Constitutional Validity of GST Compensation Cess- HC Admits Plea

By Editor4 Goods and Services Tax Judiciary September 7, 2017

TaxGuru Citation: 2017 taxguru.in 795
Case Name: Mohit Minerals Pvt. Ltd. Vs Union Of India & Anr. (Delhi High Court)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Courts: All High Courts, Delhi High Court

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Mohit Minerals Pvt. Ltd. Vs Union Of India & Anr. (Delhi High Court)

1. Allowed, subject to all just exceptions.

W.P. (C) No. 7459/2017 & C.M. No. 30754/2017 (Stay)

2. Notice. Mr. Ravi Prakash, learned Central Government Standing Counsel, accepts notice for Respondent No. 1, the Union of India.

3. The challenge in this petition is to the constitutional validity of the Goods and Services Tax (Compensation to States) Act, 2017 (‘Act’). The context in which the challenge is laid is that the Petitioner is a trader of imported and Indian coal having its operation in various parts of the country. Prior to the impugned Act, under the Finance Act, 2010 (‘FA 2010’), with effect from 1st July 2010, a ‘Clean Energy Cess’ was levied under Chapter VII. As a result, on every metric tonne of coal that was sold by the Petitioner, it was required to pay initially a cess @ Rs. 100 per tonne which was progressively increased and stood at Rs. 400 per tonne as on the date of its abolition when the new GST regime was introduced.

4. Section 18 of the Taxation Laws (Amendment) Act, 2017 (‘TLA Act’) states that enactments specified in the third column of the Third Schedule thereto stand repealed to the extent specified in the fourth column thereof. Under the Third Schedule has been included the entire Chapter VII of the FA, 2010. Chapter VII pertained to the ‘Clean Energy Cess‘. In other words with effect from 1” July 2017 the Clean Energy Cess levied under the FA 2010 stands abolished. Clause 4 (a) of Article 279 A of the Constitution of India, which was inserted by the Constitution (One Hundred and First Amendment) Act 201 6 (hereafter the ‘COI 101st Amendment Act’), states that the Goods and Services Tax Council (GST Council) shall make recommendations to the Union and States on “the taxes, cesses and surcharges levied by the Union, the States and local bodies which may be subsumed in the goods and services tax.” Further Clause 4 (f) states that the GST Council may recommend special rates for a specified period “to raise additional resources during any natural calamity or disaster.” The idea was to have all the cesses and levies abolished and subsumed under the GST. Additional revenue could be raised only for natural calamities and disasters.