2017 (9) TMI 389 - HC - GST

Deferment of implementation of GST - Held that - petitioner cannot urge and/or seek directions to the respondents to postpone the decision to implement GST with effect from 1.7.2017, for simple reason that herein levy and collection of taxes on goods and services has sanction of law. That from written submission, it is much evident that all such necessary steps are taken by the respondents to ensure implementation of the GST, as it appears (i) over 65 Lakhs tax-payers have already migrated to GST network and obtained registrations, (ii) the rates and taxes have been notified; (iii) rules have been framed and notified ; (iv) wide publicity is given in public domain; (v) entire machinery has been geared up not only to accept new challenge but to ensure GST is implemented effectively. - petition dismissed - decided against petitioner.

Summary

Issues:
Challenge to the implementation of Goods and Services Tax (GST) on various grounds.

Analysis:
1. Implementation of GST without Parliamentary sanction and in the middle of the financial year:
The petitioner challenged the implementation of GST citing lack of parliamentary sanction and mid-year implementation as invalid. The petitioner expressed concerns about the unpreparedness of various States and Union Territories in adopting the new system. The petitioner also highlighted the non-payment of compensation for the first quarter of the financial year, leading to financial instability. The petitioner suggested deferring the implementation until all legal flaws are rectified and final rates for all items are decided by all states and Union Territories.

2. Concerns about the effectiveness of Acts and implementation of SGST:
The petitioner doubted the effectiveness of Acts in reducing regulatory and administrative hurdles. The petitioner recommended the development of an automatic software interfaced with the Trade Tax Automated Bank Account (TTABA) and other measures for the effective implementation of GST.

3. Prayers for reliefs and directions:
The petitioner prayed for several reliefs, including deferring implementation until parliamentary sanction is obtained, utilizing the period for action on anti-profiteering laws and illegal activities, providing education and awareness to traders, and insisting on a dedicated Trade-Bank-Account based on valid trade licenses. The petitioner emphasized the importance of public awareness and information dissemination regarding the new tax system.

4. Validity of the decision to implement GST:
The respondent, represented by the Additional Solicitor General, argued that the decision to implement GST was lawful. The ASG highlighted that State legislatures had passed the necessary Acts, rules had been framed and notified, taxpayers had migrated to the GST network, tax rates had been notified, and administrative machinery was in place. The ASG emphasized that all necessary steps had been taken to ensure the effective implementation of the new tax system.

5. Court's decision and dismissal of the PIL:
After considering the petition and the submissions made by the ASG, the Court concluded that the petitioner's arguments lacked merit. The Court noted that the implementation of GST had legal sanction, with over 65 lakh taxpayers already migrated to the GST network, rates notified, rules framed, and wide publicity given. The Court found that the respondents had taken all necessary steps for effective implementation of GST and, therefore, dismissed the Public Interest Litigation (PIL).

In summary, the High Court of Bombay dismissed the challenge to the implementation of GST, ruling that the decision had legal sanction and that the respondents had taken all necessary steps for effective implementation. The Court found the petitioner's concerns unsubstantiated and emphasized the readiness of the administrative machinery for GST implementation.