Order Date – 16 November 2023

Parties: Association of technical textiles manufacturers and Processors & Anr. Vs Union of India & Ors.

Facts –

• The Petitioner, Association of technical textiles manufacturers, are aggrieved by the Circular dated 31 December 2018 issued by the Tax Research Unit, pertaining to the classification of polypropylene woven and non-woven bags including those laminated with Biaxially Oriented Polypropylene under Chapter 39.
• 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 petitioner contented that TRU has no power to issue the clarification as per Section 168 of the Central Goods & Services Tax Act, 2017 and it is vested exclusively in the Central Board of Indirect Taxes and Customs.

Issue –

• Whether TRU has the power to issue clarification with respect to classification of goods and articles?

Order –

• The Single Bench of Hon’ble High Court observed that respondents could not draw any provision of the CGST Act, in terms of which the TRU could be said to have been clothed with the authority or jurisdiction to render a clarification with respect to classification of goods and articles. That power clearly appears to stand conferred upon the Board exclusively. Thus it was held that no authority vested in the TRU to issue the clarification and this would have been sufficient to dispose of the writ petition on this short ground alone.
• Further 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.
• Further, Courts should avoid expressing an opinion on questions of classification unless they are directly raised and adequate and cogent material placed on the record. Bearing in mind the impact that such a ruling may have, findings in that respect, in any case, should not be founded on material which is tenuous and inadequate. The issue of classification should is left open for the consideration of the competent authority in appropriate proceedings.
• Hence the writ petition is allowed and the impugned circular dated 31 December 2018 is quashed.