Case Summary: M/s. Harsh Polyfabric Private Limited Vs. Union Of India
Application No: W.P.O 588 of 2019 With W.P.O 235 of 2021
Date of Order: 19.06.2024
Court Name: High Court at Calcutta
Summary of the Case:
The case involves M/s. Harsh Polyfabric Private Limited, which has been engaged in the manufacturing, exporting, and supplying of non-woven fabrics and Spunbonded Polypropylene Bed Sheets (PPSB Bed Sheets) since 2007. The primary issue in this case pertains to the classification of PPSB Bed Sheets under the correct tariff heading for GST purposes, which affects the refund of accumulated Input Tax Credit due to an inverted duty structure.
The petitioner classified the PPSB Bed Sheets under heading 6304, attracting a GST rate of 5%, while the respondent authorities classified it under heading 5603, attracting a GST rate of 12%, resulting in partial denial of the refund of accumulated Input Tax Credit amounting to Rs. 39,61,030/-.
Petitioner's Submissions:
· The petitioner argued that their PPSB Bed Sheets should be classified under heading 6304, which pertains to bed linen and similar articles.
· They contended that the issuance of Show Cause Notices lacked specificity and did not adhere to procedural fairness.
· The petitioner had been consistently classifying the PPSB Bed Sheets under heading 6304 and paying GST at the rate of 5%.
· They highlighted that under the erstwhile VAT regime, their classification and tax exemptions were accepted by the Hon'ble West Bengal Taxation Tribunal.
Respondent's Submissions:
· The respondents contested the classification of PPSB Bed Sheets, arguing that they should be classified under heading 5603.
· They issued Show Cause Notices and disallowed the refund claims on the basis that the PPSB Bed Sheets are manufactured using Polypropylene Granules, which fall under Chapter 39 and should be taxed at 18%.
· The appellate authority revised the decision, concluding that PPSB Bed Sheets should be taxed at 12%, the same as non-woven fabric under heading 5603.
Judgment:
The court reviewed the arguments and submissions from both sides. It found that the classification of PPSB Bed Sheets was a matter of significant contention. The court noted the procedural lapses in the issuance of Show Cause Notices and the lack of opportunity given to the petitioner to present their case effectively.
The court directed the respondent authorities to reconsider the petitioner's classification and refund claims in light of the procedural lapses and the established classification practices under the erstwhile VAT regime.
Conclusion:
The case was disposed of with a direction to the respondent authorities to review the classification and refund claims of the petitioner, taking into account the procedural fairness and the precedent set by the Hon'ble West Bengal Taxation Tribunal. The court emphasized the need for adherence to due process and fair consideration of the petitioner's submissions.
