Orson Holdings Company Limited Vs Union Of India

The petition, filed under Article 226 of the Constitution of India, is challenging the constitutional validity of Rule 138(10) of the Central Goods and Services Tax (GST) Rules, 2017 and the Gujarat Goods and Services Tax Rules, 2017. The petitioner argues that this rule is unconstitutional and violates Articles 14, 19(1)(g), and 301 of the Constitution. The specific contention is that Rule 138(10) imposes an unreasonable restriction on the validity period of certain documents or processes under the GST regime, which the petitioner asserts could hinder the freedom to carry on trade and commerce across states.

On 7.12.2018, the Court issued a notice in this case and subsequently passed an order. This order indicates that the court is considering the legal challenges posed by the petitioner and has acknowledged the arguments regarding the constitutional violations claimed. The petition likely seeks a declaration that Rule 138(10) is invalid, arguing that it imposes undue and arbitrary limitations on the duration for which certain activities or documentation related to GST can be valid, thus affecting the petitioner’s business operations.

The Court’s order signifies the beginning of judicial examination into whether the provisions of Rule 138(10) align with the constitutional guarantees of equality, freedom of trade, and protection against unreasonable restrictions. The outcome of this case could have significant implications for the interpretation and enforcement of GST regulations in India, potentially leading to changes in how such rules are applied to ensure they do not infringe upon fundamental rights.

In a petition filed under Article 226 of the Constitution of India challenging the constitutional validity of Rule 138(10) of the Central Goods and Services Tax Rules, 2017, and the Gujarat Goods and Services Tax Rules, 2017, the Court issued a notice on December 7, 2018. The petition contends that Rule 138(10), which restricts the validity period of the way bill based on the distance to be traveled in a day, is unconstitutional and violates Articles 14, 19(1)(g), and 301 of the Constitution.

During the proceedings, the petitioners, represented by advocates Mr. Vinay Shraff and Mr. Vishal Dave, highlighted an issue related to a notice issued under section 129(3) of the Central Goods and Services Tax Act, 2017 (referred to as Annexure “J” in the petition). The notice directed the petitioner to appear before the State Tax Officer-2. In response, the petitioner submitted a reply, but the Court was informed that the impugned order under section 129(3) was issued on September 28, 2018, before the scheduled hearing date of October 2, 2018. This premature issuance of the order was argued to be a violation of the principles of natural justice.

The Court was further briefed on sub-section (4) of section 129 of the Act, which mandates that no tax, interest, or penalty should be determined under sub-section (3) without providing the concerned person an opportunity to be heard. It was argued that despite the mention of a hearing date in the show cause notice, the order was issued before this date, thereby denying the petitioner the opportunity for a hearing, thus breaching sub-section (4) of section 129 of the Act. The Court’s attention was drawn to these procedural irregularities, which formed a central part of the challenge to the order’s validity and the enforcement of Rule 138(10).

In the case filed under Article 226 of the Constitution of India, the petitioners challenged the constitutional validity of Rule 138(10) of the Central Goods and Services Tax (CGST) Rules, 2017 and the Gujarat Goods and Services Tax (GST) Rules, 2017. The rule in question limited the validity period of a waybill based on the distance to be travelled within a day, which the petitioners argued violated Articles 14, 19(1)(g), and 301 of the Constitution of India.

The Court noted that the petitioners, represented by Mr. Vinay Shraff and Mr. Vishal Dave, pointed out an issue related to a notice issued under section 129(3) of the CGST Act, 2017. This notice directed the petitioner to appear before the State Tax Officer-2. The petitioners contended that they had responded to this notice but highlighted that the impugned order, issued on 28.09.2018, was passed before the scheduled hearing date of 02.10.2018. They argued this constituted a breach of the principles of natural justice as stipulated in sub-section (4) of section 129, which mandates that no tax, interest, or penalty should be determined without giving the concerned person an opportunity to be heard.

Further, the petitioners referred to section 122(1)(xiv) of the Act, which deals with penalties for transporting taxable goods without the required documentation. This section specifies a penalty of either ten thousand rupees or an amount equivalent to the tax evaded, whichever is higher. Additionally, they highlighted section 73, which covers the determination of tax liabilities not paid or short-paid, erroneously refunded, or where input tax credit was wrongly availed or utilized. Sub-section (8) of section 73 states that if a person pays the tax along with interest within thirty days of the notice issue, no penalty shall be applicable, and all proceedings related to the notice would be concluded. The petitioners asserted that they had paid the tax and penalty within the specified thirty-day period, thereby complying with this provision.

In summary, the petitioners contested the premature issuance of the order, asserting that their compliance with the statutory requirements should have exempted them from penalties. They argued that their rights to a fair hearing, as guaranteed by the Constitution, were violated by the actions of the authorities. The Court was urged to examine the validity of the rule and the procedural fairness in the handling of their case.

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