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2022 (11) TMI 1267 - HC - GSTConstitutional validity of the amended Section 140 of the CGST Act - Constitutionality, vires and legality of Section 28 of the Central Goods and Services Tax (Amendment) Act, 2018 - retrospective disallowance of transaction and carry forward of credit of Education Cess and Secondary and Higher Education Cess into the GST regime - HELD THAT - The grievance on the part of the applicant is that the Adjudicating Authority has not awaited the outcome of the challenge which has already been made by questioning the constitutional validity of the amended Act. And now, there will be a requirement to pay the penalty and the interest, which according to learned advocate Mr. Modh would be around Rs.9,00,000/- in the instant case. It is only one time that the said amount needs to be paid. He, therefore, has also urged to stay that requirement till the Court finalizes the constitutional validity. As the Court is yet to apply its mind to the challenge which has been made before this Court and as the appeal is already statutorily provided, the applicant shall be at liberty to file an appeal and can make a request for stay of appeal. Any further proceedings, at the instance of the appellate authority shall be subject to the final outcome of the main matter. If the issue of limitation is the reason for hampering the chance of the applicant in preferring the appeal, let that not be raised against him. Application disposed off.
Issues: Challenge to constitutionality, vires, and legality of Section 28 of the Central Goods and Services Tax (Amendment) Act, 2018 and Circular No.87/06/2019-GST; Stay on recovery proceedings pending the main matter; Show-cause notice for appropriation of credit under CGST Act; Enforcement of amendment to explanation 2 to Section 140 of the CGST Act; Request for stay on penalty and interest pending final decision.
Analysis: 1. The applicant challenged the constitutionality, vires, and legality of Section 28 of the Central Goods and Services Tax (Amendment) Act, 2018, and Circular No.87/06/2019-GST. The challenge was based on the retrospective disallowance of the transaction and carry forward of credit of Education Cess and Secondary and Higher Education Cess into the GST regime. The Court issued notice and fixed the main matter for urgent attention due to a group of related matters (Para 2). 2. A show-cause notice was issued seeking to appropriate the credit of Education Cess and Secondary and Higher Education Cess under Section 140(1) of the CGST Act. The applicant contested the issuance of the notice and subsequent Order-in-Original, arguing that the amendment to explanation 2 to Section 140 of the CGST Act has not been enforced. The applicant relied on a Bombay High Court decision for support (Para 3). 3. The applicant sought relief from the show-cause notice and Order-in-Original, contending that they were issued without jurisdiction. The applicant also requested a stay on recovery proceedings or, alternatively, a stay on the penalty amount if a certain percentage of the tax under dispute was paid (Para 4). 4. The respondent opposed the request for a stay, citing a decision of the Madras High Court favoring the Revenue. The respondent argued that the challenge was premature and need not be entertained at present (Para 5). 5. The Court considered the submissions from both sides and noted the challenge to the constitutional validity of the amended Section 140 of the CGST Act. The Court declined to grant the requested relief at the present stage, emphasizing that the main matter was scheduled for a hearing. The Court suggested the applicant file an appeal and seek a stay of appeal, with further proceedings subject to the main matter's outcome (Para 6-7). 6. The Court disposed of the civil application accordingly, instructing the completion of pleadings within a specified timeframe (Para 8).
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