SC upholds constitutional validity of compensation law under GST

SC upholds constitutional validity of compensation law under GST

News

1. Supreme Court (SC) upholds constitutional validity of ‘The Compensation to States Act, 2017’, thus allowing the levy of cess for compensation to States in case of revenue shortfall under the Goods and Services Tax (GST).

Important Facts:

2. SC ruling is on Special leave petition (SLP) filed by central government challenging the earlier order of Delhi High Court.

3. Delhi HC had ordered against additional levy of cess on a coal company named Mohit Minerals in addition to clean energy cess.

4. SC has ruled that Compensation to States Act, 2017 is not beyond the legislative competence of Parliament

SC observation-

5. The Compensation to States Act, 2017 is not beyond the legislative competence of Parliament.

6. Clean Energy Cess and State Compensation Cess are two different cesses for different purpose. Thus, one cannot be set off against the other.

7. The act does not violate constitution One Hundred and First Amendment Act, 2016

• The constitution (One Hundred and First Amendment Act, 2016) introduced a national Goods and Services Tax in India from July 1, 2017.