Provisions of Section 7(1)(aa) Under CGST Act Challenged, Demand Notice for Past Four Years Stayed by HC Until Next Hearing
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- Last Updated on 30 May, 2024
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Case Details: Huda Urban Estate and Town and Country Planning Employees Welfare Organization v. Union of India - [2024] 162 taxmann.com 847 (Punjab & Haryana)
Judiciary and Counsel Details
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- Sanjeev Prakash Sharma & Sudeepti Sharma, JJ.
- Deepak Gupta, Adv. for the Petitioner.
- Gagandeep Singh Malhotra & Ms Tanisha Peshawaria for the Respondent.
Facts of the Case
Haryana Urban Development Authority and Town and Country Planning Employees Welfare Organisation (the Petitioner) filed a writ petition before the Punjab and Haryana High Court to challenge the constitutional validity of Section 108 of the Finance Act, 2021. Section 108 of the Finance Act, 2021 introduced section 7(1)(aa) vide notification dated 21-12-2021 under the CGST Act, 2017 w.e.f. 01-07-2017.
The Petitioner contended that section 7(1)(aa) modified the definition of ‘person’ as provided in section 2(84) of the GST Act, 2017 without any modification made therein. As per section 2(84) of the Act, a person includes an association of persons or a body of individuals, whether incorporated or not in India or outside India. However, section 7(1)(aa) explains that for the purposes of the said clause, it is clarified that the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. The Petitioner contended that such an explanation and definition of person would result in the very clause of mutuality being done away with and would create a disturbance of mutual transaction between the members of an association, body of individuals or a company. It has also been made retrospective wrongfully from 2017.
High Court Held
The High Court issued notice to the respondents and stayed the effect and operation of the show cause notice until further orders.
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