Facts of the Case

The petitioner, M/s. B.M.R. Industries Pvt. Ltd., a registered taxpayer engaged in manufacturing and selling prawn feed and shrimp health-care products at SPSR Nellore District, Andhra Pradesh, reported sales of two products, "Bio Pro-Enhac" and "Minwa and Minwa Plus," under HSN Code 2309 as exempt "aquatic feed... supplements and additives" per Notification No. 2/2017-Central Tax (Rate) dated 28.06.2017, Sl. No. 102. Following an inspection on 11.11.2022 and an intimation in Form GST DRC-01A, the Assistant Commissioner (ST), Ongole, issued a show cause notice dated 09.12.2022 proposing to reclassify Bio Pro-Enhac under HSN 2936 (vitamins) and Minwa/Minwa Plus under HSN 2931 (organo-inorganic compounds), both taxable at 18%. After hearing the petitioner, the officer passed an assessment-cum-penalty order dated 07.02.2023 (DIN 3707022356293) for tax periods 2020-21 to 2022-23, rejecting the exemption and confirming 18% GST with interest and equal penalty. The petitioner challenged this order before the Andhra Pradesh High Court.

Issues Involved

  1. Whether "Bio Pro-Enhac" falls under exempt HSN 2309 as a feed supplement/additive or under taxable HSN 2936 as vitamins/pro-vitamins.
  2. Whether "Minwa and Minwa Plus" falls under exempt HSN 2309 or under taxable HSN 2931 as organo-inorganic compounds.
  3. Whether the assessing officer's failure to discuss the petitioner's cited precedent vitiated the classification finding.

Petitioner's Arguments

  • Bio Pro-Enhac shares the same raw materials as pelletted shrimp feed (calcium propionate, fish meal, wheat bran, corn meal, soya) and differs only in being fermented rather than pelletted, so it remains a feed supplement under HSN 2309.
  • Both products are imported and domestically sold under HSN 23099090 (micro-minerals for animal feed, not human consumption), which is exempt.
  • Entry 102 of Notification No. 2/2017-CTR exempts not just "feed" but also "supplements and additives," a wider category that covers both products.
  • Reliance was placed on Sun Export Corporation v. Collector of Customs (SC), holding that animal feed supplements are entitled to the same exemption as animal feed, a ratio the officer failed to properly discuss.

Respondent's Arguments

  • Bio Pro-Enhac contains vitamins/pro-vitamins in concentrated form used mainly to improve immunity and digestion, matching the medicinal character of HSN 2936, not the generic-use character of HSN 2309.
  • Minwa and Minwa Plus are poured directly into pond water to stabilise alkalinity and control pH, having nothing to do with feed value, and squarely fall under HSN 2931.
  • Neither product matches the description of "aquatic feed... supplements and additives" in the exemption notification, since their primary function is water treatment, not nutrition.
  • The petitioner had an efficacious alternative statutory remedy and the writ petition was not maintainable.

Court Order/Findings

  • The Division Bench upheld classification of Minwa and Minwa Plus under HSN 2931, agreeing that their main purpose is maintaining pond pH/alkalinity rather than nutrition, so the exemption does not apply.
  • On Bio Pro-Enhac, the Court found that the assessing officer had not discussed or analysed the Sun Export Corporation ratio and other precedents relied on by the petitioner before rejecting the exemption claim, and held this omission vitiated that part of the order.
  • The impugned order was set aside only to the extent of the Bio Pro-Enhac finding and remanded for fresh consideration after affording a hearing; the Minwa/Minwa Plus classification was left undisturbed.

Important Clarification

Where an assessee places reliance on binding precedent on the scope of a feed-supplement exemption, the assessing officer must expressly discuss and distinguish that precedent before rejecting the claim; failure to do so vitiates that part of the classification order, even where the classification of a product whose function is unrelated to feed (such as a water-treatment chemical) can independently be sustained without such discussion.

Sections Involved

  • Notification No. 2/2017-Central Tax (Rate), Sl. No. 102 - exempts aquatic feed including shrimp/prawn feed, supplements and additives.
  • HSN 2309 - preparations of a kind used in animal feeding, including feed supplements.
  • HSN 2936 - provitamins and vitamins, natural or reproduced by synthesis.
  • HSN 2931 - other organo-inorganic compounds.

Decision – In Favour of

The outcome is split. The Assessee succeeds partly, with the Bio Pro-Enhac classification set aside and remanded for fresh consideration because the officer failed to engage with binding precedent. The Department succeeds on Minwa and Minwa Plus, whose classification under HSN 2931 at 18% GST was upheld. The petition was thus "partly allowed and remanded," and neither side obtained an unqualified win.

Related Case Laws

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

Case Details

  • Court: High Court of Andhra Pradesh
  • Case No.: Writ Petition No.9578 of 2023
  • CNR: Not available
  • Coram: Justice U. Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa
  • Decision Date: 19 December 2023
  • Disposal Nature: Partly allowed and remanded

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