GST levy on mobility aids

Context: The GST levy on mobility aids places a prohibitive burden on the ability of disabled citizens to lead a dignified life

Background

• Recently, in Nipun Malhotra vs. Union of India case the Supreme Court of India heard brief arguments on the constitutional validity of the levy of Goods and Services Tax (GST) on mobility aids used by disabled citizens.
• According to the petitioner, the tax imposed on the products such as wheelchairs, tricycles for the disabled, braille paper and braille watches was discriminatory.
• But the Court adjourned the case stating that its power to review the decision of imposing tax was constrained by the principle of separation of powers.
• it suggested that the GST council (the governing body) is responsible for determining which products are taxed, and at what rate and its decisions are final.
• However, until the advent of the GST, mobility aids were almost entirely immune from indirect taxes.
• In virtually every State, exemptions were granted on the payment of value-added-tax on such goods. The GST did away altogether with this exemption.

Why should the Supreme court review the legitimacy of the taxes levied?

• Protecting the Fundamental rights: Taxes have a direct bearing on society. The nature and rate of tax imposed on a product have direct consequences on a person’s freedom and on a person’s right to be treated with equal care and concern.
• Promotes inequality: The tax places a prohibitive burden on the ability of disabled citizens to access the most basic goods, to lead lives with dignity.
• To Validate the legitimacy: When the GST Council reject the petitioner’s plea, it would be irrational of the Court not to test the legitimacy of the levy.
• International Precedence: The top courts in Canada and Colombia have recently came up to examine whether or not an imposition of a tax violates a fundamental right.
• Does not affect separation of powers: Taxing laws are very much similar to ordinary laws where judiciary has the power of judicial review and it doesn’t obstruct legislative and executive competence.

Read Also :-What is Goods and Service Tax? 

What were the reasons provided by government to impose GST on mobility aids?

• According to the government, relieving mobility aids from taxation, will disincentivise domestic manufacturers.
• In the absence of a levy of GST on the final product, the manufacturer will be burdened with input taxes. Since it cannot claim any credit for those taxes paid.
• So, the prices of the final product would have to be higher, otherwise the manufacturer will be placed in a relative position of disadvantage to foreign makers.
• The 5% concessional GST rate will result in a win-win situation for both the users of such devices, the disabled persons, as well as the domestic manufacturers of such goods.

Why the arguments given by government is not satisfactory?

• First, many other essential products are exempted from GST.For example, in July 2018, following a sustained campaign, the levy imposed on female personal hygiene products (tampons and sanitary pads) was removed.
• Second, the Parliament has other ways to ensure that domestic manufacturers, for example, it can exempt firms from paying taxes on inputs on the condition that such inputs will be used to manufacture mobility aids.

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Taxation, is just a tool intended to augment general welfare. The GST Council can learn from the good practices of Canada and Australia and grant a complete exemption on the levy imposed on mobility aids.