Case Law Details
Delta Corp Limited and Anr. Vs Union of India and Ors. (Sikkim High Court)
In a recent legal development, the Sikkim High Court is gearing up to make a crucial decision regarding the challenge to Rule 31A of the Central Goods and Services Tax (CGST) Rules, 2017. This case has significant implications for businesses and taxpayers. The hearing, which took place on October 20, 2023, focused on the matter raised by Delta Corp Limited and Anr. against Union of India and others. Let’s delve into the details of this case and its potential impact.
The counsel for the Delta Corp Limited and Anr. (“Petitioners”) have challenged, inter alia, Rule 31A of the Central Goods and Services Tax Rules, 2017 (“the CGST Rules”) as ultra vires to the Constitution of India. The Petitioners have also challenged the Show Cause Notice (“SCN”) dated September 27, 2023, issued against the Petitioners, Rate Notification dated June 28, 2017, Circular dated January 04, 2018, and FAQ clarification dated September 06, 2017.
The counsel for the Petitioners further submitted that, the Petitioners have been corresponding with the concerned authorities as they were facing difficulty in determining the value of the supply made, particularly after the insertion of Rule 31A of the CGST Rules. However, the Petitioners were constrained to approach the Court challenging vires of Rule 31A of the CGST Rules. The Counsel for the Petitioners also submitted that, the need to respond to SCN would not arise if the Petitioners are successful in their challenge to Rule 31A of the CGST Rules. The Deputy Solicitor General of India submitted that, at this stage only SCN has been issued and further steps would be taken only after the receipt of reply from the Petitioners.
The matter has been listed for filing of reply and further hearing on December 05, 2023.
Conclusion
The Sikkim High Court’s upcoming decision on the challenge to Rule 31A of the CGST Rules has the potential to impact the interpretation and application of this rule in the realm of Goods and Services Tax. The case, brought forward by Delta Corp Limited and Anr., highlights the complexities faced by businesses in complying with tax regulations. The outcome of this legal battle may have far-reaching consequences, providing clarity on the constitutional validity of Rule 31A and its related elements. The hearing on December 05, 2023, will be a significant moment for businesses, taxpayers, and legal experts closely monitoring this case.
FULL TEXT OF THE JUDGMENT/ORDER OF SIKKIM HIGH COURT
1. Ms. Shadhna Pradhan appearing as Advocate on record of the petitioners submits that all the respondents have been duly served and affidavit of service has been duly filed. It is further submitted that in addition the respondents have also been notified that the matter is to be heard today. She undertakes to file a further affidavit of service stating the above facts within the course of the day.
2. Heard Mr. Harish Salve, learned Senior Counsel for the petitioners. The learned Senior Counsel submits that the petitioners have challenged, inter alia, Rule 31A of the Central Goods and Services Tax Rules, 2017 as ultra vires the Constitution of India. The petitioners have also challenged the show cause notice dated 27.09.2023 issued against the petitioners; the rate notification dated 28.06.2017; circular dated 04.01.2018 and FAQ clarification dated 06.09.2017.
3. It is submitted that although Rule 31A was inserted in the year 2018 the petitioners was issued show cause notice only in the year 2023. It is the petitioners’ case that they had been corresponding with the concerned authorities regarding the difficulties faced by them in determining the value of supply made by them particularly after insertion of Rule 31A. However, the issuance of the show cause notice has compelled the petitioners to approach this court challenging the vires of Rule 31A. It is submitted that if the petitioners challenge to Rule 31A is successful the question of responding to the show cause notice would not arise.
4. According to the learned Deputy Solicitor General of India at present only show cause notice has been issued and further steps would be taken on receipt of reply from the petitioners who is now before this Court challenging the vires of the impugned provisions.
5. Issue notice upon the respondents in Writ Petition as well as in I.A. No. 01 of 2023 subject to filing of requisites within three days. A copy of this order shall also be forward to the respondents along with the notice.
6. The learned Deputy Solicitor General of India on behalf of respondent no.1 and the learned Additional Advocate General on behalf of respondent no.2 accepts notice and waives formal notice thereof.
7. The respondents may also file their response to the interim application praying for stay of the proceedings within a period of two weeks hence.
8. Let I.A. No. 01 of 2023 be heard on 05.12.2023. Until then status quo as of today shall be maintained by the respondents.
9. The learned counsel for the parties are requested not to delay the hearing of the interim application.
10. List on 05.12.2023 on which date I.A. No. 01 of 2023 shall be heard.
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