Union of India & Anr. Versus Mohit Mineral Pvt. Ltd. And Vice-Versa
GST
2018 (10) TMI 200 – Supreme Court – 2018 (17) G. S. T. L. 561 (SC)
SUPREME COURT OF INDIA – SC
Dated:- 3-10-2018
Civil Appeal No. 10177 of 2018 (arising out of SLP(C)No. 25415 of 2017), Transferred Case (C) No. 9 of 2018, Civil Appeal No. 10179 of 2018 (arising out of SLP(C)No. 7708 of 2018)
GST
Mr. A.K. Sikri And Mr. Ashok Bhushan JJ.
For the Petitioner(s) : Mr. K.K. Venugopal, AG, Ms. Nisha Bagchi, Adv. And Mr. B. Krishna Prasad, AOR
For the Respondent(s) : Mr. J.K. Mittal, Adv., Mr. Rajveer Singh, Adv., Mr. Praveen Swarup, AOR And M/S. Khaitan & Co., AOR
JUDGMENT
ASHOK BHUSHAN,J.
Leave granted.
2. The validity of the Goods and Services Tax (Compensation to States) Act, 2017 enacted by Parliament as well as the Goods and Services Tax Compensation Cess Rules, 2017, the Rules framed by the Central Government in exercise of power under Section 11 of the Goods and Service Tax (Compen
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tayed impugned order passed by the High Court.
5. Civil Appeal arising out of SLP(C)No.7708 of 2018 has been filed by Union of India challenging interim order dated 08.09.2017 passed by the Division Bench of the Delhi High Court in Writ Petition (C) No.7965 of 2017 (Hind Energy and Coal Benefication (India) Ltd. vs. Union of India and another). The Division Bench of the High Court passed interim order dated 08.09.2017 almost in the similar manner as was passed on 25.08.2017. This Court passed an order on 16.01.2018, while hearing SLP(C)No.25415 of 2017 filed against interim order dated 25.08.2017, on oral request of Attorney General, which was also joined by the learned counsel appearing for the respondentswrit petitioners, transferred Writ Petition (C) No.7459 of 2017 to this Court to be heard along with SLP(C)No.25415 of 2017. Transferred Case(C) No.9 of 2018 (Mohit Mineral Pvt. Ltd. vs. Union of India and another) has been registered on transfer of Writ Petition (C)No.7459 of 2017
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
was introduced in the Lok Sabha to seek amendment in the Constitution, inter alia, providing for subsuming of various indirect taxes and Central and States surcharges and cesses so far as they relate to supply of goods and services both on inter-State and intra-State. The Constitution (One Hundred and First Amendment) Act, 2016 was passed to levy goods and services tax. Section 18 of the Amendment Act enabled the Parliament to levy a cess for five years to compensate the States for the loss of revenue on account of GST. On 12.04.2017, Parliament enacted three Acts, namely, (1) The Central Goods and Services Tax Act, 2017; (2) The Integrated Goods and Services Tax Act, 2017; and (3) The Goods and Services Tax (Compensation to States) Act, 2017 (hereinafter referred to as “Compensation to States Act, 2017”). On 04.05.2017, the axation Laws (Amendment) Act, 2017 was enacted, whereunder, several cesses including Clean Energy Cess was repealed. The writ petitioner submitted a representation
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
te), dated 28.06.2017 issued by the Respondent No.1 under the impugned legislation, are illegal and unconstitutional;
D) issue a Writ of certiorari/mandamus or any other appropriate Writ/order/direction against the Respondent No.2 by declaring that the Respondent No.2 has no power under Article 279A of Constitution of India to make any recommendation, whatsoever, for levy and collection of cess as envisaged and levied under the impugned Goods and Services Tax (Compensation to States)Act, 2017 or framing of Rules and issuance of Notification under the said impugned legislation;
E) issue such other writ/order/direction to the Respondent No.2 to place before this Hon'ble Court the records of the recommendation given and all decision taken in respect of levy and collection of cess as envisaged and levied under the impugned Goods and Services Tax (Compensation to States) Act, 2017, framing of Rules and issuance of Notification under the said impugned legislation;
F) issue such oth
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ction 8 of the impugned Act contemplates levy of “a cess on such intraState supplies of goods or services or both”, the same that is provided in Section 9 of the Central Goods and Services Tax Act, 2017 ('CGST Act') and such “inter-State supply of goods and services or both” as provided for in Section 5 of the Integrated Goods and Services Tax Act, 2017 ('IGST Act'). Therefore, it is clear that cess is being levied on the same taxable event that is the subject matter of the levy under the CGST and IGST Acts, viz., supply of goods and services.
… … … …
13. The Court, at this stage, is of the view that, the Petitioner has made out a prima facie case for partial ad interim relief subject to conditions. As far as the additional levy on the stocks of coal on which it has already paid the Clean Energy Cess in terms of FA Act, 2010, the Petitioner should not be required to make any further payment. However, on stocks of coal on which no Clean Energy Cess under the F
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ring taxing power to Union and States for levying GST on every transaction of supply of goods or services both. There was a clear objective of the aforesaid constitutional amendment that with the introduction of Goods and Services Tax, not only the indirect taxes but the cesses and surcharges levied on goods and services shall also be subsumed in it.
12. By Taxation Laws (Amendment) Act, 2017 various enactments levying various types of cesses were repealed including Clean Energy Cess/Clean Environment Cess which was levied and collected on coal.
13. The Compensation to States Act, 2017 is repugnant to and transgress the mandate of the Constitution (One Hundred and First Amendment) Act, 2016. It was the Parliament's conscious decision to abolish with effect from 01.07.2017 all cesses including cess levied on coal as per mandate of the Constitution (One Hundred and First Amendment) Act, 2016. The impugned legislation is colourable legislation which lacks legislative competence. No
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
r suffered cess of Rs. 400 per ton on the coal and under the impugned legislation the Union is again levying and collecting cess at the rate of Rs. 400 per ton on the stock lying with the petitioner as on 30.06.2017 just on eve of the day when all legislation related to GST including impugned legislation was introduced, whereas on the same stock of coal, cess was already levied and collected under the provisions of Chapter VII of Finance Act, 2010. Thus, it amounts to double collection of tax at the same rate on the same stock. Even if the impugned legislation is found to be within legislative competency, the petitioner may be permitted to set off the cess of Rs. 7.68 crores which was already paid on the stock lying with the petitioner on 30.06.2017. Levy under impugned legislation is tax and not a cess, hence, not permissible in law.
16. Shri K.K. Venugopal, learned Attorney General submits that cess is nothing but a special kind of tax. If the legislature is competent to levy the ma
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d and collected for the purposes of financing and promoting clean energy initiatives, funding research in the area of clean energy, for any other purpose relating thereto whereas GST Compensation Cess is collected to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax.
17. The High Court committed an error in prima facie holding that credit of Clean Energy Cess should be allowed to be utilised for paying GST Compensation Cess. The provision of credit and flow of credit is a purely policy decision of the Executive. The Parliament does not lack legislative competence to enact Compensation to States Act, 2017 nor the legislation can be said to be colourable legislation. The Compensation to States Act, 2017 in no manner transgressed Constitution (One Hundred and First Amendment) Act, 2016.
18. Learned counsel for both the parties have placed reliance on various judgments of this Court in support of their respec
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d to notice relevant constitutional provisions and the Parliamentary enactments relevant for the issues raised in these cases.
22. Part XII of the Constitution deals with Finance. Article 265 provides that no tax shall be levied or collected except by authority of law. Article 366 contains definitions.
Article 366(26A) defines “services” as “services means anything other than goods”. Whereas Article 366 (29A) contains an inclusive definition of “tax on the sale or purchase of goods”. A Bill was introduced in the Lok Sabha namely, the Constitution (One Hundred and TwentySecond Amendment) Bill, 2014 on 19.12.2014 proposing constitutional amendments to introduce the goods and services tax for conferring concurrent taxing powers on the Union as well as the States including Union territory with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. Statement of Objects and Reasons of the Bill are as follows:-
“STATEMENT OF
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
y levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, Special Additional Duty of Customs, and Central Surcharges and Cesses so far as they relate to the supply of goods and services;
(b) subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services;
(c) dispensing with the concept of 'declared goods of special importance' under the Constitution;
(d) levy of Integrated Goods and Services Tax on inter-State transactions of goods and services;
(e) levy of an additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce to be collected by the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
re inserted.
Amendments were also made in Articles 248, 249, 250, 268, 269, 270, 271, 286, 366 and 368. Article 268A was omitted.
Amendments were also made in Seventh Schedule of the Constitution in List I and List II. Article 246A and 269A as inserted by Constitution (One Hundred and First Amendment) Act, 2016 is as follows:-
“246A. Special provision with respect to goods and services tax. (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State.
(2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce
Explanation.-The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279A, take effect from the date recom
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
part of the Consolidated Fund of India.
(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State.
(5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce.”.
24. Article 270 of the constitution as amended by the above Amendment Act is as follows:-
“270.Taxes levied and distributed between the Union and the States. (1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in Articles 268, 269 and 269A, respectively, surcharge on taxes and duties referred to in Article 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the St
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
m such commencement, whichever is earlier.
26. At this stage, it is also relevant to notice that in the Constitution (One Hundred and TwentySecond Amendment) Bill, 2014, Clause 18 contain a provision for arrangement for assignment of additional tax on supply of goods to States for two years or such other period recommended by Council, which was to the following effect:-
“18. Arrangement for assignment of additional tax on supply of goods to States for two years or such other period recommended by Council (1) An additional tax on supply of goods, not exceeding one per cent. in the course of inter-State trade or commerce shall, notwithstanding anything contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2).
(2) The net proceeds of additional tax on supply of goods in
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
services tax for such period which may extend to five years.”
28. It is, however, to be noticed that Constitution (One Hundred and TwentySecond Amendment) Bill, 2014 was passed but Clause 18 of the Bill was not incorporated and Clause 19 found place as Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016. After the aforesaid Constitution Amendment, Parliament enacted Central Goods and Services Tax Act, 2017 (Act No.12 of 2017 dated 12.04.2017) to make a provision for levy and collection of tax on intra State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. On the same day, another enactment namely 'The Integrated Goods and Services Tax Act, 2017' (Act No. 13 of 2017 dated 12.04.2017) was enacted to make a provision for levy and collection of tax on inter-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. Anot
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t, 2017 provides for levy and collection of Cess, which is as follows:
8. Levy and collection of cess. (1) There shall be levied a cess on such intraState supplies of goods or services or both, as provided for in section 9 of the Central Goods and Services Tax Act, and such interState supplies of goods or services or both as provided for in section 5 of the Integrated Goods and Services Tax Act, and collected in such manner as may be prescribed, on the recommendations of the Council, for the purposes of providing compensation to the States for loss of revenue arising on account of implementation of the goods and services tax with effect from the date from which the provisions of the Central Goods and Services Tax Act is brought into force, for a period of five years or for such period as may be prescribed on the recommendations of the Council:
Provided that no such cess shall be leviable on supplies made by a taxable person who has decided to opt for composition
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
d on the said goods under section 12 of the Customs Act, 1962 (52 of 1962), on a value determined under the Customs Tariff Act, 1975.
29. Section 12(1) empowers the Central Government to make rules for carrying out the provisions of the Act on the recommendation of the Council. The Council is defined in Section 2(e) of the Act as “Council means the Goods and Services Tax Council constituted under the provision of Article 279A of the Constitution”. The Schedule of the Act read with Section 8 contains description of supply of goods or services in column 2; Tariff item, heading, subheading, Chapter or supply of goods or services, as the case may be, in column 3 and the maximum rate at which goods and services ta x compensation cess may be collected in column 4. The Central Government, in exercise of power under Section 12, has framed the rules namely “The Central Goods and Services Tax Rules, 2017”.
30. Parliament enacted the Taxation Laws (Amendment) Act, 2017 dated 04.05.2017 to amend
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
as cess), hence in pith and substance the legislation does not belong to the subject falling within the limits of its power but is outside it.
34. Part XI of the Constitution deals with the relation between the Union and the States, Chapter I of which deals with “Legislative Relations”. Article 245 deals with “Distribution of Legislative Powers”. The Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in Seventh Schedule of the Constitution. The Parliament, and subject to Clause(1) of Article 246, the Legislature of a State also have power to make laws with respect to any of the matters enumerated in List III of the Seventh Schedule. Article 248 deals with residuary power of Legislation in following manner:
Article 248 – Residuary powers of legislation (1) Subject to article 246A, Parliament has exclusive power to make any law with respect to a matter not enumerated in the Concurrent List or State List.
(2) Such power shall include t
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e word rate has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.) indicates. When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which is an increment. Guruswamy and Co. v. State of Mysore, AIR 1967 SC 1512, per dissenting judge and India Cement Ltd. v. State of T.N., AIR 1990 SC 85.
The word 'cess' means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess, etc.) indicates. Shinde Brothers v. Hy. Commissioner, Raichur, AIR 1967 SC 1512, 1525.”
37. This Court had considered the expression “cess” in Shinde Brothers Etc. Vs. Deputy Commissioner, Raichur & Others Etc., AIR 1967 SC 1512, Justice M. Hidyatullah, as he then was in his dissenting opinion has defined th
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
the Constitution Bench judgment of this Court in India Cement Ltd. & Others Vs. State of Tamil Nadu & Others, (1990) 1 SCC 12, the above definition given by Hidayatuallah, J. was quoted with approval in Para 19, which is quoted as below:-=
“19. Here, we are concerned with cess on royalty.
One can have an idea as to what cess is, from the observations of Hidayatullah, J., as the learned Chief Justice then was, in Guruswamy & Co. v. State of Mysore9 where at page 571, the learned Judge observed :
“The word 'cess' is used in Ireland and is still in use in India although the word rate has replaced it in England. It means a tax and is generally used when the levy is for some special administrative expense which the name (health cess, education cess, road cess etc.) indicates. When levied as an increment to an existing tax, the name matters not for the validity of the cess must be judged of in the same way as the validity of the tax to which it is an increment.”
39. The meaning of “ce
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ther educational purposes.”
40. The expression “cess” as held above means a tax levied for some special purpose, which may be levied as an increment to an existing tax. The Scheme of Compensation to States Act, 2017 as noticed above indicate that the cess is with respect to goods and services tax. There are more than one reason to uphold the legislative competence of Parliament to enact the Compensation to States Act, 2017. Constitution Bench of this Court in Union of India Vs. Harbhajan Singh Dhillon, (1971) 2 SCC 779 held that only question to be asked while examining the legislative competence of Parliament with regard to a particular enactment is: Is the matter sought to be legislated or included in List II or in List III or is the tax sought to be levied mentioned in List II or in List III”. In Para 21, the Constitution Bench laid down following:
“21. It seems to us that the function of Article 246(1), read with Entries 196, List I, is to give positive power to Parliament to le
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
t to be levied mentioned in List II or in List III: No question has to be asked about List I. If the answer is in the negative then it follows that Parliament has power to make laws with respect to that matter or tax.”
41. When we pose the above question in context of impugned legislation, i.e. Compensation to States Act, 2017, we do not find any entry in List II or List III of Seventh Schedule, which may refer to levying of cess in question. Article 248 read with Articles 246 and 246A clearly indicate that residuary power of legislation is with the Parliament. In the present case, we may notice that no contention has been raised before us that the subject matter of legislation was within the competence of State Legislature, and that the Parliament had no competence to legislate. Applying the H.S. Dhillon's test (supra), we do not find any lack of legislative competence in the Parliament.
42. Learned counsel for the petitioner relied on two decisions of this Court namely Hoechst Phar
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
down:
“74. It is equally well settled that the various entries in the three Lists are not 'powers' of legislation, but 'fields' of legislation. The power to legislate is given by Article 246 and other Articles of the Constitution. Taxation is considered to be a distinct matter for purposes of legislative competence. Hence, the power to tax cannot be deduced from a general legislative entry as an ancillary power. Further, the element of tax does not directly flow from the power to regulate trade or commerce in, and the production, supply and distribution of essential commodities under Entry 33 of List III, although the liability to pay tax may be a matter incidental to the Centre's power of price control.
75. “Legislative relations between the Union and the States inter se with reference to the three Lists in Schedule VII cannot be understood fully without examining the general features disclosed by the entries contained in those Lists”: Seervai in his Constitutional Law of India,
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tion; Entries 82 to 92A deal with taxes. In List II, Entries 1 to 44 deal with general subjects of legislation; Entries 45 to 63 deal with taxes. This mutual exclusiveness is also brought out by the fact that in List III, the Concurrent Legislative List, there is no entry relating to a tax, but it only contains an entry relating to levy of fees in respect of matters given in that list other than court-fees. Thus, in our Constitution, a conflict of the taxing power of the Union and of the States cannot arise. That being so, it is difficult to comprehend the submission that there can be intrusion by a law made by Parliament under Entry 33 of List III into a forbidden field viz. the State's exclusive power to make a law with respect to the levy and imposition of a tax on sale or purchase of goods relatable to Entry 54 of List II of the Seventh Schedule. It follows that the two laws viz. subsection (3) of Section 5 of the Act and para 21 of the Control Order issued by the Central Governmen
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he purpose of levy of surcharge, in addition to the tax payable by him, is not assail32 able. So long as sales in the course of inter-State trade and commerce or sales outside the State and sales in the course of import into, or export out of the territory of India are not taxed, there is nothing to prevent the State Legislature while making a law for the levy of a surcharge under Entry 54 of List II of the Seventh Schedule to take into account the total turnover of the dealer within the State and provide, as has been done by subsection (1) of Section 5 of the Act, that if the gross turnover of such dealer exceeds Rs. 5 lakhs in a year, he shall, in addition to the tax, also pay a surcharge at such rate not exceeding 10 per centum of the tax as may be provided. The liability to pay a surcharge is not on the gross turnover including the transactions covered by Article 286 but is only on inside sales and the surcharge is sought to be levied on dealers who have a position of economic supe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ssion “any cess levied for specific purposes under any law made by Parliament”. Article 270(1) as existed prior to Constitution (One Hundred and First Amendment) Act, 2016, is as follows:-
Art.270.(1) All taxes and duties referred to in the Union list, except the duties and taxes referred to in Arts. 268, 268A and 269 respectively, surcharge on taxes and duties referred to in Art. 271 and any cess levied for specific purposes under any law made by Parliament shall be levied and collected by the Government of India and shall be distributed between the Union and the States in the manner provided in clause (2).”
47. After Constitution (One Hundred and First Amendment) Act, 2016, as per Article 270, Parliament can levy cess for a specific purpose under a law made by it. Article 270, thus, specifically empowers Parliament to levy any cess by law.
Lastly, Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016 expressly empowers Parliament shall, “by law” on the recomm
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ed and First Amendment) Act, 2016. It is submitted that Constitution (One Hundred and First Amendment) Act, 2016 does not permit levy of cess on supply of goods or services on which Goods and Services Tax has been levied. Elaborating the submission, it is contended that the clear objective of Constitution (One Hundred and First Amendment) Act, 2016 was to subsume various Central and States Taxes, Central and States surcharges and cesses, so far as, they relate to supply of goods and services. When all taxes, surcharges and cesses were subsumed in by Goods and Services Tax, imposition of compensation to States cess clearly falls foul to the Constitution (One Hundred and First Amendment) Act, 2016. The Statements of Objects and Reasons of Constitution (One Hundred and TwentySecond Amendment) Bill, 2014, as noticed above, was to subsume various Central Indirect Taxes and levy of Service Tax, Additional Customs Duty, Special Additional Duty of Customs, Central Surcharges and Cesses so far
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
liberal interpretation in consonance with Article 39(b) and (c) of the Constitution.
49. The words “arising out of” have been used in the sense that it comprises purchase of shares and lands from income arising out of the Kanpur undertaking. We are of the opinion that the words “pertaining to” and “in relation to” have the same wide meaning and have been used interchangeably for among other reasons, which may include avoidance of repetition of the same phrase in the same clause or sentence, a method followed in good drafting. The word “pertain” is synonymous with the word “relate”, see Corpus Juris Secundum, Volume 17, page 693.”
51. Learned counsel for the petitioner has placed reliance on judgment of this Court in Dewan Chand Builders and Contractors Vs. Union of India and Others, (2012) 1 SCC 101. The Parliament had enacted Building and Other Construction Workers' (Regulation of Employment and Conditions of Service) Act, 1996 and Building and Other Construction Workers Welfare Ce
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ficiary, and (ii) if it is a “tax” then it is a tax on “lands and buildings” falling within the ambit of Schedule VII List II Entry 49 (the State List), ousting the legislative competence of Parliament.”
52. This Court noticed the distinction between fee and tax and referred to earlier judgments including judgment of this Court in Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, AIR 1954 SC 282. This Court upheld the cess as fee and not tax. In paragraph 31, reasons for upholding levy as fee has been given by this Court, which is to the following effect:-
“31. There is no doubt in our mind that the Statement of Objects and Reasons of the Cess Act, clearly spells out the essential purpose the enactment seeks to achieve i.e. to augment the Welfare Fund under the BOCW Act. The levy of cess on the cost of construction incurred by the employers on the building and other construction works is for ensuring sufficient funds for the Wel
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ncrement to the goods and services tax. We having already held that State compensation cess is “with respect to” goods and services tax, it is a tax.
54. Learned counsel for the petitioner has further relied on certain decisions on distinction between tax and fee. But the levy of cess, in the present case, not even claimed as fee, it is not necessary to refer to above cases which reiterate the well established principles emanating from Commissioner, Hindu Religious Endowments, Madras Vs. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (supra).
55. The expression used in Article 246A is “power to make laws with respect to goods and services tax”. The power to make law, thus, is not general power related to a general entry rather it specifically relates to goods and services tax. When express power is there to make law regarding goods and services tax, we fail to comprehend that how such power shall not include power to levy cess on goods and services tax. True, that Constitution (O
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
Amendment) Act is concerned, the submission of the learned counsel for the petitioner is correct that additional tax, which was contemplated by Clause 18 of the Bill did not find place in Constitution Amendment Act. Further, Clause 19 of the Bill find place as Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016. Thus, power of Parliament to make law providing for compensation to the States for loss of revenue was expressly included by constitutional provision.
57. Further, the Preamble of Compensation to States Act, 2017 expressly mentions the Act to provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services Tax in pursuance of the provisions of the Constitution (One Hundred and First Amendment) Act, 2016. Thus, the Compensation to States Act, 2017 has been enacted under the express Constitution (One Hundred and First Amendment) Act, 2016. We, thus, also do not find any force in the submission of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e Compensation to States Act is not a colourable legislation.
Whether levy of Compensation to States Cess and GST on the same taxing event is permissible in law? (Issue No.4)
59. The petitioner elaborating his contention submits that as per Section 8 of impugned legislation there shall be levied a cess on intraState supply of goods and services as provided in Section 9 of the CGST Act whereas CGST Act has been enacted to levy tax as provided under Article 246A of the Constitution. This is also true in respect of the cesses imposed on inter-State supplies of goods and services covered by Section 5 of IGST Act, 2017. Therefore, on the same very transaction there cannot be two levies, one under CGST Act and another under impugned legislation as it would amount to double taxation as levy is on the same taxable event and same subject. Thus, there is an overlapping on law which is not permissible. The petitioner contends that goods and services tax being already imposed by three enactments
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
incidentally 'affect' another subject in some way; but that is not the same thing as the law being on the latter subject. There might be overlapping; but the overlapping must be in law.
The same transaction may involve two or more taxable events in its different aspects. But the fact that there is an overlapping does not detract from the distinctiveness of the aspects, Lord Simonds in Governor General in Council v. Province of Madras [1945] FCR 179 P.C. at 193, in the context of concepts of Duties of Excise and Tax on Sale of Goods said:
“…The two taxes, the one levied on a manufacturer in respect of his goods, the other on a vendor in respect of his sales, may, as is there pointed out, in one sense overlap. But in law there is no overlapping. The taxes are separate and distinct imposts. If in fact they overlap, that may be because the taxing authority, imposing a duty of excise, finds it convenient to impose that duty at the moment when the excisable article leaves the
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
tesy to counsel. The last one, for instance, deserve the least attention. There is nothing in Article 265 of the Constitution from which one can spin out the constitutional vice called double taxation. (Bad economics may be good law and vice versa). Dealing with a somewhat similar argument, the Bombay High Court gave short shrift to it in Wester India Theatres (AIR 1954 Bom 261). Some undeserving contentions die hard, rather survive after death. The only epitaph we may inscribe is :
Rest in peace and don't be reborn ! If on the same subjectmatter the legislature chooses to levy tax twice over there is no inherent invalidity in the fiscal adventure save where other prohibitions exist.”
63. Goods and Services Tax imposed under the 2017 Acts as noticed above and levy of cess on such intraState supply of goods and services or both as provided under Section 9 of the CGST Act and such supply of goods and services or both as part of Section 5 of IGST Act is, thus, two separate imposts
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
other purpose relating thereto whereas States Compensation Cess is collected to “provide for compensation to the States for the loss of revenue arising on account of implementation of the goods and services tax”.
66. The distribution between the Union and States of the Clean Energy Cess and GST Compensation Cess so collected are also different. Under Section 83(6) of the Finance Act, 2010 the Clean Energy Cess was to be used for the purposes of the Union and not to be distributed to the States whereas States Compensation Cess has to be wholly distributed amongst the States to compensate the States.
67. The petitioner's submission that the petitioner should be given the credit to the extent of payment of Clean Energy Cess upto 30.06.2017 also cannot be accepted. The Clean Energy Cess and States Compensation Cess are entirely different from each other, payment of Clean Energy Cess was for different purpose and has no bearing or connection with States Compensation Cess. Giving credi
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
