Yields Significant Revenue: Centre Tells Kerala High Court Non-Inclusion Of Petroleum Products Under GST Was 'A Conscious Decision'

The Centre and the Goods and Services Tax (GST) Council have maintained their stance before the Kerala High Court that petroleum products should not be included within the ambit of GST citing that it was a 'conscious decision' considering that they yield substantial revenues for the Central and State governments.

The said authorities in their counter affidavit have stated:

"It is respectfully submitted that it was a conscious decision of the GST Council to keep petroleum products outside the GST regime at this stage. These products yield significant revenue for both Centre and States." 

The counter-affidavit was filed after the Court directed them to provide "genuine reasons" for the non-inclusion of petroleum products within the ambit of GST. This comes after the Centre informed that the non-inclusion was due to the pandemic. The developments ensued in a petition filed by Kerala Pradesh Gandhi Darshanvedhi challenging the decision of the GST council.

Nevertheless, the Centre has again cited the pandemic as a reason for its decision pointing out that the Centre and States are extending stimuli in all areas for the economy to recover from the disruptions caused by Covid.

The affidavit filed through Senior Standing Counsel for the Central Board of Indirect Taxes and Customs PR Sreejith further stated that since post-crisis revenue generation is a demanding task, "tax revenues are required to ensure that socio-economic initiatives undertaken in larger public interest are not adversely affected."

The petition, filed through Advocate Arun B Varghese, had contended that the "fragmented taxing policies" due to different rates of tax levied by different State governments hinders the achievement of a harmonised national market as envisaged under Article 279A(6) of the Constitution of India.

The counter-affidavit challenged the maintainability of the petition as the prayer of the petitioner seeks to quash the decision of the GST Council in an attempt to enforce the provisions of Article 279A(5) and associated legislative actions. The Centre, therefore, submitted that the petition goes against the doctrine of separation of powers.

The contention of the petitioner that the fundamental rights of citizens under Articles 14 and 21 are affected are not sustainable, it was further contended.

"The Government, in its own wisdom, considering all relevant factors, including the need for mobilising resources amid serious fiscal constraint, had taken the decision to raise the duty in public interest. Fiscal policy is a function of several factors and may not be constrained by the fact that it causes hardship to persons who have to pay or suffer taxes." 

On these grounds, the Centre sought for the petition to be dismissed.

Case Title: Kerala Pradesh Gandhi Darshanvedhi v. Union of India