Supreme Court seeks Centre, State response in plea challenging provisions of Kerala GST Act that permit levy of tax under old scheme

The Supreme Court this week sought responses from the Central government and the State of Kerala in a plea challenging provisions of the Kerala Goods and Services Tax (GST) Act that permit assessment and collection of tax under the old tax regime [TS Belaraman v. The Commercial Tax Officer].

The order was passed by a Bench of Justices S Ravindra Bhat and Dipankar Datta in a petition filed against a November 22 Kerala High Court judgment dismissing a challenge to the constitutional validity of these provisions.

The Court also ordered that no coercive steps be taken for recovery till the next date of hearing.

"Issue notice returnable in four weeks. Till the next date of hearing, no coercive steps shall be taken against the petitioner(s) for recovery," the order said.

The petitioner's business was registered under the erstwhile Kerala Value Added Tax (VAT) Act, which was repealed when the GST regime came into force.

It was the petitioner's case that the GST Act allowed certain provisions of the earlier regime to continue with relation to levy, collection and assessment of tax. When the tax department issued pre-assessment notices in 2018 under the provisions that were in force at the time, the constitutional validity of the notices was challenged by various petitioners.

The plea was dismissed by a single-judge of the High Court, who reasoned that the State had sufficient legislative powers to include a savings clause under the Kerala GST Act.

An appeal against this decision was dismissed by a Division Bench of the High Court on November 31, 2022. Therefore, the petitioner moved the top court.

It was argued that this matter also raised concern with regard to the businesses of small enterprises suffering immensely as a result of the the COVID-19 pandemic. The petitioners thus urged the Court to consider these issues of constitutional importance.

Agreeing to hear the plea, the Court called for a response from the State as well as Centre while protecting the petitioners from coercive steps by the authorities.

Advocates S Mahesh Sahasranaman, Aakash Nandolia and Sagun Srivastava appeared for the petitioner.

The petition was filed through advocate-on-record Arjun Garg (Partner, GSL Chambers).

Senior Advocate Thottathil B Radhakrishnan and advocates MP Vinod and Atul Shankar Vinod represented petitioners in a connected matter.

[Read Order]