2021 (4) TMI 1055 - HC - GST

Validity of the Entry No.3(if) read with para2 of the Notification No.11/2017 Central Tax (Rate) dated 28.6.2017 amended by Notification No.3/19 Central Tax (Rate) dated 29.3.2019 - this according to the petitioner has created artificial restriction on the value of the land for undivided share of the land for the purpose of transfer of property for the undivided share - ultra vires to Section 7(2) of the CGST Act read with Entry 5 of Schedule III and Sections 9(1) and 15 of the CGST Act - HELD THAT - Issue notice making it returnable on 14.6.2021. Ms.Nidhi Vyas, learned AGP waives service of notice on behalf of the State Government. Over and above regular mode of service, service through e-mode is permitted. To be heard with Special Civil Application No.850 of 2017.

Issues:
Challenge to the validity of Entry No.3(if) of Notification No.11/2017 Central Tax (Rate) and similar notification under Gujarat Goods & Service Tax Act, 2017 regarding the value of land for transfer of property for undivided share. Prayers include declaring the notifications ultra vires to various sections of the CGST Act, manifestly arbitrary, grossly discriminatory, and violating Article 14 of the Constitution of India. Also, seeking quashing of search proceedings, refund of tax and interest, and stay orders.

Analysis:

1. Validity of Notification Entry:
The petition challenges the validity of Entry No.3(if) of Notification No.11/2017 Central Tax (Rate) and its similar counterpart under the Gujarat Goods & Service Tax Act, 2017. The petitioner argues that these notifications have imposed artificial restrictions on the value of land for undivided share transfer, which is alleged to be ultra vires to Section 7(2) of the CGST Act, Entry 5 of Schedule III, and Sections 9(1) and 15 of the CGST Act. The prayers seek a declaration that the notifications are illegal and ultra vires to the relevant provisions of the CGST Act.

2. Constitutional Violations:
The petitioner further contends that the impugned notifications are manifestly arbitrary, grossly discriminatory, and contravene Article 14 of the Constitution of India. The prayers request the court to strike down Entry 3(if) of the notifications as being violative of Article 14 and ultravires to Article 246A of the Constitution of India, 1950. This raises a significant constitutional issue regarding the validity of the notifications in light of the principles of equality and non-discrimination.

3. Quashing of Search Proceedings:
Additionally, the petition seeks the quashing of search proceedings initiated by respondent No.6, alleging that these proceedings were without the authority of law and violated the provisions of Section 67(2) of the CGST Act. The prayer includes a request for the issuance of a writ of certiorari or any other appropriate writ to quash the search proceedings, highlighting the importance of procedural compliance and legality in tax enforcement actions.

4. Refund of Tax and Interest:
The petitioner also seeks relief in the form of a direction to the respondents to refund the amount of tax and interest totaling a specific amount, which was allegedly illegally collected via Form DRC03 dated 06.03.2021 due to the illegal nature of the search proceedings. This aspect raises issues related to the consequences of illegal tax collection and the rights of taxpayers to seek refunds in such circumstances.

5. Stay Orders and Coercive Actions:
Furthermore, the prayers include requests for interim reliefs such as staying the implementation of the impugned notifications, staying the operation of a specific order of the Gujarat Appellate Authority for Advance Ruling, and directing respondents to refrain from resorting to any coercive action against the petitioner. These requests for interim relief highlight the urgency and potential irreparable harm that the petitioner may suffer pending the final disposal of the petition.

6. Notice and Hearing:
The court issued notice to the respondents, making it returnable on a specific date, with the learned AGP waiving service of notice on behalf of the State Government. The matter is also scheduled to be heard along with another Special Civil Application, indicating a consolidated approach to similar legal issues for efficient adjudication.

In conclusion, the judgment involves a comprehensive analysis of the challenges to the validity of tax notifications, constitutional violations, procedural irregularities in search proceedings, refund claims, and requests for interim reliefs. The petition raises significant legal and constitutional issues that require thorough examination and adjudication by the court.

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