2019 (2) TMI 388 - HC - GST

Levy of tax on construction activities - value of the land at one-third of the total amount charged - Constitutional validity of entry 5(b) of Schedule II to the GST Act, 2017 - legislative competence - Article 246A and 265 of the Constitution - Held that - passing of a legislation by itself does not confer any such right to file the writ petition unless a cause of action arises therefor Enacting a legislation or issuing Notification/Circular could not confer a right to challenge unless the litigant is affected by the action initiated by the executive in furtherance of such legislation/administrative Circular/Notification more particularly, in taxing statutes. Cause of action is sine qua non for challenging such legislation/ Notification/Circular. The writ Court cannot adjudicate upon such matters in vacuum - The petitioner involved in construction activity or works contract would not be suffice to examine the constitutional vires of the Act and the related Notification/Circular unless the cause of action emerges. This Court is of the considered view that the writ petitions at this stage are premature and deserve to be dismissed as not maintainable - petition dismissed.

Summary

Issues:
Challenge to the constitutionality of GST Act provisions and related notifications and circulars.

Analysis:
The petitioner sought various reliefs in the writ petition challenging the constitutionality of certain provisions of the GST Act, 2017, and related notifications and circulars. The issues raised included the declaration of specific entries in Schedule II of the CGST Act as unconstitutional, lacking legislative competence, and violating various articles of the Constitution. The petitioner also sought to quash provisions of a notification covering certain entries as unconstitutional and illegal. Additionally, the petitioner challenged a clarification issued by the respondent as ultra vires and violative of constitutional articles.

The respondent raised a preliminary objection regarding the maintainability of the writ petition, arguing that no cause of action had emerged for the petitioner to challenge the impugned provisions. The court was referred to the judgment in Kusum Ingots & Alloys Limited Vs. Union of India, emphasizing that a cause of action is essential for filing a writ petition challenging legislative and executive actions. The petitioner contended that regardless of any action taken by the authorities, they were entitled to challenge the provisions, citing precedents from the Hon'ble Apex Court and other High Courts.

The court considered the legal propositions and judgments cited by both parties. It highlighted the distinction between legislation and executive action, emphasizing that a cause of action is necessary for challenging such actions. Various judgments were referenced to illustrate the importance of a cause of action in constitutional challenges. The court concluded that enacting legislation or issuing notifications/circulars does not automatically confer the right to challenge without a cause of action. It emphasized that adjudication without a cause of action would be academic and premature, leading to the dismissal of the writ petitions as not maintainable.

In summary, the judgment addressed the crucial aspect of cause of action in constitutional challenges to legislative provisions and administrative actions. It underscored the necessity of a valid cause of action for approaching the court with such challenges, highlighting the legal principles and precedents governing the maintainability of writ petitions in such matters.