Case Law Details
Tecnimont Spa India Project Office Vs State of Punjab And Another (Punjab and Haryana High Court)
Punjab & Haryana HC Defers Decision on GST Section 174(2) Challenge: The Punjab and Haryana High Court recently disposed of a set of writ petitions challenging the constitutional validity of Section 174(2) of the GST Act, 2017. The provision, which also exists in the Kerala and Haryana GST Acts, had previously been upheld by the Kerala High Court. The petitioners contended that the section was unconstitutional, but the court deferred its final decision, citing ongoing proceedings before the Supreme Court in the case of T.S. Belaraman v. The Commercial Tax Officer & Others (C.A. No. 006724/2024).
The Kerala High Court had earlier ruled in favor of the Revenue, holding that Section 174(2) of the GST Act was constitutionally valid and within the legislative competence of the state. Aggrieved by this decision, the assessees challenged it before the Supreme Court, where leave was granted on May 14, 2024. In the interim, the apex court restrained the Revenue from taking coercive steps against the petitioners. Given this development, the Punjab and Haryana High Court observed that any final adjudication on the matter would depend on the Supreme Court’s ruling.
Following the Supreme Court’s approach, the Punjab and Haryana High Court extended interim relief to the petitioners and directed that the outcome of the Supreme Court’s ruling in T.S. Belaraman would determine the fate of the challenge to Section 174(2). The High Court, therefore, disposed of the writ petitions, stating that the challenge would remain subject to the Supreme Court’s final verdict. Until then, all interim orders protecting the petitioners from adverse action by the tax authorities would continue to remain in force.
This ruling underscores the significance of the pending Supreme Court decision, which will set a precedent for similar challenges across different states. The judgment also reflects the High Court’s cautious approach, opting to await the apex court’s ruling rather than rendering a potentially conflicting decision. As the matter now rests with the Supreme Court, businesses and legal experts await a final determination on the constitutional validity of Section 174(2) of the GST Act.
FULL TEXT OF THE JUDGMENT/ORDER OF PUNJAB AND HARYANA HIGH COURT
1. The issue raised in the present bunch of writ petitions is challenge to section 174(2) of the GST Act, 2017. The same provision was incorporated as section 174(2) of the Kerala State Goods and Services Tax Act, 2017 as has been incorporated in Punjab State Goods and Services Tax Act, 2017 and Haryana State Goods and Services Tax Act,
2. Challenge to vires of the said section was laid before the High Court of Kerala in bunch of cases which were decided in favour of the Revenue holding the provisions as within the framework of the Constitution of India, and also the action was held to be within the competence of the department.
3. The concerned assesses have assailed the judgment before the Supreme Court in C.A. No.006724/2024, [SLP(C) No.640/2023] titled as T.S. Belaraman vs. The Commercial Tax Officer and others along with connected SLPs, wherein leave has been granted vide order dated 14.05.2024. By interim order, the Revenue was restrained from takingny coercive steps, which has been directed to be continued by the Supreme Court while granting leave.
4. In the present bunch of cases, we have also passed similar interim orders and had posted these cases for waiting for the decision of the Supreme Court. However, now since the Supreme Court has granted leave, final adjudication will have to be done by the Supreme Court on the said issue.
5. Keeping in view thereto, we propose to dispose of all these writ petitions and direct that the challenge to section 174(2) of the GST Act, 2017 would be subject to the final outcome of the decision in the case of S. Belaraman (supra).
6. Till the disposal of the SLP in S. Belaraman (supra) by the Supreme Court, interim orders passed by this Court in all the respective cases shall continue to operate, which shall be subject to the final decision to be rendered by the Supreme Court in T.S. Belaraman (supra).
7. Writ Petitions stand disposed of as above.
8. All pending applications also stand disposed of.
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