Sant Lal And Sons vs. State Of Punjab And Another

Held

The Court decided to dispose of the writ petitions by directing that the challenge to Section 174(2) of the GST Act, 2017, would be subject to the final outcome of the decision in the case of T.S. Belaraman (supra) by the Supreme Court. The Court reasoned that since the Supreme Court had granted leave in the T.S. Belaraman matter, the final adjudication on this issue would be made by the apex court. Consequently, the recovery proceedings in respect of the concerned petitioners were stayed, and the interim order was directed to continue, subject to the final decision of the Supreme Court. The Court explicitly stated that the present petitions were being disposed of in view of the Supreme Court's pending decision.

Facts

The petitioners, Sant Lal & Sons, Subash Trading Co., and Avi Packaging Industries, filed writ petitions challenging Section 174(2) of the GST Act, 2017, as incorporated into the Punjab State Goods and Services Tax Act, 2017, and the Haryana State Goods and Services Tax Act, 2017. This challenge was part of a larger group of cases. The petitioners argued that the impugned provision was unconstitutional and that the actions taken under it were beyond the competence of the department. The High Court noted that a similar challenge to Section 174(2) of the Kerala GST Act had been decided in favour of the Revenue by the Kerala High Court. Furthermore, the Supreme Court had granted leave in a related matter, SLP(C) No.640/2023 titled T.S. Belaraman vs. The Commercial Tax Officer, and had restrained the Revenue from taking coercive steps.

Key Issues

1. Whether Section 174(2) of the GST Act, 2017, as incorporated into the respective State GST Acts, is ultra vires the Constitution of India. The petitioner argued that the provision is unconstitutional and that actions taken under it are beyond the competence of the department. The Revenue contended that the provision is intra vires and within the legislative competence of the State. 2. Whether the High Court's previous holding in a bunch of cases, upholding the validity of Section 174(2) and the actions taken thereunder, was correct. The petitioner relied on the Supreme Court's decision to grant leave in the T.S. Belaraman case, suggesting a potential re-examination of the issue. The Revenue relied on the previous High Court judgments that had upheld the provision.