Gujarat High Court allows refund of GST on cotton seed oil cake treating it as exempt cattle feed

Background of the dispute

The matter in N H Associates Vs Superintendent of Central GST and Central Excise (Gujarat High Court) concerned a writ petition filed to challenge demand and appellate orders under the GST law and to claim refund of GST already deposited on supplies of cotton seed oil cake.

The assessee had:

  • Challenged:

    • An order-in-original dated 15.12.2023
    • An order-in-appeal dated 05.07.2024
    • A consequential DRC-07 dated 26.12.2024

  • Sought a direction to refund:

    • CGST of Rs. 37,578/-
    • SGST of Rs. 97,578/-
    • IGST of Rs. 1,84,620/-

These amounts were paid via DRC-03 dated 15.11.2022 (ARN: AD241122005118T) and were adjusted against an alleged GST demand on sale of cotton seed oil cake for the period 01.07.2017 to 21.09.2017.

The central contention was that cotton seed oil cake is predominantly used as cattle feed and is covered by the exemption granted under Notification No. 02/2017-Central Tax (Rate) dated 20.06.2017, and therefore no GST was ever payable on such supplies during the relevant period.

Reliefs claimed in the writ petition

The assessee approached the Gujarat High Court with a two-fold prayer:

  1. Certiorari-type relief
    To set aside:

    • The order-in-original dated 15.12.2023 (Annexure F-1) passed by respondent no. 1
    • The order-in-appeal dated 05.07.2024 (Annexure A) passed by respondent no. 2
    • The resulting DRC-07 dated 26.12.2024 (Annexure B)

  2. Mandamus-type relief
    To direct respondent no. 1 to refund the GST amounts (CGST, SGST and IGST) paid through DRC-03 dated 15.11.2022, which had been appropriated towards the demand on alleged non-payment of GST on sale of cotton seed oil cake from 01.07.2017 to 21.09.2017.

The core grievance was that the authorities raised and confirmed the demand without appreciating that cotton seed oil cake is exempt under Notification No. 02/2017-Central Tax (Rate) dated 20.06.2017 as cattle feed.

Proceedings before the High Court

Reference to earlier coordinate bench decision

At the very beginning of the hearing, learned counsel for the assessee submitted that the controversy in this writ petition was identical to the one already decided by a Coordinate Bench of the Gujarat High Court by judgment and order dated 12.09.2024 in Special Civil Application No. 19190 of 2023.

The learned Senior Standing Counsel appearing for the Department did not dispute that the issue in the present case was squarely covered by that earlier decision.

The High Court identified that the central question was whether cotton seed oil cake supplied by the assessee during the period 01.07.2017 to 21.09.2017 was exempt from GST as cattle feed, and accordingly, whether:

  • The demand confirmed through order-in-original and order-in-appeal was legally sustainable; and
  • The amounts paid via DRC-03 could validly be appropriated, or had to be refunded.

Findings of the earlier coordinate bench (applied in this case)

The Court extracted and relied extensively on the reasoning of the earlier coordinate bench which had examined the same product and exemption provision.

In that earlier decision, the Court had observed as under: