In Brief
The Supreme Court upheld the validity of the Goods and Services Tax (Compensation to States) Act, 2017 against constitutional challenges. The Court held that Parliament had legislative competence under Article 270 and Section 18 of the Constitution (One Hundred and First Amendment) Act, 2016 to enact the law. The Court clarified that cess is a special kind of tax and can be levied as an increment to GST. The Act does not violate the amendment's objective of consolidating indirect taxes, and levy of compensation cess on the same taxable event as GST does not constitute impermissible double taxation, as they are separate and distinct imposts. The Court rejected the petitioner's claim for set-off of Clean Energy Cess paid prior to GST implementation, holding that credit is a matter of legislative policy and neither the statute nor rules provided for such set-off.
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