Raj Metal Industries & Ors. v/s Union of India

In this application under Article 226 of the Constitution of India, the petitioners have brought forward a challenge against the validity of Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act. These provisions relate to the Goods and Services Tax (GST) regime in India. The petitioners contend that these rules and sections are unconstitutional or unlawful in some manner.

Specifically, Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act are under scrutiny. Rule 86A may pertain to the restrictions on input tax credit in certain situations, while Section 16(2)(c) could relate to conditions for claiming input tax credit under the GST laws.

The petitioners also challenge the actions taken by the State GST authorities in connection with summons that were issued on October 19, 2020. It appears that these summons are related to some form of investigation or enforcement action undertaken by the GST authorities.

The writ petitioners have raised objections to these legal provisions and actions, presumably on grounds that they infringe upon their rights or are not in accordance with the law. They seek relief from the court, likely in the form of declarations of the provisions being unconstitutional or unlawful, and possibly injunctions against the enforcement of these provisions or actions by the GST authorities.

Overall, this summary outlines a legal challenge brought forth by the petitioners against certain provisions of the GST laws and actions taken by the GST authorities, invoking the jurisdiction of the High Court under Article 226 of the Constitution of India.

In this case, the petitioners have filed an application under Article 226 of the Constitution of India challenging the legality of Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act. Additionally, they contest the actions taken by the State GST authorities, including the issuance of summons on October 19, 2020, and the subsequent blocking of the electronic credit ledger on December 8, 2020.

Mr. Vinay Shraff, representing the petitioners, argues that since proceedings were already underway under the CGST Act, the State GST authorities had no jurisdiction to initiate separate proceedings. He cites Sub-Section 2(b) of Section 6 of the West Bengal GST Act to support his contention, emphasizing that when proceedings are initiated by central authorities, state authorities cannot intervene. He also refers to a Circular issued by the Ministry of Finance, Department of Revenue, dated October 5, 2018, in support of his argument.

On the other side, Mr. Dastoor, the learned Additional Solicitor General representing the Union of India, Mr. Abhratosh Majumdar, the learned Additional Advocate General representing the State CGST, and Mr. Somnath Ganguly, representing the CGST, present their arguments.

After careful consideration, the court finds that the summons issued by the State GST authorities on October 19, 2020, appears to contravene Section 6(2)(b) of the WBGST Act. Consequently, the court orders a stay on these summons and any related proceedings.

The case under consideration is an application filed under Article 226 of the Constitution of India wherein the petitioners challenge the legality of Rule 86A of the CGST Rules/WBGST Rules and Section 16(2)(c) of the CGST Act/WBGST Act. Additionally, the petitioners contest the actions taken by the State GST authorities concerning summonses issued on October 19, 2020, and the subsequent blocking of the electronic credit ledger on December 8, 2020.

Mr. Vinay Shraff, representing the petitioners, argues that since proceedings were already initiated under the CGST Act, the State GST authorities were not entitled to initiate further proceedings. He cites Sub-Section 2(b) of Section 6 of the West Bengal GST Act to support his argument and also refers to a circular issued by the Ministry of Finance on October 5, 2018.

In response, Mr. Dastoor, the Additional Solicitor General representing the Union of India, and Mr. Abhratosh Majumdar, the Additional Advocate General representing the State CGST, present their arguments. Mr. Somnath Ganguly, representing the CGST, also presents his case.

After considering the arguments, the court finds that the summonses issued by the State GST authorities on October 19, 2020, appear to contravene Section 6(2)(b) of the WBGST Act. Consequently, the court orders a stay on these summonses and any related proceedings. However, regarding the blocking of the electronic credit ledger, Mr. Majumdar argues that it was carried out by the State authorities as agents of the Central authorities and does not constitute a separate “proceeding” under Section 6(2)(b) of the WBGST Act.

As the validity of Rule 86A and Section 16(2)(c) of the CGST Act/WBGST Act is challenged, the court directs the exchange of affidavits in this matter. Affidavits-in-opposition are to be filed within four weeks, with replies due within two weeks thereafter.

The court clarifies that its order does not prevent the Central GST authorities from proceeding in accordance with the law or continuing with any proceedings initiated by them.

The case is scheduled for further appearance after the completion of the affidavit exchange process. Parties can obtain an urgent certified copy of the order upon fulfilling all necessary formalities.

Download PDF:

For Reference Visit:

Read Another Case Law:

GST Case Law