Supreme Court Stays Delhi HC Judgment Which Declared IGST Imposition On Oxygen Concentrators Imported By Individuals As Unconstitutional

The Supreme Court on Tuesday stayed the Delhi High Court judgment which declared that imposition of Integrated Goods and Services Tax(IGST) for oxygen concentrators imported by individuals for personal use as unconstitutional.

A vacation bench comprising Justices DY Chandrachud and MR Shah was hearing the special leave petition filed by the Ministry of Finance against the Delhi High Court judgment  (Ministry of Finance vs Gurcharan Singh).

The bench observed that "arguable questions are raised" by the Ministry in its petition. The bench noted in its order that the GST council has constituted a Group of Ministers to consider the issue of GST exemption for COVID-19 relief, and the GoM is set to submit its report on June 8.

Attorney General for India K K Venugopal, appearing for the Union Ministry, told the bench that the Delhi High Court has "thrown the net very wide" with its declaration.

When Justice Chandrachud pointed out that the Centre has already exempted IGST for oxygen concentrators imported by government agencies, the Attorney General replied that it was for a different purpose. The purpose of such exemption was to distribute the concentrators imported by state agencies to poor and needy people. Such a purpose is not there for concentrators imported by individuals, the AG said.

The AG further informed the bench that the GST council is set to consider the very same issue on June 8. But the High Court judgement has tied the hands of the Centre, the AG said.

Justice MR Shah observed that it was debatable whether Article 14 of the Constitution is applicable to an issue of taxation policy. The judge also commented that the High Court has not gone into the purpose of exemption.

Taking note of the AG's submissions, the bench passed the stay order, while issuing notice returnable within 4 weeks.

"The Attorney General submits that on May 21 meeting of the GST council, it was decided that a Group of Ministers would be constituted to scrutinize the need for further exemption on COVID relief. They will submit a report on 8th June. It is submitted that the High Court order trenches upon a matter of pure policy. It is submitted that exemption which has been granted for oxygen concentrator is for a distinct classification. Arguable questions are raised", the bench observed in the order.

It was on May 21 that a division bench comprising Justices Rajiv Shakdher and Talwant Singh of the High Court delivered the ruling. The High Court had noted that the Centre has exempted oxygen concentrators imported by government agencies from IGST. In that backdrop, not extending the benefit of exemption to oxygen concentrators imported by individuals as gifts from persons abroad is arbitrary and unreasonable, the High Court held.

The High Court also took note of fact that the exemption notification was issued by the Centre in the backdrop of crisis created by the acute shortage of medical oxygen during the second wave of the COVID-19 pandemic.

"...in our view, a declaratory relief can be accorded, to the effect, that imposition of IGST on oxygen concentrators, imported as gifts, i.e., free of cost, for personal use, is violative of Article 14 of the Constitution on the ground that an artificial, unfair and unreasonable distinction has been drawn between persons, who are similarly circumstanced as the petitioner and those who import oxygen concentrators through a canalizing agency", the High Court had said.

Click here to read/download the order