2019 Taxo.online 714

MISC. BENCH No. – 29816 of 2019





Central Goods and Service Tax, 2017

Notification no. 8

Pankaj Kumar Jaiswal, Justice & Irshad Ali, Justice

In favour of revenue

High Court


Represented by:-

Petitioner :- Shailender Singh,Ankit Tiwari,Kaviya Singh
Respondent :- C.S.C.,Digvijay Nath Dubey


  1. Heard Sri Shailender Singh, learned counsel for the petitioner, Sri Digvijay Nath Dubey, learned Chief Standing Counsel for the respondents.
  2. By this writ petition under Article 226 of the Constitution of India the petitioner is praying for following relief: i. to issue a writ, order or direction in the nature of certiorari commanding the opposite parties to:- a) to quash the impugned recommendations of GST Council being void ab initio; b) strike down the impugned notification no. 8 of 2017 Central Tax dated 27.07.2017 holding it to be ultra vires; c) strike down the impunged notification no. 14/2019 Central Tax dated 7th March, 2019 holding it to be ultra vires.
  3. The petitioner is a society registered under the Societies Registration Act, 1860. The petitioner being an Association of Small Scale Ice Cream Manufacturers is eligible for various policies framed for promotion of Small Scale Industries by the various government agencies. The Association is challenging the validity of notification no. 8 of 2017 dated 27.07.2017 and 14 of 2019 dated 7th March, 2019 on the ground that same are unjust, unreasonable and in arbitrary manner the Ice Cream has been treated at par with Pan Masala and Tobacco products. There is no justification of the Ice Cream Manufacturers being treated equally with Pan Masala and Tobacco Manufacturers when admittedly there are no any ill-effects of consumption of Ice Cream. There are more than fifty thousand Small Scale Ice cream Manufacturers in India, which roughly employed 20- 30 employees and such heavy taxation without any reasonable classification between Small Scale and Large Scale Ice Cream Manufacturers would lead to shut-down the Small Scale Units.
  4. When we asked, on which ground validity has been challenged by the petitioner or validity of the aforesaid notifications have been challenged, learned counsel for the petitioner has submitted that same is violative of Article 14 of the Constitution of India.
  5. It is well settled that a legislative provision cannot be struck down as being arbitrary, irrational or unreasonable. No enactment can be struck down by just saying that it is arbitrary or unreasonable.
  6. The Hon’ble Supreme Court in the matter of State of M.P. Vs. Rakesh Kohli and another, decided on 11th May, 2012 (Civil Appeal No. 1270 of 2004) has held: 21. The Constitution Bench of this Court in Mohd. Hanif Quareshi and others v. State of Bihar[15], while dealing with the meaning, scope and effect of Article 14, reiterated what was already explained in earlier decisions that to pass the test of permissible classification, two conditions must be fulfilled, namely, (i) the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) such differentia must have rational relation to the object sought to be achieved by the statute in question. The Court further stated that classification might be founded on different basis, namely, geographical, or according to objects or occupations or thelike and what is necessary is that there must be a nexus between the basis of classification and the object of the Act under consideration. 22. In Mohd. Hanif Quareshi15, the Constitution Bench further observed that there was always a presumption in favour of constitutionality of an enactment and the burden is upon him, who attacks it, to show that there has been a clear violation of the constitutional principles. It stated in paragraph 15 (at pgs. 740-741) of the Report as under :
    “……..The courts, it is accepted, must presume that the legislature understands and correctly appreciates the needs of its own people, that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds. It must be borne in mind that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest and finally that in order to sustain the presumption of constitutionality the Court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation………” 23. The above legal position has been reiterated by a Constitution Bench of this Court in Mahant Moti Das v. S.P. Sahi[16]. 24. In Hamdard Dawakhana and another v. The Union of India and others[17], inter alia, while referring to the earlier two decisions, namely, Bengal Immunity Company Ltd.11 and Mahant Moti Das16 , it was observed in paragraph 8 (at pg. 559) of the Report as follows: “8. Therefore, when the constitutionality of an enactment is challenged on the ground of violation of any of the articles in Part III of the Constitution, the ascertainment of its true nature and character becomes necessary i.e. its subject-matter, the area in which it is intended to operate, its purport and intent have to be determined. In order to do so it is legitimate to take into consideration all the factors such as history of the legislation, the purpose thereof, the surrounding circumstances and conditions, the mischief which it intended to suppress, the remedy for the disease which the legislature resolved to cure and the true reason for the remedy.” 25. In Hamdard Dawakhana17, the Court also followed the statement of law in Mahant Moti Das16 and the two earlier
    decisions, namely, Charanjit Lal Chowdhury v. Union of India and others[18] andThe State of Bombay and another v. F.N. Balsara[19] and reiterated the principle that presumption wasalways in favour of constitutionality of an enactment. 26. In one of the recent cases in Karnataka Bank Limited6, while referring to some of the above decisions, in para 19 (at pgs. 262-263) of the Report, this Court held as under : “19. The rules that guide the constitutional courts in discharging their solemn duty to declare laws passed by a legislature unconstitutional are well known. There is always a presumption in favour of constitutionality, and a law will not be declared unconstitutional unless the case is so clear as to be free from doubt; “to doubt the constitutionality of a law is to resolve it in favour of its validity”. Where the validity of astatute is questioned and there are two interpretations, one of
    which would make the law valid and the other void, the former must be preferred and the validity of law upheld. In pronouncing on the constitutional validity of a statute, the court is not concerned with the wisdom or unwisdom, the justice or injustice of the law. If that which is passed into law is within the scope of the power conferred on a legislature and violates no restrictions on that power, the law must be upheld whatever a court may think of it. (See State of Bombay v. F.N. Balsara.)”
  7. In the matter of R.K. Garg Etc. Etc vs Union Of India & Ors.,reported in 1981 AIR 2138 the Constitution Bench of Hon’ble
    Supreme Court stated that laws relating to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion, etc.
  8. While dealing with constitutional validity of a taxation lawenacted by Parliament or State Legislature, the court must have regard to the following principles: (i), there is always presumption in favour of constitutionality of a law made by Parliament or a State Legislature (ii), no enactment can be struck down by just saying that it is arbitrary or unreasonable or irrational but some constitutional infirmity has to be found (iii), the court is not concerned with the wisdom or unwisdom, the justice or injustice of the law as the Parliament and State Legislatures are supposed to be alive to the needs of the people whom they represent and they are the best judge of the community by whose suffrage they come into existence (iv), hardship is not relevant
    in pronouncing on the constitutional validity of a fiscal statute or economic law and (v), in the field of taxation, the Legislature enjoys greater latitude for classification.
  9. On due consideration of the aforesaid we are of the view that the classification cannot be said to be without any rationale.
  10. The writ petition filed by the petitioner has no merit and is, accordingly, dismissed. No order as to costs.

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