Page 97 - GSTL_26th March 2020_Vol 34_Part 4

2020 ] IN RE : KARNATAKA CO-OPERATIVE MILK PRODUCERS FEDERATION LTD. 607
ar and permitted flavours, which do not alter its essential character of milk; that
as per the Food Safety and Standards Authority of India (FSSAI), flavoured milk
means “the product prepared from milk or other products derived from milk or
both and edible flavourings with or without addition of sugar, nutritive sweet-
eners, other non-diary ingredients, stabilizers and food colours; that flavoured
milk is a natural diary milk, and does not have any alcoholic content as certified
in the laboratory report; that flavoured milk is required to be classified under
Chapter 0402 99 90 only and not under Chapter 2202 99 30.
5. The Authority for Advance Ruling examined the application filed by
M/s. KCMPFL and vide Ruling No. KAR/ADRG 88/2019, dated 26th Sept.,
2019, arrived at the conclusion that Flavoured Milk is classifiable under Heading
0402 99 90.
6. The Commissioner of Central Taxes, South Commissionerate, Banga-
lore reviewed the impugned order passed by the Authority and being aggrieved
by the said order, communicated with the jurisdictional State GST officer to file
an appeal before us. Accordingly, an appeal has been filed by the Assistant
Commissioner of Commercial Taxes, LGSTO 40, Bangalore on the following
grounds :
6.1 The Appellant submitted that it was brought to their notice by the
DGGI, Bangalore Zone Unit, that M/s. KCMPFL (the applicant-respondent) had
suppressed vital facts in the application made before the Authority for Advance
Ruling about the investigations that had been initiated by the DGGI under the
CGST Act, 2017; that investigation was initiated by the Central authority Direc-
torate General of GST Intelligence, Bangalore against the applicant and incident
report was issued on 17-1-2019; that this fact of investigations conducted by
DGGI against the applicant was not brought to the notice of the Authority; that
the Advance Ruling thus obtained by keeping the Authority for Advance Ruling
in the dark appears to be not a legal and correct order and therefore it should be
appealed against as the subject order of the Authority appears to be invalid ab
initio. They referred to the proviso to Section 98(2) of the CGST Act which states
that advance ruling cannot be obtained when investigations have been initiated;
that it has been brought to their notice that a number of cases have been booked
by DGGI across India and in some cases the taxpayers have admitted the stand
of the Department and made the payments of differential tax. The Appellant
submitted that since huge revenue is at stake, the ruling of the lower Authority
should be held as void ab initio.
6.2 On the issue of classification, they submitted that HSN Explanatory
Note to Heading 0402 states that the said heading does not cover -
(a) curdled, fermented or acidified milk or cream; and
(b) beverages consisting of milk flavoured with cocoa or other sub-
stances (Heading 2202).
Further HSN Note (B)(2) to Heading 2202 states that the heading includes bever-
ages ready for consumption such as those with a basis of milk and cocoa. There
are several judicial rulings which state that HSN Notes have persuasive value.
Reliance has been placed on Health India Laboratories v. CCE - 2007 (216) E.L.T.
161 (CESTAT) affirmed by Supreme Court 2008 (224) E.L.T. A133 (S.C.) wherein
it has been held that HSN Explanatory Notes have overriding effect over trade
parlance.
6.3 The Appellant submitted that prior to GST, under Central Excise
GST LAW TIMES  26th March 2020  193