The Madras High Court recently issued a ruling on the classification and taxation of aluminium foil containers. The court determined that the product should be categorized under 7615 with a 12% Goods and Services Tax (GST) rate, resolving a dispute between the petitioner M/s. Veeram Natural Products, and the tax authorities.
Before the introduction of the GST system, aluminium foil containers were subject to taxation under the Central Excise Law and were categorized under Chapter heading 7607 with a duty rate of 12.5%. After the implementation of GST, the petitioner reclassified the product under 7615 with a 12% tax rate. However, the tax authorities disagreed and argued that the product should be categorized under 7607 with an 18% tax rate.
The petitioner's legal representative argued that under GST, the taxable event for levying tax is the "supply" of goods and services. The court agreed with this argument and observed that the issue raised by the petitioner had been resolved in their favour by the Honorable Supreme Court, as per previous decisions.
The court concluded that aluminium foil containers should be classified under 7615 with a GST rate of 12%, thereby quashing the contested order. However, the petitioner had already paid taxes at the rate of 18% for the period from July 2017 to November 2017, resulting in an accumulated credit. The High Court declined to rule on the refund issue, citing the need for consideration of various factors. The matter of the refund is left open to be decided by the provisions of the law between the parties.
In conclusion, the Madras High Court's ruling provides clarity on the classification and taxation of aluminium foil containers and resolves a long-standing dispute between the petitioner and the tax authorities.
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