A petition has been filed before the Gauhati High Court challenging the Central Government’s decision to impose Goods and Services Tax (GST) on processed tea.
The petitioners, Gauhati Tea Warehousing Association (GTWA) challenged the vires of a clarification issued by the Ministry of Finance on November 15 2017, that processed tea, including black and white teas, falls outside the definition of agricultural produce given in notifications issued under the Integrated Goods and Services Tax and Union Territories Goods and Services Tax Acts. Therefore, exemption from GST is not available for their loading, packing, and warehousing.
A bench of Justice Manash Ranjan Pathak admitted the writ petition and issued notices to the respondents to furnish their replies by June 20.
Both the Union and the State Governments, the Commissioner of GST, Guwahati and the GST Council have been made respondents in the case.
The petitioners were represented by advocates M.L. Gope, Nitu Hawelia and others.
Assistant solicitor general Subhash Chandra Kayal and state government advocate R.B. Bora accepted the notices for the respondents.
Admitting the petition, the High Court granted an interim relief and observed that “Payment towards GST made by the petitioner’s association in terms of the impugned clarification shall be subject to the outcome of this writ petition.”
Earlier, the Supreme Court, while upholding an order of the Allahabad High Court, held that “processed tea” is an “agricultural produce”. The petitioner relied on this decision and claimed exemption from tax.
According to the respondents, tea used for making the beverage, such as black and white tea, is a processed product made in tea factories after carrying out several processes, such as drying, rolling, shaping, refining, oxidation and packing on green leaf and is the processed output of the same. Thus it is not eligible for the exemption available for loading, unloading, packing, storage or warehousing of agricultural produce.
