Madhya Pradesh HC dismisses Plea Challenging GST Provision for Levy of Cess on Intra-State Supplies [Read Order]

A division bench of the Madhya Pradesh High Court comprising Chief Justice Ravi Malimath, & Justice Vishal Mishra has dismissed a petition challenging section 8 of the Goods and Services Tax (Compensation to States) Act, 2017 and the rules and notification connected thereto, in view of the dismissal of the SLP by the Supreme Court and affirming the validity of the Act in a similar case.

The petitioner, Mr. Ranvir Kumar filed a petition seeking a direction to declare that the Section 8 of the "Goods and Services Tax (Compensation to States) Act, 2017" and 'Goods and Services Tax Compensation Rules, 2017' as invalid.

The petitioner alleged that the Notification No.1/2017-Compensation Cess (Rate), dated 28th June 2017, is unconstitutional, oppressive and Ultra Vires and not applicable to the petitioners for levy of Cess for their coal stocks purchased up to the June 2017.

The petitioners further contended that they are not liable to pay the additional levy for the stocks of coal upto June 2017 on which they have already paid the Clean Energy Cess in terms of Finance Act, 2010.

As per section 8 of the Goods and Services Tax (Compensation to States) Act, 2017, there shall be levied a cess on such intra-State 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 levy under section 10 of the Central Goods and Services Tax Act.

The department has placed on record a judgment of the Supreme Court in the case of Union of India vs. Hind Energy and Coal Benefication (India Ltd.) and connected matters decided on 3.10.2018.

Dismissing the petition, the division bench has held that “In terms of the order dated 3.10.2018, the very question with regard to the validity of the Goods and Services Tax (Compensation to States) Act, 2017 was under challenge. In view of dismissal of the aforesaid SLP and affirming the validity of the Act, the said judgment would stand applicable to the case in hand.”

To Read the full text of the Order CLICK HERE

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