The Gauhati High Court directed the GST Commissioner to consider the application claiming a special rate to be fixed on the basis of add-ons made to manufactured goods.
The petitioner company, M/s Ahinsha Chemicals Pvt. Ltd. has been engaged in a business manufacture of instant tea. In the course of the manufacturing business, the petitioner company is subjected to the provisions of the Central Excise Act, 1944. The petitioner company also claimed some benefits under the Northeast Industrial Policy for which certain exemptions are made in respect of excise duties that are payable under the said Act.
The procedure adopted for grant of exemption is that the assessee first pays the excise duty and thereafter for the purpose of exemption the duty paid stands refunded. Initially the refund was made to the extent of 100% of the payment of the excise duty. The respondents had issued the Notification No.20/2008-Central Excise dated March 27, 2008 by which it was provided that instead of 100% refund of the excise duty paid, the refund would be subjected to the rates provided in the said notification in respect of the different categories of goods as are provided therein.
Clause 3(1) of the Notification dated March 27, 2008 provides that notwithstanding anything contained in the said notification the manufacturer shall have the option not to avail the rates specified in the Table provided in the said Notification and apply to the Commissioner of Central Excise or the Commissioner of Customs and Central Excise, as the case may be, having jurisdiction over the manufacturing unit of the manufacturer for fixation of a special rate representing the actual value addition in respect of any goods manufactured and cleared under the notification, if the manufacturer finds that fourth-fifths of the ratio of actual value addition in the production or manufacture of the said goods to the value of the said goods, is more than the rate specified in the said Table contained in the notification.
The single judge bench of Justice Achintya Malla Bujor Baru directed the Principal Commissioner of GST Gauhati to consider the aforesaid application of the petitioner dated 28.09.2020 claiming for a special rate to be fixed on the basis of the add-ons made to the goods manufactured within 6 weeks.
“After arriving at the special rate, if any as per the order to be passed by the Principal Commissioner, GST further process against the petitioner as per law may be initiated. Till such decision is taken, no coercive measure be taken against the petitioner pursuant to the communication impugned dated 01.01.2021 as well as not to pursue with the communication dated 22.01.2001 made from the Office of the Assistant Commissioner of GST Gauhati to the AGM/Branch Manager, State Bank of India,” the court said.
The court noted that if any coercive measures had already been taken, the same be restored to its original position. As the court has already provided that no coercive measures be taken, in respect of the Account of the petitioner in the State Bank of India (SBI) Nalbari Bazar Branch, the same be allowed to be operated by the petitioner till such decision is taken on the application of the petitioner claiming for special rate.
The petitioner has also assailed the imposition of interest for the amount that the petitioners are required to pay to the respondent GST department for the amount that they are to return. “As we have not decided the said issue, liberty is granted to the petitioner to approach this Court again on the question of imposition of interest, if so advised,” the court directed.