HC Directs Department to Regularise Past Returns Filed by ‘Fryums’ Manufacturer at Nil Rate of Tax on ‘As Is’ Basis

Case Details: J. K. Papad Industries v. Union of India - [2024] 166 taxmann.com 410 (Gujarat)

Judiciary and Counsel Details

• Bhargav D. Karia & Niral R. Mehta, JJ.
• Uchit N Sheth for the Petitioner.
• Ms Hetvi Sancheti for the Respondent.

Facts of the Case

The petitioner was engaged in the business of edible food products. It was manufacturing and selling different shaped unfried fryums and supplying the same without payment of GST by classifying it under HSN 19059040 instead of HSN 19059030. The department conducted audit and raised demand on ground that fryums would be taxable at rate of 18%. It filed writ petition against the demand.

High Court Held

The Honorable High Court noted that the CBIC circular dated 13.01.2023 stated that snack pellets such as fryums would be taxable at the rate of 18%. However, in the 50th Council meeting, it was decided to recommend that the tax rate for uncooked/unfried snack pellets manufactured through extrusion process be fixed at 5%. The CBIC issued circular dated 01.08.2023 further stating that issue for past period upto 27.07.2023 was regularised on ‘as is’ basis. Therefore, the demand on fryums for past period at 18% was not sustainable and liable to be set aside.

List of Cases Referred to

• Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Company [2018] 95 taxmann.com 327/69 GST 239/361 ELT 577 (SC) (para 22).