"Pandemic no excuse:" Kerala High Court directs GST Council to give "genuine reasons" for non- inclusion of Petrol/Diesel under GST

The Kerala High Court on Tuesday expressed its dissatisfaction with the reasons given by the Goods and Services Tax Council (GST Council) for its decision to not include petrol and diesel within the ambit of GST [ Kerala Pradesh Gandhi Darshanvedi Vs. Union of India ].

. A Division Bench of Chief Justice S Manikumar and Justice Shaji P Chaly rejected the statement of the council that it was due to the COVID-19 pandemic that it could not deliberate on a subject that has large revenue implications.

" We are not satisfied with the reasons. There should be some discussion and genuine reasons, as to why petroleum products cannot be brought under the GST regime. Further, pandemic period cannot be cited as a reason. It is well known that even during pandemic period, several decisions were taken involving revenue, after deliberations, " the Court said in its order.

. Therefore, it directed the relevant authorities to file a detailed statement with cogent reasons for not including petrol and diesel under the GST.

. The Court made the observation while hearing a PIL, filed through advocate Arun B Varghese, which stated that the recent sharp spike in petrol and diesel prices has wreaked havoc, not only on general economic stability, but also on the lives of the common man, especially those from lower income households.

It was contended that non-inclusion of petrol and diesel under the GST regime are violative of Articles 14 and 21 of the Constitution of India.

. The petitioner had previously approached the Court after a representation submitted by it to the GST council seeking to bring petroleum products under the GST regime had received no response.

The Court had taken note of an earlier decision of the Court that held that GST council cannot be mandated to make any decision and, therefore, chose to only direct the GST Council to forward the representation to the Union of India to take an appropriate decision.

. However, once the representation submitted by the petitioner was considered by the GST council at its 45th meeting, it decided that it is not appropriate to include petrol and diesel within the ambit of GST at this stage. This was then vehemently opposed by the petitioner who once again moved the Court by way of the present plea.

" There is no application of mind in taking such a decision. There is no justification as to why the present stage is not ripe enough to take a decision when the rate of petrol and diesel is rising on a daily basis, " the plea said.

. At the previous hearing , the Court had directed the GST Council to file a statement elaborating on the reasons for its decision.

. At the most recent hearing, Advocate PR Sreejith, Standing Counsel for the Central Board of Indirect Taxes and Customs, handed over a copy of the letter from the Director of GST Council, New Delhi and submitted that the petroleum products could not be brought under the GST regime.

The letter stated that the matter was taken in the 45th GST Council meeting.

The Court noted that three issues seemed to have been considered by the Council, for bringing petroleum products under the GST regime, i.e.,

the matter involves high revenue implications;

requires larger deliberations; and

during pandemic times, it would be difficult to bring petroleum products under GST regime.

. This did not find favour with the Court which opined that the pandemic cannot be used as an excuse for such a decision and directed the Council to elaborate on its reasons.

. [Read Order]

"Pandemic no excuse:" Kerala High Court directs GST Council to give "genuine reasons" for non- inclusion of Petrol/Diesel under GST

Giti Pratap

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