PROPOSED AMENDMENT TO SECTION 17[5][d], Goods and Services Tax - GST

[Sadanand Bulbule]

Dear experts

You are aware that recently held 55th GST Council meeting has recommended for an amendment to nullify the judgement of the Hon'ble Supreme Court rendered in the case of Safart Retreat case. It reads as under:

Amendment in section 17(5)(d) of CGST Act, 2017

• To align the provisions of section 17(5)(d) of CGST Act, 2017 with the intent of the said section, the Council has recommended amending section 17(5)(d) of CGST Act, 2017, to replace the phrase "plant or machinery" with "plant and machinery", retrospectively, with effect from 01.07.2017, so that the said phrase may be interpreted as per the Explanation at the end of section 17 of CGST Act, 2017.
• My understanding:
• Will it not frustrate the functioning of the judiciary as an independent and constitutional pillar for democracy?
• What was the wisdom and object of the Parliament for enacting the provision of Section 17[5][d] then ?
• This U turn is to flip its own wisdom and object. Whenever the judgement is not palatable, make amendments retrospectively to dampen it. Can greed for revenue overrule such judgement of the Supreme Court?
• Comments plz.

Posts / Replies

[DEVARA SIVAPRASAD]

            It appears for me that GST Council doesn't want to extend the ITC upon the Goods or Services or both used in the Construction of an Immovable Property(Civil Structure, when read with definition Provided for the same under the General Clauses Act,1872) on his own Account even such Immovable Property is used in the Course or furtherance of Business

             The Apex Court justified that it may fall under the ambit & Scope of Plant for Some Service Providers but at the same time, it has ignored the later part of the restriction saying that "Such Plant/ Immovable Property even if  used in the Course or furtherance of the business." That why because, it was proposed to replace "Plant or Machinery"  with "plant and Machinery."

           I view of above,  I feel that  the Apex Court has not given its ruling to main balance between justice and legislative Authority.

          So, Legislative Authority always have and had that retrospective Power to implement the legislative intent.

             

[Sadanand Bulbule]

Dear Sir
Here issue is not about the authority of the Legislature. It has its own prerogative.  But justification for such move. There is no  mistake in drafting the provision of Section 17(5)(d) per se. Objects of law should remain absolute and not variable. 

In case the legislature wants to stick to its original intent now , why is it acting swiftly subsequent to the Supreme Court’s judgment? Why not earlier on its own realisation? 
This is my concern. 

[Shilpi Jain]

In my view, keeping the provisions as they are, would lead to more litigation. We would see petitions on discrimination between 17(5)(c ) and (d). 

Also not to mention -- the long battle that would ensue to identify what PLANT means.

Just one more thing if they could have done - define - 'on own account'

[DEVARA SIVAPRASAD]

Obvious reason might be that the GST Council wouldn't have thought the interpretation done by the Apex Court. Further, it is not he case of the Apex Court exercising its extraordinary Power under Article 142 of the Constitution to fill up the void left by the Legislature to ensure balance between Justice and legislature Authority. It has interpreted what was there in the Section 17(5)(d) of the CGST Act,2017 but leaving behind/ignoring the latter part of the restriction. 

 I would like to bring to the notice of the Experts Group that the every Apex Court Order will be examined by the Legal, Judicial and Policy Sections of the CBIC and where it is found that the Order is Contrary to the policies of the Government, either by way of reviewing the Provisions or by clarifying the policy intent in the light of the decision of Supreme Court decision after being consulted with the GST Council. 

     

[Sadanand Bulbule]

With all its prerogative power, will it not amount to “mistrust” in the lawmakers by way of swinging their moods to make amendment just to build another “china wall” in the way of entitlement to ITC?  End of the day, trust in law is paramount than revenue. There are thousands of new avenues to tap revenue or to contain tax evasion. Why to twist the arms of already handicapped taxpayers this way?