V.S. Products VS Union Of India

In this intra-court appeal, the Appellant challenges an order dated 04.01.2022 issued in WP No.5237/2021. The original writ petition filed by the Appellant contested the imposition of excise duty under the Central Excise Act, 1944 (‘the 1944 Act’), as well as the imposition and collection of National Calamity Contingency Duty (referred to as ‘NCCD’) on tobacco and tobacco products, but was ultimately dismissed.

The background of the case involves the Appellant, a proprietary firm engaged in the manufacturing of tobacco and tobacco products. The Appellant had registered itself under Rule 9 of the Central Excise Registration Rules, 2002. Following the implementation of the Goods and Services Tax (GST) regime.

This intra court appeal stems from an order dated 04.01.2022 issued in WP No.5237/2021, in which the writ petition filed by the Appellant contesting the imposition of excise duty under the Central Excise Act, 1944 (‘the 1944 Act’) and the levy and collection of National Calamity Contingency Duty (NCCD) on tobacco and tobacco products, was dismissed.

The Appellant, a proprietary firm involved in manufacturing tobacco and tobacco products, had registered itself under Rule 9 of the Central Excise Registration Rules, 2002. After the implementation of the Goods and Service Tax (GST) regime, it registered itself under Rule 10(1) of the Central Goods and Services Tax Rules, 2017. Subsequently, Central Excise Duty was imposed on Tobacco and Tobacco products via Notification No.2/2019 issued under Section 5A(1) of the 1944 Act on 06.07.2019.

In response, the Appellant filed a writ petition challenging the validity of the aforementioned Notification. Additionally, it sought a declaration that Section 174 of the Central Goods and Services Tax Act, 2017 (CGST Act), which aims to preserve the operation of the 1944 Act concerning tobacco and tobacco products, is unconstitutional and legally flawed. Furthermore, the Appellant contested the constitutionality of Section 136 of the Finance Act, 2001, which deals with the levy and collection of NCCD.

The Appellant’s main contention was that the imposition of excise duty and NCCD on tobacco and tobacco products was unconstitutional and against the provisions of law. They argued that the relevant laws infringed upon their rights and were not in conformity with the Constitution.

However, the court dismissed the writ petition, upholding the validity of the Notification imposing excise duty, the provision preserving the operation of the 1944 Act under the CGST Act, and the constitutionality of Section 136 of the Finance Act, 2001. The court’s decision essentially affirmed the legality of the imposition of excise duty and NCCD on tobacco and tobacco products, rejecting the Appellant’s arguments to the contrary.

The appeal now seeks to challenge the decision of the court in dismissing the writ petition and upholding the validity of the excise duty and NCCD levied on tobacco and tobacco products.

This intra court appeal stems from an order issued on 04.01.2022 in WP No.5237/2021, wherein the writ petition filed by the Appellant challenging the imposition of excise duty under the Central Excise Act, 1944 (‘the 1944 Act’) and the levy and collection of National Calamity Contingency Duty (NCCD) on tobacco and tobacco products, was dismissed.

Here’s a summary of the facts leading to the filing of this appeal:

The Appellant, a proprietary firm, is involved in the manufacturing of tobacco and tobacco products and was registered under Rule 9 of the Central Excise Registration Rules, 2002. Subsequently, upon the introduction of the Goods and Service Tax (GST) regime, the appellant registered under Rule 10(1) of the Central Goods and Services Tax Rules, 2017. A notification (No.2/2019) dated 06.07.2019 imposed Central Excise Duty on Tobacco and Tobacco products, prompting the Appellant to file a writ petition challenging the validity of this notification.

In the writ petition, the Appellant contested the constitutionality of the repeal and saving provision contained in Section 174 of the Central Goods and Services Tax Act, 2017 (CGST Act) regarding the operation of the 1944 Act concerning tobacco and tobacco products. Additionally, the Appellant challenged the constitutionality of Section 136 of the Finance Act, 2001, which levies and collects NCCD. Alternatively, they sought a declaration that Section 136 of the Finance Act, 2001, has been implicitly repealed from 01.07.2017, the date on which the CGST Act came into effect, and demanded a refund of the NCCD amount collected by the Respondents from that date onwards.

The findings of the learned Single Judge, as outlined in the judgment dated 04.01.2022, include the following:

(i) The introduction of Article 246A in the Constitution conferred the power of simultaneous levy on Goods and Services akin to the Goods and Services Tax, and the use of a non obstante clause does not negate the power available under Article 246.

In essence, the Appellant’s appeal challenges the dismissal of their writ petition contesting the imposition of excise duty and NCCD on tobacco and tobacco products, citing constitutional and legal grounds.

result in a dual taxation regime, which is not prohibited by law.

(ii) The Notification dated 06.07.2019 issued under Section 5A(1) of the 1944 Act is not ultra vires Articles 14 and 19(1)(g) of the Constitution.

(iii) The provision contained in Section 174 of the CGST Act qua the Tobacco and Tobacco products is valid and constitutional.

(iv) Section 136 of the Finance Act, 2001, which provides for the levy and collection of NCCD, is constitutionally valid.

(v) There is no implied repeal of Section 136 of the Finance Act, 2001, with effect from 01.07.2017.

(vi) The appellant is not entitled to refund of NCCD collected with effect from 01.07.2017. AGGRIEVED BY THE FINDINGS OF LEARNED SINGLE JUDGE, THE APPELLANT PREFERRED THIS INTRA COURT APPEAL ON THE FOLLOWING GROUNDS:

1.Mr. Vineet Kansal, learned Senior Advocate assisted by Mr. Jatinder Kumar, learned counsel for the appellant has raised following contentions:

(i) That the learned Single Judge has failed to appreciate that Article 246A of the Constitution merely provides for concurrent legislative powers to levy GST on goods and services and does not authorize simultaneous levy of excise duty and GST on the same transaction.

(ii) That the learned Single Judge has failed to appreciate that Article 246A does not override the non obstante clause contained in the CGST Act.

(iii) That the learned Single Judge has failed to appreciate that the levy of excise duty on tobacco and tobacco products under the 1944 Act is not sustainable post implementation of GST.

(iv) That the learned Single Judge has failed to appreciate that Section 174 of the CGST Act saves only the power to levy tax and not the tax itself.

(v) That the learned Single Judge has failed to appreciate that Section 136 of the Finance Act, 2001, which provides for levy and collection of NCCD, has been impliedly repealed with effect from 01.07.2017. (vi) That the learned Single Judge has failed to appreciate that the appellant is entitled to a refund of NCCD collected with effect from 01.07.2017.

2.The respondent-State represented by Mr. Rajesh Goyal, learned Additional Advocate General, on the other hand, has supported the impugned judgment and has contended that the same does not warrant any interference.

This intra-court appeal stems from an order dated 04.01.2022 issued in WP No.5237/2021, wherein the writ petition filed by the Appellant challenging the imposition of excise duty under the Central Excise Act, 1944, and the levy and collection of National Calamity Contingency Duty (NCCD) on tobacco and tobacco products, was dismissed.

The facts leading to this appeal are as follows: The Appellant, a proprietary firm engaged in the manufacturing of tobacco and tobacco products, had registered itself under the Central Excise Registration Rules, 2002, and later under the Goods and Services Tax regime. A notification (No.2/2019) dated 06.07.2019 imposed Central Excise Duty on tobacco and tobacco products.

The Appellant filed a writ petition challenging the validity of this notification, as well as seeking a declaration that certain provisions of the Central Goods and Services Tax Act, 2017, saving the operation of the 1944 Act concerning tobacco and tobacco products, and Section 136 of the Finance Act, 2001, which provides for the levy and collection of NCCD, were unconstitutional. Alternatively, the Appellant sought a declaration that Section 136 of the Finance Act, 2001, had been impliedly repealed from 01.07.2017, the date on which the CGST Act came into force. Additionally, the Appellant sought a refund of the NCCD amount collected by the Respondents from 01.07.2017.

The findings of the learned Single Judge in the WP No.52371/2019, which encompassed the Appellant’s case and other connected matters, are summarized as follows:

1.The introduction of Article 246A in the Constitution confers the power of simultaneous levy on Goods and Services Tax (GST) and does not abrogate the power available under Article 246.

2.The powers under Article 246 and 246A are mutually exclusive and can be simultaneously exercised.

3.Duty of excise can be levied on tobacco and tobacco products under Article 246 read with Entry 84 of List I post the introduction of Article 246A.

4.The subsumation of manufacture in the concept of supply, even if accepted, would amount to double taxation, which is not impermissible unless prohibited by law.

5.Supply and manufacture are two legally recognized aspects, and their taxation does not lead to overlapping but rather treats the levy of tax on different aspects.

6.Surcharge is a method of raising additional revenue and is not related to the levy of tax or the liability of the assessee to pay tax.

7.The surcharge under Article 271 does not apply to GST and is imposed by way of the Finance Act, which is separate from the surcharge on GST.

8.NCCD is in the nature of excise duty and may be construed as an additional levy.

Based on these findings, the learned Single Judge dismissed the writ petition filed by the Appellant.

In conclusion, the Appellant is appealing this decision, disputing the findings of the learned Single Judge and seeking a reversal of the dismissal of their writ petition challenging the imposition of excise duty and NCCD on tobacco and tobacco products.

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