Facts of the Case:

In this case, the writ petitions were filed by suppliers of pulses such as moong dal and toor dal, who marketed their products under unregistered brand names. Under the original GST rate notifications issued on 28 June 2017, GST at 5% was leviable only on goods supplied in unit containers bearing a registered brand name, while similar goods without a registered brand name were exempt. Following the implementation of GST, several businesses deregistered their trademarks but continued to market their products under the same brand names, thereby remaining outside the GST net.

To address this perceived tax avoidance, the GST Council, in its 21st Meeting held on 9 September 2017, recommended expanding the scope of “registered brand name” to include brands in respect of which an actionable claim was available. Acting on these recommendations, the Central Government issued Notifications Nos. 27/2017 and 28/2017 dated 22 September 2017, and the State Government issued a corresponding notification.

However, the notifications went beyond the Council’s recommendation by introducing the additional expression “enforceable right in a court of law” and prescribing a procedure for voluntarily foregoing such rights. Based on these amended notifications, show cause notices were issued to the petitioners demanding GST.

The petitioners challenged the validity of the notifications, contending that the Government had exceeded the recommendations of the GST Council and that the subsequent ratification by the GST Council in its 22nd Meeting could not cure the defect.

Issue:

Whether notifications issued by the Central Government under Sections 9 and 11 of the CGST Act can travel beyond the recommendations made by the GST Council, and whether the GST Council possesses the constitutional or statutory authority to retrospectively ratify notifications already issued by the Government so as to validate provisions that were not originally recommended by the Council.

Held That:

The Madras High Court allowed the writ petitions and held that notifications issued under Sections 9 and 11 of the CGST Act constitute subordinate legislation and must strictly conform to the recommendations of the GST Council. Relying upon the decision of the Supreme Court in Union of India v. Mohit Minerals Pvt. Ltd., the Court held that although GST Council recommendations are not binding on Parliament or State Legislatures while enacting primary legislation, they are binding upon the Government while exercising delegated legislative powers such as issuing notifications or framing rules. On comparing the recommendations of the GST Council with the impugned notifications, the Court found that the Council had recommended inclusion only of “actionable claim”, whereas the Government had unilaterally added the wider expression “enforceable right in a court of law”, which materially enlarged the scope of taxation. Since this additional expression lacked any recommendation from the GST Council, the notifications, to that extent, were held to be ultra vires the CGST Act and Article 279A of the Constitution.

The Court further held that the GST Council has only the constitutional power to make recommendations under Article 279A and has not been conferred any express or implied power to ratify notifications already issued by the Government. Applying the settled principle that statutory powers cannot be validated through subsequent ratification unless expressly authorised by law, the Court ruled that the GST Council’s purported ratification of the notifications during its 22nd Meeting was without jurisdiction and legally ineffective. Consequently, the impugned show cause notices, being founded upon the invalid portion of the notifications, were quashed. However, liberty was reserved to the Department to initiate fresh proceedings, if otherwise permissible, in accordance with the notifications to the extent they remained valid after severing the ultra vires expression.

Case Name: M/s. Guru and Co., M/s. Jeyabalan and Co. And Others Versus Union of India, Government of Tamil Nadu, Rep. by its Principal Secretary and Commissioner of Commercial Taxes, Goods And Services Tax Council, The Deputy Director, Directorate General of Good and Services Tax Intelligence Unit, Madurai, Central Board of Indirect Taxes and Customs, New Delhi And Others dated 15.06.2026

To read the complete judgement 2026 Taxo.online 1752