The court observed that there is a prima facie case made out, thus decided to stay the further proceedings

An 18% GST ( Goods and Services Tax ) was imposed on paper bags under the residual entry at Serial No. 453 of Schedule 3 of the GST Rate Notification is under challenge, where the Madras High Court granted an interim relief by staying the GST Department Proceedings. The bench of Justice Senthilkumar Ramamoorthy observed that the primary basis of challenge is that rate fixation is a function assigned to the GST Council under the CGST Act, 2017 and that the GST Council meetings did not recommend the inclusion of residuary entry 453. The assessee, Polyspin filed a writ petition challenging the notification No.1/2017-Central Tax (Rate) dated 28.06.2017 and the Notification No.II(2)/CTR-532 (d-4)/2017 dated 29.06.2017 as is the GST appellate order dated 18.08.2023. The GST department confirmed the demand by classifying paper bags under the residual entry at Serial No. 453 of Schedule III of the Rate Notification ( Notification No. 1/2017 – Central Tax (Rate), as amended ), taxing them at 18%, rejecting the assessee’s classification at a 12% GST rate. Advocate Vinay Shraff, representing the assessee, argued that any provisions in the GST rate notification exceeding the GST Council’s recommendations constitute an overreach of government authority under Section 9 of GST Act. Consequently, such aspects of the Rate Notification are ultra vires and invalid. The counsel also pointed out that the assessee had remitted a total sum of Rs.12,11,97,175/- towards the disputed tax amount of Rs.12,23,79,681/-. The High court, considering the submissions of the assessee’s counsel decided to stay further proceedings pursuant to the GST appellate order under challenge until the matter is heard next.