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2020 Supreme(Del) 1093
IN THE HIGH COURT OF DELHI AT NEW DELHI
Manmohan, Sanjeev Narula, JJ.
Manufacturers Traders Association & Anr. - Appellant
Versus
Union Of India & Ors. - Respondent
Writ Petition (Civil) No. 597 of 2019
Decided On : 15-09-2020
Jasmeet Singh, Advocate, Prakash Shah, Advocate, Jasdeep Dhillon, Advocate, Kirtiman Singh, Advocate, Srivtas Kaushal, Advocate, Amit Bansal, Advocate, Aman Rewaria, Advocate, Vipasha Mishra, Advocate
The decision of the GST Council regarding the GST rate prevails and cannot be challenged based on other statements or responses.
Headnote:
GST Rate - Fabrics - Section 9(1) of the CGST Act, 2017, Section 5(1) of the IGST Act, 2017, Section 9(1) of the DGST Act, 2017 - No. 1/2017-Central Tax (Rate), No. 1/2017- Integrated Tax (Rate), No. 1/2017-State Tax (Rate) - The court discussed the conflict between the GST notifications and the recommendations made by the Goods and Service Tax Council regarding the GST rate for fabrics falling under Chapters 50 to 63 of the Customs Tariff. The court analyzed the minutes of the 15th GST Council Meeting and the subsequent clarification provided by Respondent No. 3 in the 38th GST Council Meeting, ultimately concluding that the recommendation for the GST rate on specialized and industrial fabrics of chapters 56 to 59 was indeed 12%. The court dismissed the petition as there was no merit in challenging the decision of the GST Council.
Fact of the Case:
The Petitioners sought a writ in the nature of mandamus directing the Central Government and the Government of NCT of Delhi to notify the GST rate of 5% for all varieties of fabrics falling under Chapters 50 to 63 of the Customs Tariff, in line with the recommendations made by the Goods and Service Tax Council.
Finding of the Court:
The court found that the recommendation for the GST rate on specialized and industrial fabrics of chapters 56 to 59 was indeed 12%, as clarified by Respondent No. 3 in the 38th GST Council Meeting. The court dismissed the petition as there was no merit in challenging the decision of the GST Council.
Issues: The conflict between the GST notifications and the recommendations made by the Goods and Service Tax Council regarding the GST rate for fabrics falling under Chapters 50 to 63 of the Customs Tariff.
Ratio Decidendi: The court relied on the clarification provided by Respondent No. 3 in the 38th GST Council Meeting, which confirmed the recommendation for the GST rate on specialized and industrial fabrics of chapters 56 to 59 as 12%, and concluded that there was no merit in challenging the decision of the GST Council.
Final Decision: The court dismissed the petition as there was no merit in challenging the decision of the GST Council.
JUDGMENT
Sanjeev Narula, J. - CM APPL. 22639/2020
1. By way of this application, the Petitioners seek early hearing of the petition through video conferencing. Since no objection is raised on behalf of the Respondents, the application is allowed. Having regard to the fact that a short question is involved in the present petition, with the consent of the counsel for both parties, we proceed to hear the main petition for final disposal.
2. The application is disposed of accordingly.
W.P.(C) 597/2019 & CM APPL. 22638/2020
3. Petitioner No. 1, a society comprising of members engaged in the manufacture of fabrics, has invoked the extraordinary writ jurisdiction of this Court under Article 226 of the Constitution of India, 1950 ("Constitution") seeking inter alia a writ in the nature of mandamus directing the Central Government ("Respondent No. 1") as well as the Government of NCT of Delhi ("Respondent No. 2") to notify the GST rate of 5% for all varieties of fabrics falling under Chapters 50 to 63 of the Customs Tariff in furtherance of the recommendations made by the Goods and Service Tax Council ("Respondent No. 3").
4. Briefly stated, the subject matter of the present petition revolves around three GST Notifications, the details whereof are as follows: (i) No. 1/2017-Central Tax (Rate) dated 28.06.2017 issued by Respondent No. 1 under Section 9(1) of the CGST Act, 2017, notifying the rate of central tax at 6% on Intra-State supply of fabrics; (ii) No. 1/2017- Integrated Tax (Rate) dated 28.06.2017 also issued by Respondent No. 1 under Section 5(1) of the IGST Act, 2017, notifying the rate of integrated tax at 12% on Inter-State supply of the fabrics; (iii) No. 1/2017-State Tax (Rate) dated 30.06.2017 issued by Respondent No.2 under Section 9(1) of the DGST Act, 2017, notifying the rate of state tax at 6% on Intra-State supply of fabrics made within the NCT of Delhi. In terms of the afore-noted notifications, for fabrics falling under Chapter 50 to 63 GST @ 5% has been notified, except for the varieties of fabrics falling under Chapter 58 and 59 for which GST is notified @ 12%.
5. The Petitioners perceive the aforesaid three notifications to be in conflict with the recommendations made by Respondent No. 3 in its 15th Meeting held on 03.06.2017. They contend that although the Joint Secretary (TRU-1) CBEC proposed a rate of 12% on fabrics falling in Chapters 56, 57 & 59, however during the meeting, Respondent No. 3 took a decision and finalised uniform rate of tax for all varieties of fabrics falling under Chapters 50 to 63 of the Customs Tariff at 5% and not at the proposed rate of 12%. Then in the subsequent 16th Meeting held on 11.06.2017, the Council after due deliberations, adopted the decision taken in the previous meeting. It is thus contended that Respondents No. 1 and 2 have not implemented the specific recommendations made by Respondent No. 3 in entirety, and the rate of tax notified on all varieties of fabrics covered under Chapters 50 to 63 of the Customs Tariff is not the recommended rate of 5%. On the aforesaid footing, Petitioners seek directions to Respondents No. 1 and 2 to immediately implement the recommendations made by Respondent No. 3 and issue requisite notifications notifying the recommended rate of 5% on all varieties of fabrics covered under Chapters 50 to 63 of the Customs Tariff.
6. During the course of preliminary hearing, taking a prima facie view of the matter on the basis of the record shown to the Court, it was felt appropriate and necessary to have the matter referred to Respondent No. 3 to have its view. Directions to this effect were issued vide order dated 11.10.2019, relevant portion of which is extracted hereunder:
"On 27.08.2019, we had passed the following order:
" 1. During the course of arguments, the counsel for Petitioner relies upon the paragraph No. 9.8.10 of Minutes of the 15th GST Council Meeting held on 03.06.2017, which read as follows:
"9.8.10. After discussion, the Council agreed
