Kerala Khadi & Village Industries Board Vanchiyoor Vs Union of India (Kerala High Court)
In a significant ruling, the Kerala High Court dismissed a petition filed by the Kerala Khadi & Village Industries Board, which had sought exemption from Goods and Services Tax (GST) on the sale of khadi and village products. The petitioner, a statutory body under the Kerala Khadi & Village Industries Board Act, argued that it should continue to enjoy tax exemptions previously granted under the VAT and service tax regimes. The Court, however, held that such exemptions do not carry over unless expressly provided for under the GST Act.
The case arose following an assessment order issued under Section 73 of the Central Goods and Services Tax Act, 2017, which imposed a tax liability of ₹2.11 crore, along with interest and penalty. The petitioner challenged this order on the grounds that it had been historically exempted from VAT and service tax and continued to serve a public interest function by promoting rural employment and preserving traditional village industries. The petitioner also referred to prior representations made to government authorities requesting continued exemption.
The High Court ruled that, under the GST regime, no exemption or “zero-rated” tax has been granted for the petitioner’s activities or products. Citing Section 11 read with Section 73 of the CGST/SGST Acts, the Court made it clear that tax exemptions must be explicitly included in the current legal framework. The earlier benefits under VAT and service tax laws do not survive the transition to GST. The Court emphasized the settled legal principle that there can be no estoppel against a statute and reiterated that previous exemptions have no bearing unless the GST law itself provides for them.
