Whether the writ petition is maintainable irrespective of whether any action is initiated or not by the respondent-authorities?

PJ/Case Law/2018-2019/3513

Case: M/s GLOBAL ASSOCIATES ASSOCIATION OF PERSONS

Citation: 2019-TIOL-40-Karnataka High Court-GST

Issue: Whether the writ petition is maintainable irrespective of whether any action is initiated or not by the respondent-authorities?

Brief Facts: The issue involved in appeal is filed by M/S GLOBAL ASSOSCIATES ASSOCIATION OF PERSONS. They have filed the writ petition to declare Entry 5(b) of Schedule II to the CGST Act, 2017 as unconstitutional lacking legislative competence and violative of Article 246A and 265 of Constitution. They further contended to quash the entry 3(i) of para 2 of notification11/2017-CT (R ) dated 28.06.2017 and quash the clarification issued on 09.01.2018. This notification and circular envisages levy of tax on construction activities and deeming the value of the land at one-third of the total amount charged.

Appellant’s contention: The appellant is aggrieved by the Notification and Circular issued by the respondent-authorities pursuant to Entry 5(b) of Schedule II to the Central Goods and Services Tax Act, 2017 ('Act' for short) which envisages levy of tax on construction activities and deeming the value of the land at one-third of the total amount charged. Learned Counsel argued that irrespective of any action initiated or not by the respondent authorities, the applicant is entitled to challenge the same and hence the writ petition is maintainable.

Respondent’s Contention and Reasoning of Judgment. It is not in dispute that the provisions of the Act, and the Notification and Circular issued by the respondent authorities have been challenged without there being any cause of action. Enacting legislation or issuing Notification/Circular could not confer a right to challenge unless the litigant is affected by the action initiated by the executive in furtherance of such legislation/administrative Circular/Notification more particularly, in taxing statutes. Cause of action is for challenging such legislation/Notification/Circular. The writ Court cannot adjudicate upon such matters in vacuum. Adjudication of such issues cause of action would be merely academic, consuming public time de hors the litigants waiting in serpentine queue seeking justice before the courts for the relief/s sought for, arising out of the cause of action. They relied on Apex Court decision in case of Kusum Ignots & Alloys Limited v. Union of India 2004-TIOL-117-SC-CX-LB. They have relied on various decisions in support of their contention.

Decision: The writ petitions at this stage are premature and deserve to be dismissed and are not maintainable. The Karnataka High Court has relied on various decisions and held that casue of action is sine qua non for challenging any provision. As there is no cause of action and hence the writ is not maintainable.

Comment: The gist of this case is that the petitioner had raised the preliminary objection regarding the maintainability of the writ petition. It was contended that no cause of action had emerged to the petitioner to challenge the vires of the statutory provisions as well as the Notification and Circular issued by the competent authorities and any legislation or issuing Notification/Circular could not confer a right to challenge unless the litigant is affected by the action initiated by the executive in furtherance of such legislation/administrative Circular/Notification more particularly, in taxing statutes. And so, the writ petition should not be maintainable.

Prepared by – Raksha Chhajed

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PJ/Case Law/2018-2019/3513

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