Constitutional Validity of Section 174(2) CGST Act Challenged: Decision Deferred Pending Supreme Court Ruling

Summary:

In this case, the petitioner challenged the constitutional validity of Section 174(2) of the Central Goods and Services Tax Act, 2017. Both parties acknowledged that the issue was already being considered by the High Court of Punjab and Haryana in Tecnimont Spa India Project Office v. State of Punjab and another. The High Court in that case held that the challenge to Section 174(2) would be subject to the final outcome of the decision in T.S. Belaraman v. Commercial Tax Officer and others before the Supreme Court. In light of this, the present writ petition was disposed of in similar terms, with the orders passed in the Tecnimont Spa India Project Office case being applied mutatis mutandis to the instant case.

Facts of the Case:

The petitioner filed a writ petition challenging the constitutional validity of Section 174(2) of the CGST Act.
Both parties agreed that the issue involved in the present petition was already being adjudicated by the High Court of Punjab and Haryana in Tecnimont Spa India Project Office v. State of Punjab and another.
The High Court in Tecnimont Spa India Project Office held that the challenge to Section 174(2) would be subject to the final outcome of the decision in T.S. Belaraman v. Commercial Tax Officer and others before the Supreme Court.

Decision:

Keeping in view the decision in Tecnimont Spa India Project Office, the present writ petition was disposed of in similar terms.
The orders passed in Tecnimont Spa India Project Office were applied mutatis mutandis to the instant case.

Conclusion:

This case highlights the importance of judicial consistency and deference to higher courts in matters involving similar legal issues. The court in this case recognized the ongoing proceedings before the Supreme Court and wisely decided to await the final outcome of that case before making a definitive ruling on the constitutional validity of Section 174(2).

HIGH COURT OF PUNJAB & HARYANA

Good Morning Flour Mills

State of Punjab

Sanjeev Prakash Sharma and SANJAY VASHISTH, JJ.

CWP No.34647 of 2024 (O & M)

DECEMBER 19, 2024

J.S. Bedi, Adv. for the Petitioner. Saurabh Kapoor, Addl. A.G. for the Respondent.

ORDER

Sanjeev Prakash Sharma, J.- Notice of motion.

2. Mr. Saurabh Kapoor, Addl. A.G., accepts notice for the respondents.

3. Both the counsel are ad idem that the issue involved in the present petition stands finally adjudicated by this Court in CWP No. 18967 of2020 (O&M), titled as, “Tecnimont Spa India Project Office v. State of Punjab and another“, decided on 10.12.2024, wherein, we have held as under:

“1. The issue raised in the present bunch of writ petitions is challenge to section 174(2) of the GST Act, 2017. The same provision was incorporated as section 174(2) of the Kerala State Goods and Services Tax Act, 2017 as has been incorporated in Punjab State Goods and Services Tax Act, 2017 and Haryana State Goods and Services Tax Act, 2017.

2. Challenge to vires of the said section was laid before the High Court of Kerala in bunch of cases which were decided in favour of the Revenue holding the provisions as within the framework of the Constitution of India, and also the action was held to be within the competence of the department.

3. The concerned assesses have assailed the judgment before the Supreme Court in C.A. No.006724/2024, [SLP(C) No.640/2023] titled as T.S. Belaraman v. The Commercial Tax Officer and others along with connected SLPs, wherein leave has been granted vide order dated 14.05.2024. By interim order, the Revenue was restrained from taking any coercive steps, which has been directed to be continued by the Supreme Court while granting leave.

4. In the present bunch of cases, we have also passed similar interim orders and had posted these cases for waiting for the decision of the Supreme Court. However, now since the Supreme Court has granted leave, final adjudication will have to be done by the Supreme Court on the said issue.

5. Keeping in view thereto, we propose to dispose of all these writ petitions and direct that the challenge to section 174(2) of the GST Act, 2017 would be subject to the final outcome of the decision in the case of T.S. Belaraman (supra).

6. Till the disposal of the SLP in T.S. Belaraman (supra) by the Supreme Court, interim orders passed by this Court in all the respective cases shall continue to operate, which shall be subject to the final decision to be rendered by the Supreme Court in T.S. Belaraman (supra).

7. Writ Petitions stand disposed of as above.”

4. Keeping in view above, we dispose of this Writ Petition in the aforesaid terms. The observations and order passed above shall apply mutatis mutandis to the present case.

5. All pending applications also stand disposed of accordingly.