TMI Blog2023 (11) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... o issue any clarification or directive under Section 168 of the CGST Act, the circular is liable to be quashed and set aside on this ground alone. All that needs to be observed in this regard is that the conflict of opinion that may exist would have to be resolved by parties taking appropriate steps as contemplated under the CGST Act. It is noted that the impugned circular while purporting to convey a position with respect to the classification of non-woven polypropylene bags has rested its conclusions solely on the basis of the provisions contained in Chapter 39. It has neither alluded to Section XI of the First Schedule to the 1975 Act nor has it referred to Chapter 56 thereof. The contention of the petitioners that non-woven polypropylene is an article which would fall within Tariff Heading 5603 was neither questioned nor contested before us by the respondents. In any case, a reading of the impugned circular would establish that it fails to examine the issue on the anvil of the distinction which the 1975 Act appears to construct when it places plastics under Chapter 39 and textiles and articles thereof separately in Section XI, and more particularly, as was contended by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Research Unit [TRU] constituted under the first respondent, and to the extent that it purports to clarify that polypropylene woven and non-woven bags including those laminated with Biaxially Oriented Polypropylene [BOPP] are liable to be classified as falling under Chapter 39 and more particularly Tariff Heading 3923 forming part of the First Schedule to the Customs Tariff Act, 1975 [CTA]. The dispute essentially related to a question of classification of polypropylene woven and non-woven bags under the Harmonized System of Nomenclature [HSN]. 3. The TRU has, on due consideration of the aforesaid issue, clarified that those articles would be classifiable as plastic bags under Tariff Heading 3923. The petitioners are aggrieved by the aforesaid Circular, since it contends that polypropylene woven or nonwoven bags are made out of textiles and thus cannot be equated with plastics, which form the subject matter of Chapter 39 of the First Schedule to the 1975 Act. 4. It is also their case that polypropylene non-woven fabric is a textile, which is classifiable under Tariff Heading 5603 comprised in Chapter 56 titled as Wadding, Felt and Nonwovens; Special Yarns; Twine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification of goods and articles. That power clearly appears to stand conferred upon the Board exclusively. We are thus of the considered opinion that no authority vested in the TRU to issue the clarification impugned before us. 8. While this would have been sufficient to dispose of the writ petition on this short ground alone, we proceed further in light of the detailed submissions which were addressed by respective counsels and related to the classification of the article itself. 9. Mr. Lakshmikumaran drew our attention to the title of Chapter 39 of the First Schedule to the 1975 Act and which deals with Plastics and Articles Thereof . Learned counsel laid emphasis on Notes 1 and 2 thereof and which purports to exclude textile materials which would otherwise fall within the ambit of Section XI of the First Schedule to the 1975 Act. Notes 1 and 2 of the said Chapter are extracted hereinbelow:- CHAPTER 39 Plastics and Articles Thereof NOTES 1. Throughout this Schedule, the expression plastics means those materials of headings 3901 to 3914 which are or have been capable, either at the moment of polymerisation or at some subsequent stage, of being fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for example, furniture, lamps and lighting fittings, illuminated signs, prefabricated buildings); (y) articles of Chapter 95 (for example, toys, games, sports requisites); or (z) articles of Chapter 96 (for example, brushes, buttons, slide fasteners, combs, mouth--pieces or stems for smoking pipes, cigarette holders or the like, parts of vacuum flasks or the like, pens, propelling pencils, and monopods, bipods, tripods and similar articles. 10. It would thus appear that while Tariff Heading 3923 speaks of articles for the conveyance or packing of goods, it would essentially extend to articles made of plastics and read holistically exclude textiles completely therefrom. Tariff Heading 3923 is reproduced hereinbelow:- 3923 Articles for the conveyance or packing of goods, of plastics; stoppers, lids, caps and other closures, of plastics 3923 10 - Boxes, cases, crates and similar articles: 3923 10 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3923 50 10 --- Caps and closures for bottles kg 6 [15%] - 3923 50 90 --- Other kg 6 [15%] - 3923 90 - Other: 3923 90 10 --- Insulated ware kg 6 [15%] - 3923 90 20 --- Aseptic bags kg 6 [15%] - 3923 90 90 --- Other kg 6 [15%] - 11. It is however the case of the petitioners that polypropylene woven or non-woven fabric is classified under Chapter 56 falling in Section XI [Textiles and Textile Articles], and which is titled Wadding, Felt and Non-Wovens; Special Yarns; Twine, Cordage, Ropes and Cables and Articles Thereof . A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5603 93 10 --- Mulch Mats, conforming to IS 17355 kg. 10% - 5603 93 90 --- Other kg. 10% - 5603 94 --- Weighing more than 150 g/m 2 5603 94 10 --- Non-woven Geotextile and articles thereof, Conforming to IS 16391, IS 16392 kg. 20% - 5603 94 20 --- Mulch Mats, conforming to IS 17355 kg. 20% - 5603 94 90 --- Other kg. 20% - 12. Our attention was also drawn to Note 3 comprised in Chapter 56 of the First Schedule to the 1975 Act, which reads as under:- CHAPTER 56 Wadding, Felt and Nonwovens; Special Yarns; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kg. 10% - 6305 10 30 --- Jute hessian bags kg. 10% - 6305 10 40 --- Jute sacking bags kg. 10% - 6305 10 50 --- Jute wool sacks kg. 10% - 6305 10 60 --- Plastic coated or paper cum polythene lined jute bags and sacks kg. 10% - 6305 10 70 --- Paper laminated hessian jute kg. 10% - 6305 10 80 --- Jute soil savers kg. 10% - 6305 10 90 --- Others kg. 10% - 6305 20 00 - Of cotton - Of man-made textile materials: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioners. He has in terms of a Note, which was placed on the record of these proceedings, referred to the following decisions:- (a) In the matter of RLJ Woven Sacks Pvt. Ltd 2019 SCC Online WB AAAR-GST 14; (b) In the matter of Mahalaxmi Polypack Private Ltd 2019 SCC Online Utt AAR-GST 2; (c) In the matter of Mount Fab Packaging LLP 2020 SCC Online Guj AAR-GST 101. 18. We note that while both the petitioners as well as the respondents have sought to draw sustenance from various decisions rendered either by the AAR or the AAAR, they were neither cited nor placed before us for our consideration. We thus desist from rendering any observation or comment on the correctness or otherwise of the opinions so rendered. 19. While on the subject of decisions rendered on the question that stands posited, we also deem it apposite to take note of a recent decision of the Calcutta High Court decision in Mega Flex Plastics Ltd Anr v. Union of India Ors 2023 SCC Online Cal 311. The Calcutta High Court, on the facts of the said case, while dealing with the aspect of classification of polypropylene leno bags under the 1975 Act, held that polypropylene leno b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Protection Act, 1986. In the said case, while dealing with the question of whether nonwoven bags containing polypropylene would fall within the ban that stood imposed, the Department of Environment of the GNCTD took the position that since non-woven bags containing polypropylene to the tune of 98.3% would also constitute a non-biodegradable material, those articles would also fall within the scope of the ban. It was this decision which was ultimately upheld by the Division Bench. 22. The observations as appearing in Praveen Mittal are thus liable to be understood and appreciated in the aforesaid backdrop. In any case, we find that the Division Bench was neither called upon to consider the issue of classification of the article in question in terms of the various provisions of the 1975 Act nor was any such finding returned. 23. We have for reasons aforenoted come to conclude that in the absence of a conferral of any power upon the TRU, or it being recognized as being statutorily enabled to issue any clarification or directive under Section 168 of the CGST Act, the circular is liable to be quashed and set aside on this ground alone. 24. We note that both the petitioners as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. The advance ruling, we notice, is binding on the applicant ordinarily. No doubt, it has a wider impact in circumstances detailed in Section 103(1A). We are at a loss to further understand how in the name of producing a level playing field, the State, when it decides to award a contract, would be obliged to undertake the ordeal of finding out the correct HSN Code and the tax applicable for the product, which they wish to procure. This is, particularly so when the State is not burdened with the liability to pay the tax. The liability to pay tax, in the case before us, is squarely on the supplier. There are adequate safeguards and Authorities under the GST Regime must best secure the interests of the Revenue. 51. Shri Amar Dave, learned Counsel for the writ petitioner would contend that the Section 168 of the Central Act can be understood as the fountainhead of statutory power, using which, the appellants can comply with the impugned direction. The power is vested with the Board, it is pointed out. The appellants have floated a global tender. It means that the bidders can be located at any place. The Officers, who would be the Jurisdictional Officers of the bidders, may not ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Heading 5603 was neither questioned nor contested before us by the respondents. In any case, a reading of the impugned circular would establish that it fails to examine the issue on the anvil of the distinction which the 1975 Act appears to construct when it places plastics under Chapter 39 and textiles and articles thereof separately in Section XI, and more particularly, as was contended by the petitioners in Chapters 56 and 63 of the said enactment. The impugned circular also fails to advert to the Notes placed in Chapter 39, and which in unambiguous terms, exclude textiles from the ambit thereof. For the aforenoted additional reasons, we find ourselves unable to uphold the impugned circular. 27. While we were invited by Mr. Lakshmikumaran to render a final verdict on the issue of classification itself, we find that respective sides have, in this respect, failed to place adequate material on the record. The failure of parties to address the question comprehensively constrains us to desist from rendering a definitive opinion in that respect bearing in mind the industry wide ramifications that may ensue. Courts should avoid expressing an opinion on questions of classific ..... X X X X Extracts X X X X X X X X Extracts X X X X
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