M/S Presston Engineering Corporation vs. Assistant Commissioner

Held

The Court did not delve into the merits of the constitutional challenge. The petitioner's counsel filed a memo seeking permission to withdraw the petition. In light of this request, the Court dismissed the writ petition. No specific findings were made on the validity of Sub-Rule (5) of Rule 89 of the CGST Rules, 2017, nor were any operative directions issued beyond the dismissal. The issues raised by the petitioner were not adjudicated upon.

Facts

The petitioner, M/s. Presston Engineering Corporation, filed a writ petition before the Karnataka High Court challenging the constitutional validity of Sub-Rule (5) of Rule 89 of the CGST Rules, 2017. The petitioner contended that this sub-rule was ultra vires Section 54(3) of the CGST Act, 2017, and also unreasonable and discriminatory, thus violating Articles 14 and 19 of the Constitution of India. The respondents were the Assistant Commissioner of Central Tax (GST), Commissioner of Central Tax and Central Excise, Central Board of Indirect Taxes and Customs, and the Union of India. The petition was filed under Articles 226 and 227 of the Constitution.

Key Issues

1. Whether Sub-Rule (5) of Rule 89 of the CGST Rules, 2017, is ultra vires Section 54(3) of the CGST Act, 2017, and therefore liable to be struck down. The petitioner argued that the sub-rule imposes restrictions not contemplated by the parent Act, specifically Section 54(3), which deals with refunds. The petitioner contended that the sub-rule's conditions are arbitrary and go beyond the legislative intent of Section 54(3). 2. Whether Sub-Rule (5) of Rule 89 of the CGST Rules, 2017, is unreasonable and discriminatory, violating Articles 14 and 19 of the Constitution of India. The petitioner argued that the sub-rule creates an unfair distinction and imposes an undue burden, thereby infringing upon the fundamental rights of equality and freedom of trade. The respondents' arguments were not recorded in the judgment.