Facts of the Case

The petitioner, a manufacturer of desiccated coconut powder, was aggrieved by an Adjudication Order dated 17.11.2022 under Section 73(9) of the KGST/CGST/IGST Act, 2017, and the subsequent order-in-appeal dated 29.08.2023 passed under Section 107(11), both relating to the period 01.07.2017 to 27.07.2017. During this period, no specific GST rate had been prescribed for desiccated coconut, and the petitioner treated it as falling under the exemption entry for “coconuts, fresh or dried”; following a corrigendum under Notification No.1/2017-CT(R) dated 27.07.2017, the petitioner discharged tax at 12% thereafter. Proceedings were initiated via a DRC-01A intimation resulting in the Adjudication Order confirming a demand for the disputed period.

Issues Involved

  1. Whether the adjudication and appellate orders, passed without reference to the GST Council's 50th meeting resolution and consequent clarifications regularizing the desiccated coconut rate dispute for 01.07.2017-27.07.2017, are sustainable.

Petitioner's Arguments

  • In the absence of a specific rate for desiccated coconut for the disputed period, the petitioner had reasonably treated it as covered under the exemption for fresh or dried coconuts.
  • The GST Council's 50th meeting (11.07.2023) had resolved to treat such transactions on an “as is” basis for the period, followed by clarifications from the CBIC on 01.08.2023 and the Karnataka Commissioner of Commercial Taxes on 07.08.2023, both of which were placed before the Adjudicating and Appellate Authorities but not considered in the impugned orders.

Respondent's Arguments

  • Represented by the High Court Government Pleader; no independent contest to the applicability of the GST Council resolution or the clarifications is recorded in the order.

Court Order-Findings

  • The Court noted that it was undisputed that the impugned orders contained no reference whatsoever to the GST Council's resolution or the subsequent clarifications issued by the CBIC and the State Commercial Taxes Office.
  • Held that complete adjudication required the order-in-appeal to be interfered with and the matter restored for reconsideration in light of these clarifications.
  • The order-in-appeal dated 29.08.2023 was quashed, and the appellate proceedings were restored for reconsideration; the appellate authority was directed to issue a fresh notice upon receipt of a certified copy of the order.
  • The petition was allowed in part.

Important Clarification

  • Adjudicating and appellate authorities under the GST Act are obliged to consider GST Council resolutions and consequent CBIC or State clarifications that regularize a disputed rate period on an “as is” basis; an order passed without reference to a placed-on-record, applicable clarification is liable to be quashed and remanded for fresh consideration.

Sections Involved

  • Section 73(9), CGST/KGST/IGST Act, 2017 — determination and confirmation of tax demand.
  • Section 107(11), CGST/KGST Act, 2017 — powers of the appellate authority.
  • Notification No.1/2017-Central Tax (Rate) — the corrigendum specifying the applicable rate.

Decision-In Favour of

Assessee, in part — the order-in-appeal was quashed and the matter remanded for reconsideration in light of the GST Council's clarification, though the final outcome awaits the fresh appellate order.

Related Case Laws

No directly on-point case notes are currently published on this site.

Case Details

  • Court: High Court of Karnataka at Bengaluru
  • Case No.: WP No.23547 of 2023 (T-RES)
  • CNR: Not available
  • Coram: Hon'ble Mr Justice B M Shyam Prasad
  • Decision Date: 08-12-2023

Link to Download the Order

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