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2023 (12) TMI 727 - HC - GSTLevy and collection of cess by the respondent authorities under the provisions of the Assam Agricultural Produce Market Act, 1972 post the GST regime - refund of cess amount which have been wrongfully and illegally collected from the petitioners - whether post the 101st amendment of the Constitution and the enactment of the Central Goods and Service Tax Act, 2017, the Integrated Goods and Service Tax Act, 2017 and the Assam Goods and Service Tax, Act 2017 whether the respondent Board or the Market Committees established under Section 7 of the Act of 1972 would have the power to levy cess? HELD THAT - The law if applied to the facts of the present cases would make the exemption so granted by the notification No.12/2017-Central Government (Rate) dated 28.06.2017 issued by the Government of India, Ministry of Finance, Department of Revenue at Sl. No.54 and the notification No.FTX.56/2017/25 dated 29.06.2017 issued by the Finance (Taxation) Department of the Government of Assam at Sl. No.54 in respect to service by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale and purchase of agricultural produce pre-supposes that the cess which was collected by virtue of the Act of 1972 had been subsumed by the CGST Act,2017 as well as AGST Act, 2017. Under such circumstances, the levy of cess by the Respondent Board or the Market Committee after the said notifications had come into effect was unconstitutional as well as ultra vires to the provisions of CGST Act, 2017 and the AGST Act, 2017. In the instant case, the Respondent Board and the Market Committee after having lost their powers to levy cess, the financial position of the Respondent Board is in a penurious state. It is surviving as could be seen from the additional affidavit filed on 28.09.2023 on the basis of grant-in-aid received from the State Government. Under such circumstances, it is the opinion of this Court that directing the State to recover the said amount from the Respondent Board would not be in the interest of justice, equity, good conscience as well as also it would seriously hamper the functioning of the Respondent Board in terms with the provisions of the Act of 1972. This Court is not inclined to pass any direction(s) for restitution by the respondent Board of the cess so collected during the period from 01.07.2017 to 12.06.2020. Petition disposed off.
Issues Involved:
1. Whether the respondent Board had the authority to levy cess post the 101st Constitutional Amendment and the enactment of the CGST Act, 2017 and AGST Act, 2017. 2. Whether the petitioners are entitled to a refund of the cess collected by the respondent Board. Issue 1: Authority to Levy Cess Post-GST Regime The petitioners challenged the levy and collection of cess under the Assam Agricultural Produce Market Act, 1972 (the Act of 1972) post the GST regime. The court examined the provisions of the Act of 1972, particularly Section 21, which empowers the market committees to levy cess on agricultural produce bought or sold in the market area. The court noted that the power to levy such cess was originally traceable to Entry 52 and Entry 54 of List II of the Seventh Schedule of the Constitution. Post the Constitution (101st Amendment) Act, 2016, Entry 52 was omitted, and Entry 54 was substituted, limiting the State's power to levy tax only on certain specified goods. The court concluded that the respondent Board or the Market Committees could not levy cess after the enactment of the CGST Act, 2017 and the AGST Act, 2017, as these Acts subsumed the cess collected under the Act of 1972. The court held that the levy of cess by the respondent Board post-GST regime was unconstitutional and ultra vires. Issue 2: Entitlement to Refund The court examined whether the petitioners were entitled to a refund of the cess collected from them. It was noted that the petitioners did not aver that the cess collected was not passed on to their customers. The court referred to the doctrine of unjust enrichment and the principles laid down in the case of Mafatlal Industries Ltd., which requires proof that the burden of the duty was not passed on to another person. Given the lack of such averments, the court held that the petitioners were not entitled to a refund. Additionally, considering the financial condition of the respondent Board, the court opined that directing the State to recover the amount from the respondent Board would not be in the interest of justice and would hamper the functioning of the Board. Conclusion The court disposed of the writ petitions, holding that the respondent Board had no authority to levy cess post-GST regime and the petitioners were not entitled to a refund of the cess collected.
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