The Pith and substance of the CGST Act is on a topic upon which the Parliament has power to legislate, levy and collect GST: High Court of Delhi

IN THE HIGH COURT OF DELHI AT NEW DELHI Suppl. 25 W.P.(CRL) 2020 2020 SARTAJ ALI Through Mr.Vijay Aggarwal with Mr.Syed Petitioner Urfee Haider Advocates. UNION OF INDIA & ANR. ..... Respondents Through Mr. S.V. Raju ASG with Mr.Ravi Prakash CGSC Mr.Vinay Yadav Mr.Akshay Gadeock Mr.Amit Gupta Mr.Sahaj Garg and Mr.R.Venkat Prabhat Advocates for UOI. Date of Decision: 19th January 2021 HON BLE MR. JUSTICE MANMOHAN HON BLE MS. JUSTICE ASHA MENON JUDGMENT MANMOHAN J:Crl.M.A.16841 2020Allowed subject to all just exceptions. Consequently present application stands disposed of. The petition has been heard by way of video conferencing. Present writ petition has been filed challenging the constitutional validity of certain provisions of the Central Goods and Services Tax Act W.P.(CRL) 2020 2020 2017. This Court in a similar matter in Dhruv Krishan Maggu vs. Union of India & Ors. W.P.(C) 5454 2020 has refused to pass any interim order holding that it is not inclined to interfere with the investigation at this stage and that too in writ proceedings. The relevant observations made by this Court in Dhruv Krishan Maggu vs. Union of India & Ors. are reproduced hereinbelow: i) There is always a presumption in favour of constitutionality of an enactment or any part thereof and the burden to show that there has been a clear transgression of constitutional principles is upon the person who impugns such an enactment. Further laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. ii) The Goods and Service Tax is a unique tax inasmuch as the power as well as field of legislation are to be found in a single Article i.e. Article 246A. The scope of Article 246A is significantly wide as it grants the power to make all laws ‘with respect to’ goods and service tax. iii) This Court is of the prima facie opinion that the pith and substance of the CGST Act is on a topic upon which the Parliament has power to legislate as the power to arrest and prosecute are ancillary and or incidental to the power to levy and collect goods and services tax. W.P.(CRL) 2020 2020 Even if it is assumed that power to make offence in relation to evasion of goods and service tax is not to be found under Article 246A then the same can be traced to Entry 1 of List III. The term ‘criminal law’ used in the aforesaid entry is significantly wide and includes all criminal laws except the exclusions. v) This Court at the interim stage cannot ignore the view is taken by the Gujarat High Court with regard to application of Chapter XII Cr.P.C. to the CGST Act. vi) In view of the Supreme Court judgment in Directorate of Enforcement vs. Deepak Mahajan and the aforesaid Gujarat High Court judgment the arguments that prejudice is caused to the petitioners as they are not able to avail protection under Article 20(3) of the Constitution and or the provisions of Cr. P.C. do not apply even when CGST Act is silent are untenable in vii) Reliance on “no coercive orders” by counsel for the petitioners are untenable as the Supreme Court in Union of India vs. Sapna Jain Ors. SLP 4322 4324 2019 dated 29th May 2019 has ‘spoken its mind’. viii)This Court prima facie finds force in the submissions of the learned ASG that the Central Tax Officers are empowered to conduct intelligence based enforcement action against taxpayers assigned to State Tax Administration under Section 6 of the CGST W.P.(CRL) 2020 2020 What emerges at the prima facie stage is that it is the case of the respondents that a tax collection mechanism has been converted into a disbursement mechanism as if it were a subsidy scheme. x) In view of the serious allegations this Court is not inclined to interfere with the investigation at this stage and that too in writ proceedings. At the same time innocent persons cannot be arrested or harassed. Consequently the applications for interim protection are dismissed with liberty to the parties to avail the statutory remedies. However Mr. Vijay Aggarwal learned counsel for petitioner states that the order passed by this Court in Dhruv Krishan Maggu vs. Union of India & Ors.is per incuriam as it is contrary to the Division Bench judgment of this Court in Rajbhushan Omprakash Dixit vs. Union of India & Anr. 2018JCC 506. He further submits that subsequent to the Telangana High Court judgment the High Court of Punjab and Haryana in Akhil Krishan Maggu Anr. vs. Deputy Director DGGI & Ors. C.W.P. No.24195 2019 has refused to follow the Telangana High Court judgment and passed interim orders. However this Court finds that another Division Bench of this Court in Vakamulla Chandrashekhar vs. Enforcement Directorate & Anr. W.P.(Crl.) 852 2017 dated 08th May 2017 had taken a diametrically opposite view to the one enunciated in Rajbushan Omprakash Dixit vs. Union of India & Anr. No.003 W.P.(CRL) 2020 2020 of 2018 has transferred the reference made to a larger Bench of this Court to itself. Consequently as there are two contrary Division Bench judgments it cannot be said that the order passed by this Court in Dhruv Krishan Maggu vs. Union of India & Ors.is per incuriam. Further the interim order passed by the High Court of Punjab and Haryana in Akhil Krishan Maggu & Anr. vs. Deputy Director DGGI & Ors. is not binding on this Court. Also as the Supreme Court in Supreme Court in Union of India vs. Sapna Jain & Ors. SLP4322 4324 2019 has endorsed the Telangana High Court view it cannot be urged that this Court committed an error in law in not following the High Court of Punjab and Haryana view. Accordingly on parity of reasoning the application for interim relief is dismissed in view of the order passed by this Court in Dhruv Krishan Maggu vs. Union of India & Ors.2020 2020 List the matter before the roster Bench on 18th March 2021 along with the case of Dhruv Krishan Maggu vs. Union of India & Ors.2020 2020 

Summary: Constitutionality of an enactment or any part thereof and the burden to show that there has been a clear transgression of constitutional principles is upon the person who impugns such an enactment. Further, laws are not to be declared unconstitutional on the fanciful theory that power would be exercised in an unrealistic fashion or in a vacuum or on the ground that there is a remote possibility of abuse of power. This was held in the case of Sarjat Ali v. Union of India and Anr. [W.P.(CRL) 2020/2020] by Hon’ble Justice Asha Menon in the High Court of Delhi. A writ petition has been filed challenging the constitutional validity of certain provisions of the Central Goods and Services Tax, Act, 2017. Counsel for petitioner states that the order passed by this Court in Dhruv Krishan Maggu vs. Union of India &amp; Ors. W.P.(C) 5454/2020 is per incuriam as it is contrary to the Division Bench judgment of this Court in Rajbhushan Omprakash Dixit vs. Union of India &amp; Anr., 2018 (1) JCC 506. The relevant observations made by this Court in Dhruv Krishan Maggu vs. Union of India &amp; Ors. are [1] The Goods and Service Tax is a unique tax, inasmuch as the power as well as field of legislation are to be found in a single Article, i.e., Article 246A. The scope of Article 246A is significantly wide as it grants the power to make all laws ‘with respect to’ goods and service tax. [2] This Court is of the prima facie opinion that the pith and substance of the CGST Act is on a topic, upon which the Parliament has power to legislate as the power to arrest and prosecute are ancillary and/or incidental to the power to levy and collect goods and services tax. [3] Even if it is assumed that power to make offense in relation to evasion of goods and service tax is not to be found under Article 246A, then, the same can be traced to Entry 1 of List III. The term ‘criminal law’ used in the aforesaid entry is significantly wide and includes all criminal laws except the exclusions.