The Madras High Court quashed classification of Harpic and Lizol under 28% GST Slab Rate and held that duty is cast on Assessing Authority to apply its mind to objections.
The writ petition was filed challenging the impugned orderinsofar as it treats “Harpic Disinfectant Toilet Cleaner” and “Lizol Disinfectant Toilet Cleaner” under Item 31 of the Fourth Schedule to the Tamil Nadu Goods and Services Tax Act, 2017 thereby levying tax at the rate of 14% under the TNGST Act, while rejecting the classification made by the petitioner that the above products viz., “Harpic Disinfectant Toilet Cleaner” and “Lizol Disinfectant Toilet Cleaner” are disinfectants liable to tax at 9% in terms of Item 87 of the Third Schedule to the TNGST Act for the period 01.07.2017 to 13.11.2017.
The impugned order of assessment stated that the proposal has been received from the State Tax Enforcement which was not indicated / disclosed in the show cause notice. The order of assessment placesd reliance primarily on the ingredients used in Harpic and Lizol to reject the classification made by the petitioner while confirming its proposal to treat Harpic and Lizol as falling under Entry 31 of the Fourth Schedule liable to tax at 14% under TNGST.
The petitioner claimed that the State of Tamil Nadu had accepted the classification of Harpic and Lizol as Disinfectants under TNVAT Act by treating the sales of Harpic and Lizol as falling under Entry 17(a) of Part B to the Fourth Schedule of the TNVAT Act for the period 12.07.2011 to 29.05.2013 and under Entry 22 of Part C to the First Schedule to the TNVAT Act, from 29.05.2013 until GST was introduced with effect from 01.01.2017.
Reliance was also placed on the fact that the authorities under the Drugs and Cosmetics Act, 1940, had treated Harpic and Lizol as disinfectants as evident from the fact that the petitioner had obtained a drug license under the Drugs and Cosmetics Act for Harpic and Lizol.
The Court of Justice Mohammed Shaffiq observed that “On a close reading of the impugned order of assessment I find that though detailed objections under various Heads have been made by the petitioner the impugned order of assessment has not dealt with the same. It is fundamental that any quasi judicial order ought to be made taking into account all factors that are relevant while eschewing the irrelevant. Since, it is only in the impugned order of assessment it was disclosed for the first time about the fact that proposal had been received from the enforcement wing authorities, the petitioners was disabled from submitting their objections on the above aspect.”
“It is trite law that when objections are raised a duty is cast on the assessing authority to apply its mind to the objections and deal with each one of them. Failure to do so would vitiate the order of assessment on the ground of non-application of mind. find that the impugned order of assessment suffers from the vice of non-application of mind to the objection and also non-disclosure of the fact the proposal have been received from the enforcement wing thereby the impugned order of assessment stands vitiated” the Court noted.
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