Page 22 - BANKING FINANCE MARCH 2024

LEGAL UPDATE

Legal

Tax dispute relief: Interest, 100 petitions moved by firms running the finished good reaches the hands of
businesses ranging from hospitality, the consumer This court is of the view
penalty, fee to be waived fast-moving consumer goods and real that the amounts foregone from the

Interest, penalty, fee, cess, and sur- estate, challenging the constitutional public exchequer in favour of the con-
charge on taxpayers, besides the prin- validity of certain provisions of the Act, sumers cannot be appropriated by the
cipal amount, will be withdrawn under the CGST rules and the legality of the manufacturers, traders, distributors
the petty dispute relief scheme, which notices proposing imposition or penalty etc. To allow them to do so would
was announced in the Interim Budget orders by the National Anti-Profiteer- amount to unjust enrichment," the
for 2024-25. But the remission of these ing Authority (NAA). Bench underscored.
demands would not end criminal pro-
The NAA had passed final orders direct- The HC said that the obligation of mak-
ceedings, either started or planned,
ing the petitioners to pass on the com- ing a "commensurate" reduction in
against the tax assessee.
mensurate benefit of reduction in the prices mentioned in Section 171 of the
The Central Board of Direct Taxes rate of tax or the input tax credit to Act is relevant to the objective of the
(CBDT) has issued an order stating that its consumers along with interest as GST regime which is to ensure that
the remission of petty demands will per Section 171 of the Act. "suppliers pass on the benefits of reduc-
not include the demands of tax de- A division bench of Acting Chief Justice tion in the rate of tax and input tax
ducted at source and tax collected at Manmohan and Justice Dinesh Kumar credit to the consumers", especially
source raised on deductors and collec-
Sharma observed that the Act "prima- since the GST is a consumption-based
tors of income tax.
rily intends" to provide a common na- tax (as adopted in India) and the recipi-
tional market for goods and services as ent (consumer) practically pays the
CGST Act enacted in pub- reflected in its motto 'One Nation One taxes which are included in the final
lic interest, is consumer Tax'. Terming it a "consumer-centric price. It said that Section 171 cannot be
Act", the Bench said it eliminates the looked at as a "price control measure"
centric: Delhi HC levy of multiple taxes, streamlines the has been enacted in "public interest"
While upholding the constitutional va- credit mechanism by removing distor- and it mandates that "whatever is
lidity of the Central Good and Services tions in the supply chains, and ensures saved in tax must be reduced in price".
Tax (CGST) Act, the Delhi High Court a smooth pass-through and transpar- Among various other observations, the
observed that the law not only "sim- ent mechanism for levying tax. Bench further said that the anti-profi-
plifies and harmonises the indirect tax
"The Act levies a single tax on the sup- teering mechanism incorporated in
regime" in the country, but also marks ply of goods or services on the value Section 171 is in the exercise of the
a "paradigm shift" in the manner in
addition at each stage of the supply "Parliament's power to legislate on an-
which it is enacted. chain from purchase of raw materials, cillary and necessary aspects/matters"
The verdict came in a batch of over manufacture of product or import, till of the GST.

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