2017 (8) TMI 1194 – DELHI HIGH COURT – 2017 (4) G. S. T. L. 114 (Del.) – Constitutional validity of the Goods and Services Tax (Compensation to States) Act, 2017 – Clean Energy Cess progressively increased and stood at ₹ 400 per tonne from @ ₹ 100 per tonne – Clean Energy Cess that was already paid by the Petitioner under the FA 2010 – no input credit – new GST regime
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Held that:- For the purpose of providing compensation to States for loss of revenue arising out of the implementation of the GST regime, Section 8 contemplates the cess being collected in such a manner as may be prescribed. This has led to the enactment of the Goods and Services Tax Compensation Cess Rules, 2017. Notification No.1/2017-Compensation Cess (Rate), dated 28th June 2017 issued by the Ministry of Finance, Department of Revenue has re-introduced the cess @ ₹ 400 per tonne of coal. If the Act is vulnerable to being challenged for lack of legislative competence then the Rules can fare no
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A, 2010, the Petitioner will be required to pay the cess under the impugned Act. This would be subject to the directions issued hereinbefore. – W.P. (C) No. 7459/2017 and C.M. Nos. 30754 of 2017 (stay) & 30755 of 2017 (exemption) Dated:- 25-8-2017 – S. Muralidhar And Prathiba M. Singh, JJ. For the Petitioner : Mr. J.K. Mittal, Mr. Rajveer Singh, Ms. Nidhi Gupta, Advocates For the Respondents : Mr. Ravi Prakash, CGSC with Mr. Nitish Gupta, Mr. Farman Ali, Advocates with Ms. Aarti Saxena, Deputy Secretary ( DOR ) ORDER C.M. No. 30755/2017 (Exemption) 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
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Article 279 A of the Constitution of India, which was inserted by the Constitution (One Hundred and First Amendment) Act 2016 (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. 5. A very forceful case is made by Mr. J. K. Mittal, learned counsel for the Petitioner, that Parliament did not propose or intend to use the GST regime to impose new cesses. Significantly Clause 18 of the Constitution (One Hundred and Twenty-Secon
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purpose was to compensate the States for loss of revenue, that had to be done by some other means. Section 18 does not permit the levy of such cess. 7. Interestingly, when the Goods and Services Tax (Compensation To States) Bill, 2017 was introduced in the Parliament, it made an express reference to only Section 18 of the COI 101st Amendment Act. Para 2 of the Statement of Objects and Reasons accompanying the Bill preceding the Act reproduces Section 18 of the COI 101st Amendment Act. The Long Title of the Act also makes a reference only to the COI 101st Amendment Act. 8. The Court sees prima facie merit in the contention of the Petitioner, based on the history of the abolition of the Clean Energy Cess and the introduction of the GST regime, that the power of Parliament to enact the impugned Act cannot be traced to Section 18 of the COI 101st Amendment Act. There is therefore a prima facie case made out as regards the legislative competence of the Parliament to enact the impugned Act.
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e, Department of Revenue has re-introduced the cess @ ₹ 400 per tonne of coal. If the Act is vulnerable to being challenged for lack of legislative competence then the Rules can fare no better. 11. The situation in which the Petitioner is placed is that, for stocks of coal on which the Petitioner has already paid the Clean Energy Cess, the Petitioner has to again pay the fresh levy of cess at the rate of ₹ 400/- per tonne under the Act. Further, for the Clean Energy Cess that was already paid by the Petitioner under the FA 2010 no input credit is given. Mr. Mittal draws the attention of the Court to the frequently asked questions ( FAQs ) issued by the Central Board of Excise and Customs ( CBEC ) in which Question 42 and answer given thereto read as under: Question 42: Whether credit of Green Cess (Clean Energy Cess) paid on coal and available at the time of transition be eligible for being carried over? Answer: No Credit of Clean Energy Cess cannot be carried forward on tr
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gy cess @ 400/- per tonne as per the cess levied under the provisions of Chapter VII of the Finance Act, 2010. Further, w.e.f. 01.07.2017, the Petitioner have to charge cess from customers @ 400/- per tonne under the Goods and Services Tax (Compensation to States) Act, 2017 while selling this stock which will result in double taxation of around ₹ 7.68 crores on the stock of coal on which cess has already been paid. The last date payments of such cess is 25th of August 2017 for the supply made in the month of July 2017. The Petitioner, as narrated hereinabove, already made representation to the Respondents and also had meetings with officers of the Respondents No. 2, but no response and only through the press report came to know that cess already paid will not be available for credit and it will lead to double cess on the same stock. 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
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0 already stands paid. Subject to the Petitioner furnishing to the satisfaction of the officers proof of such payment, the Petitioner will be given credit for such payment and will not be required to make any further payment under the impugned Act for effecting sales and clearances. Till such time the said exercise is completed, no coercive steps will be taken against the Petitioner to recover the levy under the impugned Act. 16. It is made clear however, that on those stocks for which the Petitioner is not able to produce a satisfactory proof of already having paid the Clean Energy Cess under the FA, 2010, the Petitioner will be required to pay the cess under the impugned Act. This would be subject to the directions issued hereinbefore. 17. Reply be filed within four weeks. Rejoinder thereto, if any, be filed before the next date of hearing. 18. List on 26th October 2017. 19. Dasti under the signatures of the Court Master. – Case laws – Decisions – Judgements – Orders – Tax Manageme
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