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2024 (11) TMI 522 - HC - GSTValidity of the impugned Press Release dated 15.07.2020, by which the Ministry of Finance, Union of India, purporting to exercise its executive powers, virtually issued a fiat to the adjudicatory judicial and quasi-judicial authority to classify all alcohol-based hand sanitisers as disinfectants attracting a GST rate of 18% - HELD THAT - The impugned Press Release, does not indicate that the same is relatable to either Article 73 or Article 77 of the Constitution. Though that, by itself, may not be a ground to strike down the impugned Press Release, still, in the absence of any such indication or compliance with the provisions of Article 77 of the Constitution, we cannot simply accept that the impugned Press Release is indeed an instance of the exercise of executive power by the Union. In the absence of any compliance with the requirements of Article 77, the burden was on the Respondents to establish this aspect. The Respondents have failed to discharge this burden. However, even though it is assumed that the impugned Press Release is an instance of the exercise of executive power by the Union still, the question is whether, in the purported exercise of such executive power, the Union is competent to direct judicial and quasi-judicial authorities to decide the issue of classification of products in a particular manner - Though there may not be a very distinct line separating legislative and executive functions, still the line separating the judicial functions from the executive and legislative functions is fairly clear. The executive cannot transgress on the functions within the exclusive province of the judicial or even quasi-judicial authorities. In the STATE OF JHARKHAND AND ANR VERSUS GOVIND SINGH 2004 (12) TMI 667 - SUPREME COURT the Hon ble Supreme Court has explained that after enacting a law or Act, the Legislature becomes functus officio so far as that particular Act is concerned, and it cannot itself interpret it. No doubt, the Legislature retains the power to amend or repeal the law so made and can also declare its meaning, but that can be done only by creating another law or statute after undertaking the whole lawmaking process. The issue of whether a product falls within a particular class after the law is already enacted and the classification is already made falls within the province of the judicial and quasi-judicial authorities created under the Act. Such powers must be exercised by the judicial and quasi-judicial authorities independently and without any goading from any party, including the executive. Any press release or executive instruction meant to influence or, worse still, require the judicial or quasi-judicial authorities under the Act to exercise their judicial or quasi-judicial functions in a particular manner would interfere with their judicial or quasi-judicial functions. This cannot be allowed. The executive powers of the Union do not extend to this. The impugned Press Release virtually expresses a firm view on the classification of alcohol-based hand sanitisers as disinfectants and not medicaments . The impugned Press Release urges the authority to levy tax at 18% based on the premise that alcohol-based hand sanitisers are disinfectants and not medicaments . Though we do not propose to quash the impugned show cause notice cum demand notice dated 17.04.2023 because such a show cause notice could have as well been issued by the Respondents in the absence of the impugned Press Release or independent of the impugned Press Release. The Petitioner has made out a case for quashing the impugned Press Release so that the judicial and quasi-judicial authorities under the Act can decide on the issue of classification and, consequently, the rate of tax independently without even remotely being influenced by the impugned Press Release - this petition partly allowed by setting aside the impugned Press Release dated 15.07.2020.
Issues Involved:
1. Classification of alcohol-based hand sanitisers as "medicaments" or "disinfectants." 2. Validity of the Press Release dated 15.07.2020 issued by the Ministry of Finance. 3. Authority of executive instructions under Article 73 and Article 77 of the Constitution. 4. Separation of powers and the role of executive instructions in judicial/quasi-judicial functions. Issue-wise Detailed Analysis: 1. Classification of Alcohol-Based Hand Sanitisers: The primary contention revolves around whether alcohol-based hand sanitisers should be classified as "medicaments" or "disinfectants" for GST purposes. The Petitioner argues that these products have been consistently classified under HSN 3004 as "medicaments," attracting a lower GST rate. In contrast, the Respondents classify them as "disinfectants," subject to an 18% GST rate. The Court, however, refrained from adjudicating this classification issue, stating that it should be resolved by the appropriate adjudicatory authorities under the Act, considering the factual and legal aspects involved. 2. Validity of the Press Release Dated 15.07.2020: The Press Release issued by the Ministry of Finance classifies alcohol-based hand sanitisers as "disinfectants," attracting an 18% GST rate. The Petitioner challenges this as arbitrary and beyond the authority of the executive, arguing it preempts judicial and quasi-judicial determination. The Court found that the Press Release effectively directed adjudicatory authorities to classify these products in a specific manner, which is not permissible. The Court quashed the Press Release, emphasizing that the classification should be independently determined by judicial and quasi-judicial bodies without influence from such executive instructions. 3. Authority of Executive Instructions Under Article 73 and Article 77: The Respondents argued that the Press Release was an executive instruction under Article 73, which allows the Union to exercise executive power over matters Parliament can legislate. However, the Court noted that the Press Release did not explicitly indicate it was issued under Article 73 or 77. Without compliance with Article 77's requirements, the Court could not accept the Press Release as a legitimate exercise of executive power. The burden to prove such compliance was on the Respondents, which they failed to discharge. 4. Separation of Powers and Executive Instructions: The Court highlighted the doctrine of separation of powers, stating that the executive cannot encroach upon judicial functions. The classification of products is a matter of interpretation, which falls within the judicial and quasi-judicial domain. The executive cannot direct these authorities on how to interpret and apply the law. The Court cited precedents affirming that executive instructions cannot override or dictate judicial determinations, reinforcing the need for independent adjudication by the relevant authorities. Conclusion and Reliefs: The Court quashed the Press Release dated 15.07.2020, ensuring that the classification of alcohol-based hand sanitisers is determined independently by judicial and quasi-judicial authorities. The impugned show cause notice cum demand notice can proceed, but must be decided on its merits without influence from the quashed Press Release. The Court emphasized maintaining the separation of powers and ensuring that executive instructions do not interfere with judicial functions. The petition was partly allowed, with no order as to costs.
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