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Union of India v. Mohit Minerals Pvt. Ltd.

Civil Appeal · 2018 INSC 929Decided 3 Oct 2018
Civil Appeal No. 10177 of 2018
Justice A.K. Sikri · Justice Ashok Bhushan

Background

Mohit Minerals, a coal trading company, challenged the Goods and Services Tax (Compensation to States) Act, 2017 and its cess on coal, arguing that Parliament lacked the constitutional competence to levy this "Compensation Cess" on top of GST, that it was a colourable piece of legislation, and that it unfairly double-taxed coal stocks on which Clean Energy Cess had already been paid before GST's introduction. The dispute reached the Supreme Court through a writ petition transferred from the Delhi High Court, heard together with connected civil appeals filed by the Union of India against interim High Court orders.

Decision Breakdown

The Court held that Parliament had full legislative competence to enact the Compensation to States Act, 2017 under Article 248 (residuary power) read with Article 246A and Article 270, and that the Act did not violate or exceed the scope of the Constitution (One Hundred and First Amendment) Act, 2016. It further held that the GST Compensation Cess and GST itself, though related to the same transaction, were separate and distinct imposts in law, so there was no impermissible double taxation. Finally, it rejected the claim for a set-off against the Compensation Cess for Clean Energy Cess already paid, since the two cesses served entirely different purposes and no legislative provision allowed such a credit. The writ petition and the transferred case were dismissed, and the Union of India's civil appeals were allowed.

Lesson Learnt

A cess expressly created under a specific constitutional head (here, GST-related compensation to States) is a valid and distinct tax even if it overlaps in practice with another tax on the same transaction; "double taxation" by itself is not unconstitutional unless some specific legal provision is actually violated.

Official source (sci.gov.in)View Judgment (PDF)

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