The Madras High Court has set aside a particular clause in a circular issued by the Central Board of Indirect Taxes and Customs (CBIC), which had taken away an exemption from goods and services tax (GST) granted to fish meal that is used as a raw material for making animal feed.

       CBIC had issued the circular in December 2018 to clarify that fish meal and other raw material used for making animal feed cannot be exempted from GST. It limited the exemption to only final fish meal or animal feed and not to the fish meal used as raw material.

       This circular had clarified an earlier circular, issued a few days ahead of the roll out of GST from July 1, 2017. The earlier circular had said fish meal, along with other animal feed, would draw zero GST. It did not differentiate between their use as a raw material or a finished product.

       Armed with the new circular, tax authorities inspected the factories of Jenefa India, which is a manufacturer of fish meal, and demanded five per cent tax. Subsequent to this, officials of the directorate general of GST intelligence issued summons to the company.