA NO.6701/2023 & SCA NO.7073/2023)

MR PARESH M DAVE for the Petitioner(s) No. 1(SCA NO.15708/2024)

MR UTKARSH SHARMA, for the Respondent(s) No. 4 MR CB GUPTA(1685) for the Respondent(s) No. 1,2,3,5 ==========================================================

CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA and HONOURABLE MR.JUSTICE D.N.RAY

CAV JUDGMENT

(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)

1. Heard learned Senior Advocate Mr.

V.Sridharan with learned advocate Mr. Anand Nainawati with learned advocate Mr. Paresh M. Dave for the petitioner, learned advocate Mr. C.B. Gupta for respondent nos. 1,2,3 and 5 and learned advocate Mr. Utkarsh Sharma for respondent no.4.

2. By these petitions under Article

227 of the Constitution of India, the petitioners have prayed for quashing and setting aside the order-in-original for levy of goods and service tax in form of compensation Cess at the rate of 160% on branded tobacco products i.e. scented/flavoured chewing tobacco manufactured by the petitioners for export through merchant exporters which are subject to GST at 0.1% as per Notifications No.40/2017 and 41/2017 dated 23/10/2017.

3. As the issue arising in these petitions are common, same were heard analogously and are being disposed off by this common judgment.

4. For the sake of convenience Special Civil Application No.6701 of 2023 is treated as a lead matter.

5. Factual matrix of Special Civil Application No. 6701 of 2023 can be summarised as under:

FACTS

6. The petitioner is engaged in the business of manufacture of branded tobacco products falling under HSN 24039910 on which GST is payable at the rate of 28% and Compensation Cess is payable at the rate of 160%.

7. The goods manufactured by the petitioners are exported directly or through merchant exporters.

8. The procedure followed by the petitioners during different taxation regime is as under:

A) As per pre-GST Regime

9. Prior to the introduction of GST, the main indirect taxes applicable were Central Excise Duty, Value Added Tax ("VAT") / Central Sales Tax. ("CST").

B) As per Central Excise

10. As per Section 3 of the Central Excise Act, 1994, excise duty was leviable on manufacture of all excisable goods in India. However, Rule 19 of the Central Excise Rules, 2002 provided for export of manufactured goods without payment of duty.

11. In exercise of powers under Rule

19(3) of the Central Excise Rules, 2002, Notification No. 42/2001-CE (NT) dated 26.6.2001 was issued prescribing conditions, safeguard and procedure for removal of goods for export without payment of duty. Explanation III of the aforesaid notification read as under:

"Explanation-III. For the purposes of this notification "duty" means, the duties of excise collected under the following enactments, namely:-

(a) the Central Excise Act, 1944 (1 of 1944);

(b) the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957);

(c) the Additional Duties of Excise (Textiles and Textile Articles)

Act, 1978 (40 of 1978);

(d) the National Calamity Contingent duty leviable under section 136 of the Finance Act, 2001 (14 of 2001), as amended by Section 169 of the Finance Act, 2003 (32 of 2003) which was amended by Section 3 of the Finance Act, 2004 (13 of 2004);

(e) any special excise duty collected under a Fi