Calcutta HC Issues Notice To Centre, State On Challenge Against The Constitutionality of Rule 86A of CGST Rules

The petition also prayed for the reading down of the Section 16(2)(c) of the Central Goods and Services Tax Act, 2017 (CGST Act) and its parallel provision in the West Bengal Goods and Services Tax Act  2017 (WBGST Act).

Justice Md. Nizamuddin directed both the union as well as the state government to file affidavits by observing,

"Since the Constitutional validity of both Central and State Act has been challenged, the petitioners have to serve notice upon the Attorney General of India as well as Advocate General of the State of West Bengal."

Further, the Court declined to pass any such interim orders at the present stage of proceedings by observing,

"The interim orders as prayed for by the petitioners is same as final relief, which according to this court cannot be granted at the motion stage and furthermore, quashing of the proceedings also cannot be done at the motion stage. It is also settled position of law that every piece of legislation is presumed to be legal and valid so long it is not declared invalid by any court of law."

It may be noted that the Gujrat High Court vide judgement dated 24^th December 2020 had expressed concern over the wide ambit of Rule 86A of the CGST Rules and its possible misuse. Accordingly the bench of Chief Justice Vikram Nath and Justice J.B Pardiwala had directed the state government to issue appropriate guidelines for invoking the concerned provision.

The respondents were directed to file the counter affidavits within four weeks. Consequent to which the petitioners have to file their reply within two weeks.

The case has been listed for final hearing after eight weeks.

Case Title: MRS Realty Private Ltd. & Anr. v. Union of India & Ors.