“GST Registration Not Substitute for Licensing under Brick Kiln Act”: J&K HC Upholds Seizure Orders on Brick Dealers [Read Order]

In a recent case, the High Court of Jammu & Kashmir has clarified the relationship between Goods and Services Tax (GST) registration and sector‑specific licensing laws. The Court held that GST registration cannot substitute compliance with licensing requirements under the J&K Brick Kiln (Regulation) Act, 2010 and the Rules framed in 2017.

The decision came in writ petitions filed by Kehar Singh and other brick traders, who challenged seizure orders issued by the District Magistrates of Kathua and Samba against vehicles transporting bricks imported from outside the Union Territory.

The petitioners argued that they were registered GST payers and their trade in bricks was already regulated under the GST regime.

They contended that imposing an additional licensing requirement under the Brick Kiln Act amounted to double regulation, arbitrary interference, and violation of their fundamental right to carry on business under Article 19(1)(g) of the Constitution.

According to them, the Brick Kiln Act was intended only to regulate kiln owners engaged in manufacturing, not dealers importing finished bricks, and GST registration should suffice to legitimise their trade.

The respondents, represented by the Senior Additional Advocate General, countered that GST is a taxation statute designed to regulate indirect tax collection, not a comprehensive regulatory framework for specific industries.

They pointed to Section 2(e) of the Brick Kiln Act, which defines a “dealer” as a person engaged in the business of selling bricks, and Rule 3 of the 2017 Rules, which prohibits manufacture, sale, or storage of bricks without a valid licence.

The State argued that GST compliance does not override or nullify sector‑specific licensing laws, and that the seizure orders were passed strictly in accordance with statutory powers to curb unlicensed trade.

Justice Wasim Sadiq Nargal agreed with the respondents, highlighting that GST registration and licensing under the Brick Kiln Act serve distinct purposes.

It was observed that GST ensures proper taxation of transactions, while licensing under Rule 3 is a regulatory measure aimed at controlling the brick industry, safeguarding consumers, maintaining quality standards, and preventing environmental degradation.

The Court observed that conflating GST registration with licensing would undermine the legislative intent of the Brick Kiln Act, which was enacted to regulate both manufacturers and dealers comprehensively.

The Court further noted that Section 15 of the Act imposes restrictions on both manufacturers and dealers regarding pricing, confirming that dealers are within the regulatory framework.

Reading Section 15 together with Rule 3, the Court held that the licensing mandate applies equally to dealers and manufacturers, and that GST registration cannot exempt dealers from these obligations. The argument of “double regulation” was rejected, with the Court clarifying that taxation and licensing operate in separate spheres and complement rather than contradict each other.

On the constitutional challenge, the Court held that licensing under Rule 3 does not infringe Article 19(1)(g), which guarantees the right to trade. Article 19(6) permits reasonable restrictions in the interest of the general public, and the licensing requirement was found to be a valid regulatory measure.

The Court spotlighted that GST registration alone cannot ensure compliance with environmental, consumer, and industrial safeguards embedded in the Brick Kiln Act, and that licensing is a substantive regulatory instrument rather than a procedural formality.

Accordingly, the High Court upheld the seizure orders issued by the Deputy Commissioners and dismissed the petitions.