The Bombay High Court on Monday issued notices to the Comptroller and Auditor General of India, the 14th Finance Commission, the Goods and Service Tax Council, the Attorney General, and the State government, among others, in a plea challenging the constitutional validity of Goods and Services Tax.
A Division Bench of Justice Shantanu Kemkar and Justice R.G. Ketkar was hearing a public interest petition filed by Ashrita Prasad Kotha, an assistant professor of Jindal Global Law School.
The petition challenged the constitutional validity of the Goods and Services Tax (Compensation to States) Act, 2017 and 15 other Acts passed by the Parliament such as Beedi Workers’ Welfare Fund Act, Central Road Fund Act, Industrial Development and Regulation Act, Water (Prevention and Control of Pollution) Cess Act.
The PIL explains that cess is a tax in addition to existing taxes levied for specific purposes, the proceeds of which are to be utilised only for specific purposes. The proceeds of cesses collected by the Central government are neither to be shared with the State and nor merged with the CFI.
The share of cesses in the Union tax revenues is steadily increasing with every passing year. The cess taxes were projected at around 2% in 1999-2000 whereas it rose to 7% in 2006-2007 and 10.79% in 2016-2017.
It also goes on to say that the Centre is generating revenue in the name of cesses so that it can keep the entire revenue rather than share it with the States. The petition said that such a trend is not only disturbing but would pose a serious threat to the scheme of cooperative federalism adopted under the Constitution of India.