Supreme Court upholds constitutional validity of compensation law

The Supreme Court has upheld the Constitutional validity of the law allowing cess to be collected for compensating States for revenue shortfall under the Goods and Services Tax (GST).

“The Compensation to States Act, 2017 is not beyond the legislative competence of Parliament,” a Division Bench of Justice A K Sikri and Justice Ashok Bhushan said in its order pronounced on Wednesday. The ruling was given on a Special Leave Petition (SLP) filed by the Central Government challenging an interim order dated August 25, 2017 passed by the Division Bench of the Delhi High Court.

The Division Bench had ruled that additional levy on the stocks of coal on which the company, Mohit Minerals (petitioner in the High Court and Respondent in the Supreme Court), had already paid Clean Energy Cess in terms of Finance Act, 2010, it shall not be required to make any further payment. However, on stocks of coal on which no Clean Energy Cess under the Act was paid any payment in terms of the impugned Act would be subject to the result of the writ petition.