M/S Baby Marine (Eastern) Exports vs. Union Of INDIA

(Order of the Court was made by S.M.SUBRAMANIAM, J.) hereunder:- “9.The appellants also challenged the constitutional validity of section 16(2)(c) of the CGST Act and rule 36(4) of the CGST Rules. It is contended that those provisions are violative of Article 14 of the Constitution of India since they are discriminatory against the purchasing dealers. It is further contended that those provisions which insist that the purchasing dealer must ensure the compliance of the statutory provisions by the supplying dealer is arbitrary and illegal. 10.It is now well settled that any tax legislation may not be easily interfered with. The court must show judicial restraint to interfere with tax legislation unless it is shown and proved that such taxing statute is manifestly unjust or glaringly 3/8 https://www.mhc.tn.gov.in/judis

W.P.(MD)Nos.21165 & 21166 of 2022 unconstitutional. Taxing statutes cannot be placed, tested or viewed on the same principles as laws affecting civil rights such as freedom of speech, religion, etc. The test of taxing statutes would be viewed on more stringent tests [State of Himachal Pradesh v. Goel Bus Service, Kullu (2023 Livelaw (SC) 27)). The vires of section 16(2)(c) of the CGST Act or Rule 36(4) of the CGST Rules is not under challenge on the ground of legislative incompetence. The challenge of the constitutional validity of the provisions on the grounds of violation of Article 14 of the Constitution is vague. Nothing in the impugned provisions indicates that they discriminate between the purchasing and selling dealers. As stated already, the input tax credit is in the nature of a benefit or concession conferred under the statute. The impugned provisions prescribe certain conditions for the purchasing dealers to avail of the benefit. It is up to the purchasing dealer to avail of the said benefit/concession following those conditions. The prescription of the conditions cannot be considered discriminatory to contravene Article 14. So far as the second point urged by the appellants is concerned, it is settled that legislation or provision in a statute cannot be challenged only on the grounds of arbitrariness or unreasonableness. Manifest arbitrariness must be established to strike down a provision in the statute as violative of Article 14 of the Constitution. The test to determine manifest arbitrariness is whether the enactment is drastically unreasonable, capricious, irrational, or without adequate determining principle (See 4/8 https://www.mhc.tn.gov.in/judis

W.P.(MD)Nos.21165 & 21166 of 2022 Shayara Bano v Union of India [(2017) 9 SCC 11). Nothing indicates that the impugned provisions satisfy the said test and thus manifestly arbitrary and glaringly unconstitutional. Under these circumstances, the challenge to the constitutional validity of the impugned provisions must fail.” 2.The Division Bench of Madras High Court in the case of L & T Geostructure LLP Vs.Union of India reported in (2025) 30 Centax 453 (Mad.) considered the constitutional validity of Rule 36(4) of Goods and Service Tax Rules, 2017 and upheld the same and thereby dismissed the Writ Petition. The relevant paragraphs are extracted hereunder:- “101.Restrictions imposed under Rule 36(4) of the respective GST Rules to avail full credit of Input Tax in absence of the mandatory compliance by the supplier of goods or service as is contemplated under Section 37(1) of the respective GST Acts was a temporary measure to regulate the availing of Input Tax Credit (ITC). Ipso facto, it cannot be held that Rule 36(4) of the respective GST Rules is in violation of Article 14 of the Constitution of India.

W.P.(MD)Nos.21165 & 21166 of 2022 on the goods or service supplied by the supplier of goods or service as the case may be by a recipient who was liable to pay tax on the output supply was engaged in Zero Rated Supply within the meaning of the respective GST enactments including Integrated Goods and Service Tax and the Rules made thereunder.

W.P.(MD)Nos.21165 & 21166 of 2022 3.In view of the fact that the Division Bench of the Kerala High Court and the Division Bench of the Madras High Court upheld the provisions of the Act and Rules, no further deliberations are required from the hands of this Court. 4.The learned counsel appearing for the petitioner would submit that entire tax amount has already been paid in respect of W.P.(MD)No.21166 of 2022. 5.May that as it be, consequential relief as such sought for seeking refund of the tax amount cannot be considered by this Court, since adjudication relating to facts are required at the hands of the competent authority. Thus, the petitioner is at liberty to approach the authorities competent, if they are otherwise eligible for any relief under the provisions of the Act and Rules. 6.With the above observation, these Writ Petitions are dismissed. No costs. (S.M.S., J.) & (A.D.M.C., J.)

NCC : Yes / No Index : Yes / No Yuva 7/8 https://www.mhc.tn.gov.in/judis

W.P.(MD)Nos.21165 & 21166 of 2022 S.M.SUBRAMANIAM, J. AND DR.A.D.MARIA CLETE, J. Yuva To The Secretary Taxes, State of Tamil Nadu, Secretariat, Chennai-600 009. W.P.(MD)Nos.21165 & 21166 of 2022 06.08.2025 8/8 https://www.mhc.tn.gov.in/judis