The respondent, Cadila Healthcare Ltd., manufactured a product called “KADIPROL” containing Amprolium Hydrochloride and Vitamin K3, used in poultry to prevent coccidiosis. The company sought clarification from the Deputy Commissioner of Sales Tax under Section 62 of the Gujarat Sales Tax Act, 1969 to determine the tax rate applicable to the product. The Deputy Commissioner classified “KADIPROL” as a “Drug and Medicine” under Entry 26(1) of Schedule II, Part A, which attracted tax. The Gujarat Sales Tax Tribunal upheld this finding. However, on reference, the Gujarat High Court held that “KADIPROL” fell under Entry 25 of Schedule I as “Poultry Feed,” making it tax-exempt. The State of Gujarat appealed this decision before the Supreme Court.The Supreme Court observed that “KADIPROL” was not meant to be fed directly to poultry but to be mixed with feed and that it contained medicinal properties used for preventing infection. The Court found that the High Court had not adequately addressed the reasoning of the Sales Tax Tribunal and had relied only on earlier High Court decisions in Glaxo Laboratories (India) Ltd. v. State of Gujarat and State of Gujarat v. Pfizer Ltd. without an in-depth factual analysis. The Court noted that the issue had become academic, as there were no pending tax demands or revenue implications. Accordingly, the appeal was closed, leaving the broader question regarding the “common parlance test” open for consideration in an appropriate future case.
State of Gujarat v. Cadila Healthcare Ltd. 11-07-2022
The respondent, Cadila Healthcare Ltd., manufactured a product called “KADIPROL” containing Amprolium Hydrochloride and Vitamin K3, used in poultry to prevent coccidiosis. The company sought clarification from the Deputy Commissioner of Sales Tax under Section 62 of the Gujarat Sales Tax Act, 1969 to determine the tax rate applicable to the product. The Deputy Commissioner classified “KADIPROL” as a “Drug and Medicine” under Entry 26(1) of Schedule II, Part A, which attracted tax. The Gujarat Sales Tax Tribunal upheld this finding. However, on reference, the Gujarat High Court held that “KADIPROL” fell under Entry 25 of Schedule I as “Poultry Feed,” making it tax-exempt. The State of Gujarat appealed this decision before the Supreme Court.The Supreme Court observed that “KADIPROL” was not meant to be fed directly to poultry but to be mixed with feed and that it contained medicinal properties used for preventing infection. The Court found that the High Court had not adequately addressed the reasoning of the Sales Tax Tribunal and had relied only on earlier High Court decisions in Glaxo Laboratories (India) Ltd. v. State of Gujarat and State of Gujarat v. Pfizer Ltd. without an in-depth factual analysis. The Court noted that the issue had become academic, as there were no pending tax demands or revenue implications. Accordingly, the appeal was closed, leaving the broader question regarding the “common parlance test” open for consideration in an appropriate future case.
The Union of India filed appeals challenging the judgment of the Gujarat High Court dated 23 January 2020, which had struck down Notifications No. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate), both dated 28 June 2017, as unconstitutional. These notifications levied Integrated Goods and Services Tax (IGST) on ocean freight paid by a foreign seller to a foreign shipping line in cases where goods were imported into India on a Cost-Insurance-Freight (CIF) basis, making the Indian importer liable to pay tax on a reverse charge basis.The respondent, M/s Mohit Minerals Pvt. Ltd., imported coal under CIF contracts, where the freight was paid abroad by the exporter. It contended that it was not the “recipient” of the shipping service, that IGST on ocean freight amounted to double taxation since the value of freight was already included in the assessable value of imported goods for customs duty, and that the notifications exceeded the powers conferred by the IGST Act.The Supreme Court upheld the Gujarat High Court’s decision, declaring the levy of IGST on ocean freight as unconstitutional. It held that under a CIF contract, the importer is not the recipient of transportation service—the contractual relationship exists between the foreign exporter and the foreign shipping line. The impugned notifications were ultra vires Section 5(3) of the IGST Act, 2017 since they imposed tax liability on a third party who was not the recipient of service.The Court further held that the levy resulted in double taxation because the value of ocean freight was already included in the assessable value of imported goods under Section 3(7) of the Customs Tariff Act, 1975 and subjected to IGST at the time of import. The Court ruled that the GST Council’s recommendations are not binding on the Union and States but have persuasive value under Article 279A of the Constitution. Accordingly, all appeals filed by the Union of India were dismissed.
Union of India & Another v. M/s Mohit Minerals Pvt. Ltd. 19-05-2022
The Union of India filed appeals challenging the judgment of the Gujarat High Court dated 23 January 2020, which had struck down Notifications No. 8/2017-Integrated Tax (Rate) and 10/2017-Integrated Tax (Rate), both dated 28 June 2017, as unconstitutional. These notifications levied Integrated Goods and Services Tax (IGST) on ocean freight paid by a foreign seller to a foreign shipping line in cases where goods were imported into India on a Cost-Insurance-Freight (CIF) basis, making the Indian importer liable to pay tax on a reverse charge basis.The respondent, M/s Mohit Minerals Pvt. Ltd., imported coal under CIF contracts, where the freight was paid abroad by the exporter. It contended that it was not the “recipient” of the shipping service, that IGST on ocean freight amounted to double taxation since the value of freight was already included in the assessable value of imported goods for customs duty, and that the notifications exceeded the powers conferred by the IGST Act.The Supreme Court upheld the Gujarat High Court’s decision, declaring the levy of IGST on ocean freight as unconstitutional. It held that under a CIF contract, the importer is not the recipient of transportation service—the contractual relationship exists between the foreign exporter and the foreign shipping line. The impugned notifications were ultra vires Section 5(3) of the IGST Act, 2017 since they imposed tax liability on a third party who was not the recipient of service.The Court further held that the levy resulted in double taxation because the value of ocean freight was already included in the assessable value of imported goods under Section 3(7) of the Customs Tariff Act, 1975 and subjected to IGST at the time of import. The Court ruled that the GST Council’s recommendations are not binding on the Union and States but have persuasive value under Article 279A of the Constitution. Accordingly, all appeals filed by the Union of India were dismissed.
The appeals arose from conflicting judgments of the Gujarat High Court and the Madras High Court on the validity of Rule 89(5) of the Central Goods and Services Tax Rules, 2017 (CGST Rules). The Gujarat High Court, in VKC Footsteps India Pvt. Ltd. v. Union of India, held that the restriction of refund of unutilised input tax credit (ITC) only to input goods under Section 54(3) of the CGST Act, 2017 was unconstitutional, whereas the Madras High Court, in Tvl. Transtonnelstroy Afcons Joint Venture v. Union of India upheld the validity of the rule. The dispute centered on whether ITC accumulated due to an inverted duty structure could include tax paid on both input goods and input services.The Supreme Court upheld the decision of the Madras High Court and set aside the Gujarat High Court’s ruling. It held that the proviso to Section 54(3) of the CGST Act expressly restricts refunds to unutilised ITC accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies, thereby excluding input services. The Court ruled that refund is a statutory right, not a constitutional entitlement, and must be governed strictly by the provisions of the statute. Consequently, Rule 89(5) of the CGST Rules, which limits refund to credit accumulated on input goods, was held to be valid and not ultra vires Section 54(3). The appeals filed by the Union of India were allowed, and the writ petitions were dismissed.
Union of India & Others v. VKC Footsteps India Pvt. Ltd. 13-09-2021
The appeals arose from conflicting judgments of the Gujarat High Court and the Madras High Court on the validity of Rule 89(5) of the Central Goods and Services Tax Rules, 2017 (CGST Rules). The Gujarat High Court, in VKC Footsteps India Pvt. Ltd. v. Union of India, held that the restriction of refund of unutilised input tax credit (ITC) only to input goods under Section 54(3) of the CGST Act, 2017 was unconstitutional, whereas the Madras High Court, in Tvl. Transtonnelstroy Afcons Joint Venture v. Union of India upheld the validity of the rule. The dispute centered on whether ITC accumulated due to an inverted duty structure could include tax paid on both input goods and input services.The Supreme Court upheld the decision of the Madras High Court and set aside the Gujarat High Court’s ruling. It held that the proviso to Section 54(3) of the CGST Act expressly restricts refunds to unutilised ITC accumulated on account of the rate of tax on inputs being higher than the rate of tax on output supplies, thereby excluding input services. The Court ruled that refund is a statutory right, not a constitutional entitlement, and must be governed strictly by the provisions of the statute. Consequently, Rule 89(5) of the CGST Rules, which limits refund to credit accumulated on input goods, was held to be valid and not ultra vires Section 54(3). The appeals filed by the Union of India were allowed, and the writ petitions were dismissed.
The appellant, engaged in the manufacture of lead, was registered under the Himachal Pradesh Goods and Services Tax Act, 2017 (HPGST Act). A provisional attachment order was issued against the appellant’s receivables under Section 83 of the HPGST Act, on the allegation of availing fraudulent Input Tax Credit (ITC) based on invoices from its supplier, GM Powertech. The appellant challenged the attachment order before the Himachal Pradesh High Court, contending that it was issued without jurisdiction, in violation of the prescribed procedure, and without any pending proceedings under Section 74 of the HPGST Act at the time of attachment. The High Court dismissed the petition on the ground that the appellant had an alternative remedy under Section 107 of the Act.The Supreme Court held that the High Court erred in dismissing the writ petition solely on the ground of alternative remedy. It ruled that the “rule of alternate remedy” is a rule of discretion, not compulsion, and exceptions apply where the action challenged is wholly without jurisdiction or in violation of natural justice. On merits, the Court held that the power of provisional attachment under Section 83 is a drastic and extraordinary power and must be exercised only during the pendency of proceedings under Sections 62, 63, 64, 67, 73, or 74 of the Act. Since no proceedings under Section 74 were pending against the appellant at the time of the attachment, the order was held to be without jurisdiction. The Court further held that such attachment requires tangible material and must satisfy the condition of necessity to protect government revenue. The appeals were allowed, and the orders of provisional attachment were set aside.
M/s Radha Krishan Industries v. State of Himachal Pradesh & Others 20-04-2021
The appellant, engaged in the manufacture of lead, was registered under the Himachal Pradesh Goods and Services Tax Act, 2017 (HPGST Act). A provisional attachment order was issued against the appellant’s receivables under Section 83 of the HPGST Act, on the allegation of availing fraudulent Input Tax Credit (ITC) based on invoices from its supplier, GM Powertech. The appellant challenged the attachment order before the Himachal Pradesh High Court, contending that it was issued without jurisdiction, in violation of the prescribed procedure, and without any pending proceedings under Section 74 of the HPGST Act at the time of attachment. The High Court dismissed the petition on the ground that the appellant had an alternative remedy under Section 107 of the Act.The Supreme Court held that the High Court erred in dismissing the writ petition solely on the ground of alternative remedy. It ruled that the “rule of alternate remedy” is a rule of discretion, not compulsion, and exceptions apply where the action challenged is wholly without jurisdiction or in violation of natural justice. On merits, the Court held that the power of provisional attachment under Section 83 is a drastic and extraordinary power and must be exercised only during the pendency of proceedings under Sections 62, 63, 64, 67, 73, or 74 of the Act. Since no proceedings under Section 74 were pending against the appellant at the time of the attachment, the order was held to be without jurisdiction. The Court further held that such attachment requires tangible material and must satisfy the condition of necessity to protect government revenue. The appeals were allowed, and the orders of provisional attachment were set aside.
The petitioner, Skill Lotto Solutions Pvt. Ltd., filed a writ petition challenging the constitutional validity of the imposition of Goods and Services Tax (GST) on lotteries under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017. The petitioner contended that the inclusion of “lottery, betting, and gambling” within the definition of “goods” under Section 2(52) of the CGST Act was arbitrary and violative of Article 14 of the Constitution. It was argued that lottery transactions are in the nature of actionable claims and do not constitute “goods” or “services” for taxation purposes.The Supreme Court upheld the validity of the GST levy on lotteries. It held that the definition of “goods” under Section 2(52) of the CGST Act validly includes actionable claims other than money and securities, which covers lottery transactions. The Court ruled that lottery, betting, and gambling are actionable claims and that Parliament has the legislative competence to impose GST on such transactions under Article 246A of the Constitution. The writ petition was dismissed, with liberty granted to the petitioner to pursue remedies available in law. All pending applications, including those for intervention and impleadment, were also disposed of.
Skill Lotto Solutions Pvt. Ltd. v. Union of India & Others 03-12-2020
The petitioner, Skill Lotto Solutions Pvt. Ltd., filed a writ petition challenging the constitutional validity of the imposition of Goods and Services Tax (GST) on lotteries under the Central Goods and Services Tax Act, 2017 and the Integrated Goods and Services Tax Act, 2017. The petitioner contended that the inclusion of “lottery, betting, and gambling” within the definition of “goods” under Section 2(52) of the CGST Act was arbitrary and violative of Article 14 of the Constitution. It was argued that lottery transactions are in the nature of actionable claims and do not constitute “goods” or “services” for taxation purposes.The Supreme Court upheld the validity of the GST levy on lotteries. It held that the definition of “goods” under Section 2(52) of the CGST Act validly includes actionable claims other than money and securities, which covers lottery transactions. The Court ruled that lottery, betting, and gambling are actionable claims and that Parliament has the legislative competence to impose GST on such transactions under Article 246A of the Constitution. The writ petition was dismissed, with liberty granted to the petitioner to pursue remedies available in law. All pending applications, including those for intervention and impleadment, were also disposed of.
The respondent, Mohit Minerals Pvt. Ltd., filed a writ petition before the Delhi High Court challenging the levy of Integrated Goods and Services Tax (IGST) on ocean freight under the reverse charge mechanism. The contention was that such levy resulted in double taxation since the importer was already paying IGST on the entire value of goods, including freight, under the Customs Valuation Rules. The High Court ruled in favor of the respondent, holding the levy to be unconstitutional.The Supreme Court considered appeals filed by the Union of India against the High Court’s decision. After examining the issues, the Court held that the levy of IGST on ocean freight under reverse charge was not sustainable as it led to double taxation and went beyond the scope of legislative competence. The writ petition was dismissed, and both civil appeals filed by the Union of India were allowed. The Court ordered that the parties shall bear their own costs and disposed of all pending applications accordingly.
Union of India & Another v. Mohit Minerals Pvt. Ltd. 03-10-2018
The respondent, Mohit Minerals Pvt. Ltd., filed a writ petition before the Delhi High Court challenging the levy of Integrated Goods and Services Tax (IGST) on ocean freight under the reverse charge mechanism. The contention was that such levy resulted in double taxation since the importer was already paying IGST on the entire value of goods, including freight, under the Customs Valuation Rules. The High Court ruled in favor of the respondent, holding the levy to be unconstitutional.The Supreme Court considered appeals filed by the Union of India against the High Court’s decision. After examining the issues, the Court held that the levy of IGST on ocean freight under reverse charge was not sustainable as it led to double taxation and went beyond the scope of legislative competence. The writ petition was dismissed, and both civil appeals filed by the Union of India were allowed. The Court ordered that the parties shall bear their own costs and disposed of all pending applications accordingly.
