Gujarat High Court Nullifies GST Orders on Cotton Seed Oil Cakes
2024-10-01 11:44:06
Cotton Seed Oil Cakes: GST Orders are nullified by the Gujarat High Court
The Gujarat High Court has set aside tax demands related to the supply of cotton seed oil cakes to traders, providing relief to the petitioner, a partnership firm involved in extracting and supplying cotton seed oil cakes.
The petitioner argued that the product, known as "khol" in Gujarat, is used exclusively as cattle feed, with no other commercial purpose. However, GST officials rejected this claim during an audit, contending that the GST exemption applied only if the cakes were supplied directly for cattle feed, not for further trade. They claimed the petitioner had failed to prove that the cakes were specifically used as cattle feed, leading to short-payment of GST.
The petitioner countered by asserting that it had sold the cakes for cattle feed purposes and was not responsible for verifying their ultimate use after sale. Therefore, it had rightly claimed the GST exemption.
The court ruled in favor of the petitioner, stating that the supply to traders alone does not determine GST liability, as the end use of the product was not disputed.
The ruling is particularly relevant in light of a government notification issued on September 29, 2017, exempting cotton seed oil cakes from GST. However, authorities had argued that the exemption was not retroactive, as the case involved transactions from an earlier period.
Sandeep Sehgal, a tax partner at AKM Global, noted that the decision brings considerable relief to businesses within the cattle feed supply chain, ensuring they can claim GST exemption irrespective of whether the product is supplied to traders or directly to consumers.
