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2022 (5) TMI 1553 - HC - GST


Issues Involved:
1. Legislative Competence of Section 7 of the CGST Act/UPGST Act.
2. Constitutional Validity of Section 7 of the CGST Act/UPGST Act.
3. Alleged Breach of Natural Justice in the Impugned Assessment Order.

Issue-wise Detailed Analysis:

Legislative Competence of Section 7 of the CGST Act/UPGST Act:
The petitioner challenged the legislative competence of Parliament and the State Legislature to enact Section 7 of the CGST Act and UPGST Act, arguing that Article 246-A of the Constitution does not confer the power to impose tax on the sale of goods. The court examined the 101st Amendment to the Constitution, which introduced Article 246-A, and noted that it confers concurrent taxing powers on the Union and State Legislatures to levy GST on the supply of goods or services. The court highlighted that the amendment subsumed various indirect taxes into a single GST, thereby empowering both Parliament and State Legislatures to enact laws on GST, including the tax on the supply of goods or services. The court concluded that the Parliament and State Legislature did not lack legislative competence to enact Section 7 of the CGST Act/UPGST Act.

Constitutional Validity of Section 7 of the CGST Act/UPGST Act:
The petitioner argued that Section 7 of the CGST Act/UPGST Act is ultra vires the Constitution. The court emphasized the presumption of constitutional validity and the burden on the petitioner to prove otherwise. The court referenced multiple Supreme Court judgments affirming the presumption of constitutionality and the broad legislative powers conferred by Article 246-A. It concluded that Section 7, which defines "supply" to include the sale of goods, is within the legislative competence of Parliament and State Legislatures. The court also noted that the GST is a consumption and destination-based tax, reinforcing the validity of Section 7.

Alleged Breach of Natural Justice in the Impugned Assessment Order:
The petitioner claimed that the assessment order violated principles of natural justice, alleging that not all relied-upon documents were provided and that there was no opportunity for a hearing. The court found that the petitioner was given copies of all relevant documents and allowed to inspect the records. Notices were issued, and the petitioner had submitted a detailed reply which was considered by the assessing authority. The court noted that the petitioner has the right to appeal the assessment order under Section 107 of the UPGST Act. Therefore, the court dismissed the challenge to the assessment order on the grounds of natural justice violations.

Conclusion:
The court dismissed the writ petition, holding that:
1. Article 246-A empowers both Parliament and State Legislatures to enact laws on GST, including the supply of goods or services.
2. Section 7 of the CGST Act/UPGST Act is constitutionally valid and within legislative competence.
3. The assessment order did not breach principles of natural justice, and the petitioner retains the right to appeal.

 

 

 

 

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