TRU lacks power to issue GST circulars.

In a recent legal milestone, the Hon’ble Delhi High Court, in the case of Association of Technical Textiles Manufacturers and Processors & Anr. v. Union of India & ors., has cast a spotlight on the boundaries of authority for the Tax Research Unit (TRU) in releasing circulars under the Goods and Services Tax (GST) law. This article delves into the court's findings, which question the TRU's jurisdiction and highlight the exclusive powers vested in the Central Board of Indirect Taxes and Customs (CBIC) concerning GST clarifications.

 

Table Section
1. Introduction
2. The Legal Landscape
3. Key Revelations
4. (FAQs)
5. Implications and Conclusion

 

The Legal Landscape:

The case centered around Circular No. 80/54/2018-GST dated December 31, 2018, where the TRU clarified the classification of polypropylene woven and non-woven bags under Chapter 39 of the Customs Tariff Act, 1975. However, the petitioners contested this classification, arguing for a placement under Chapter 56 with Tariff Heading 5603.

 

 

 

Key Revelations:

1. Challenging TRU's Authority: The court meticulously scrutinized the Central Goods and Services Tax, 2017 (CGST Act) and found no legal standing for the TRU to issue clarifications on goods classification. It unequivocally stated that this power is exclusively vested in the CBIC.

2. Inadequate Consideration of Legal Provisions: The Impugned Circular faced criticism for not adequately considering the provisions of the Customs Tariff Act. The court noted a lack of analysis regarding the differentiation between plastics and textiles, especially under Chapters 39 and 56.

3. Conflict Resolution within CGST Act: The ruling emphasized that any conflicts on classification issues should follow procedures outlined in the CGST Act. This highlights the importance of adhering to statutory processes for the resolution of disputes.

4. Absence of Statutory Authority for TRU: The court conclusively established that the TRU lacks statutory authority or jurisdiction to issue such clarifications. It asserted that these powers are exclusively designated for the CBIC.

5. Quashing of Circular: Based on these findings, the court quashed the Impugned Circular, citing the TRU's overstepping of its authority in issuing a clarification under the GST law.

 

 

Implications and Conclusion:

This legal development holds significant implications for those navigating the complexities of GST regulations. It serves as a stark reminder for businesses and entities to exercise caution when relying on circulars issued by bodies lacking the requisite statutory authority. The ruling underscores the critical need for a clear understanding of the delineation of powers and the adherence to due processes outlined in the law.

this case highlights the importance of comprehending the limitations within the GST framework and underscores the necessity for legal entities to operate strictly within the confines of statutory provisions. Such adherence contributes not only to the integrity of the GST system but also to the fair and just application of tax laws.