MOOT-COURT-COMPETITION-MOOT-PROPOSITION Anu

2018
F E B R U A R Y 1 6 TH – 1 8 TH
MOOT PROPOSITION
Organized By School of Law

1. The Republic of Eutopia, got its independence in the year 1947 and its constitution was formally 4. Various associations of traders in respective items have challenged the constitutionality of the GST
enacted in the year 1950 by the name of Constitution of Eutopia, 1950 (“Constitution”), on a very Act on the ground of being abridgement of the Article 14 of the Constitution. They base their
similar lines to the Constitution of India, 1950. The Constitution granted several fundamental rights contention on the fact that various items like petroleum, liquor etc. have been left out of the
to the citizens of Eutopia. Further, to strengthen the nation’s economic development, the purview of GST on arbitrary grounds. These traders also grieve that they still being under earlier
government of Eutopia had in place its system of taxation which was a three tier federal structure VAT and excise regime, have to pay different rates of taxes under different states. The exemption
consisting of the central government, the state government and the local bodies. With the to such commodities has been alleged to be arbitrary. Secondly, it is also alleged that such a
changes in the tax structure across the globe, the state of Eutopia in order to remove the cascading differential treatment is further agonized when the states charge VAT on such commodities as per
effect of the indirect taxes, sought to reform its existing indirect tax structure. After several their own discretion having no uniformity at all and thereby being against the very object of GST
deliberations and discussions over the years, the Republic of Eutopia, on July 01, 2017 launched a i.e. having a uniform price and uniform tax base for all the goods in all the states.
new tax regime, having ended a variety of central and state imposed indirect taxes. The legal
5. Some consumer associations have also filed PILs against the GST, claiming it to be against
framework of Eutopia is similar to that of union of India.
consumer benefit and public interest. It is alleged that the selection of commodities and imposing
2. The Central Government of Eutopia, introduced this new tax regime with much grandiloquence, a particular rate of taxation on them has been done irrationally, unreasonably and arbitrarily. Some
and claims to be a milestone in economic revolution. The newly developed tax structure was a four have even gone to the extent of saying that such classification of tax base and goods under such
set of enactments i.e. Central GST Act, 2017; Integrated GST Act, 2017; Union Territory GST Act, differential tax slabs has been done to favor certain industrialists close to the incumbent
2017 and GST (Compensation to States) Act, 2017 (hereinafter collectively referred to as “GST government. Many items of basic necessities which are essential for bare survival have been
Act”). A single window tax was therefore imposed under the name of Goods and Services Tax slapped with higher rate of taxation, whereas many useless/ luxurious goods have been offered a
(“GST”). The introduction and injection of GST could be done only through amending a number lower tax rate. Therefore, some have alleged that GST to violative of not only Article 14 of the
of provisions of the Constitution, as it purported to affect the existing distribution of revenue Constitution but also Article 21 of the Constitution as being abridgment of life and liberty.
between the Centre and the states and thereby impacting the federal set up. The tax regime of
6. One of the biggest reasons behind GST not being digested by the business class in Eutopia is that
GST being known to none, has been apprehended skeptically, for the real impact on economy,
it has been introduced without proper and due preparation. Along with introduction of GST, the
common masses, business fraternity and state could not be precisely professed by any economist.
government has also claimed to scrap the paper based filing and the registration, payment, filing
3. Ever since the imposition of GST, a number of petitions including those in the form of Public and return being done only through electronic means and internet. It is alleged that a nation where
Interest Litigations (“PILs”) have been filed in various High Courts and the Supreme Court of basic necessities and a square meal is hardly available cannot be expected to compulsorily have
Eutopia. These PILs/ Writ Petitions, seek to challenge the validity of the GST Act and the computers and internet. Also, the GST regime has burdened an unending and unreasonable task
Constitution (One Hundred and First Amendment) Act, 2017, on a variety of grounds. Confused, of filing work (37 filings in a year), which are vexatious, baffling and tiresome. Previously under VAT
perplexed, baffled assessees have nowhere to go, to seek redressal of their grievance. The tax regime, the trader had to do the filing only once in a year. In the current regime, a filing is required
practitioners, chartered accountants, company secretaries and government authorities are also every month. The burden of the traders gets heavier and worsened when despite trying well in
clueless about a lot of issues. Their last resort being judicial remedy, they have moved to the higher time, penalties is being imposed on them due to poor websites and server problems. The traders
courts for the redressal of their grievance. The Supreme Court, therefore, considering the gravity have to pay penalties for no faults of their own. The tax practitioners instead of lending them a
of unrest and frustration empathized with people of Eutopia and has on its own motion, transferred helping hand have themselves cried foul. The filings and other formalities under GST and the
the cases pending in the high court’s on similar questions of law, to itself, using its power under compliance required under it is alleged to require a resource to be allocated for it separately, in
Article 139A of the Constitution. Interestingly, even some of the states have filed petitions under addition to the respective business. GST has been framed in such a way that even medium sized
the original jurisdiction of the Hon’ble Supreme Court under Article 131 of the Constitution, companies are struggling to keep up the rules, diverting resources that could have been devoted
complaining of ambiguity and violation of the federal setup. to productive activity. Government has introduced unnecessarily complexity into what should have
been the simplest of laws.
II JLU NATIONAL MOOT COURT COMPETITION 2018 II JLU NATIONAL MOOT COURT COMPETITION 2018
7. GST also aims and claims to bring the smaller traders into tax net, but not the way it should. They
while that on glass waste is 18%. This shall ultimately discourage people from buying recycled
are being forced in the system by the biggest customers in the supply chain; otherwise they may
goods. Another repercussion of such tax rate is that the rag pickers and the unorganized labor
lose business to those who are part of the system and whose payments the customer can claim as
sector shall be badly hit and lose their livelihood. A few NGOs have in this concern filed PILs
refunds. However, such refunds are not made by the government in time and are delayed for
before the Supreme Court of Eutopia.
months. This raises their working capital needs, increasing cost and reducing competitiveness. So as
to avail the credit, even the smallest of traders want to buy from GST registered wholesalers. 12. A few states seem discontent with the idea of GST itself and base their argument that it seeks to
However, the unorganized sector like farmers from villages etc. is not registered under GST network usurp the autonomy and independence of the states to a great extent and thereby causing a
and thus shall be a big looser in the system. Apparently their livelihood is fettered by the system. imbalance in the federal structure. Having assumed federal structure of the Constitution as a basic
feature of the Constitution, they have challenged the Constitution (One Hundred and First
8. Moreover, in the previous regime, manufacturers were not required to comply with excise rule, if
Amendment) Act, 2017 itself.
the turnover is below 5 crore. With merging into GST, they have to register in case the turnover
crossed the limit of 20 lakhs under GST, again creating problem on small business holders. The 13. The Chief Justice of Eutopia, in the light of seriousness of the issues involved and that the issues
above mentioned problems in the respective paragraphs have been pleaded to challenge the also pertain to the interpretation of the Constitution has constituted a bench of 5 judges to hear the
constitutionality of the GST Act and the Constitution (One Hundred and First Amendment) Act, matter in the case of “Association of Traders and Others versus Union of Eutopia.”
2017, as being in violation of many fundamental rights and the constitutional norms.
ISSUES:
9. The GST Act is also challenged on the grounds of vagueness and excessive delegation, in
I. Whether exemption of certain goods out of the purview of GST is grounded on some reasonable
derogation of the Constitutional norms. For instance, Section 171 of the Central GST Act (and the
classification or is arbitrary in nature and therefore unconstitutional?
corresponding provisions of the state GST Acts creates the obligation on businesses to pass on the
recipient any reduction in rate of tax or the benefit of input tax credit by way of commensurate II. Whether GST Act paves way for excessive delegation of powers & is therefore unconstitutional?
reduction in prices. The full guidance of what constitutes a commensurate reduction, what are the III. Whether Constitution (One Hundred and First Amendment) Act, 2017 is against the federal setup
parameters you would go by, mitigating factors, check and balance provisions among others ruled of the Eutopia and is therefore unconstitutional?
to be in the Central GST Act itself. In the current form, the anti-profiteering rules give everything
a miss. The impugned section, in effect, casts a duty on a committee of bureaucrats who shall be
the anti- profiteering authority, who will in turn decide using their own discretion what
commensurate reduction is. This is alleged to be delegation too excessive on the bureaucrats. A
penalty also can be imposed by such discretion, which may even amount to cancellation of
registration, an imposition disproportionate with the GST Act and that too without checks
and balances.
10. The GST Act and its implementation have also been challenged as being against good governance
and public trust. According to Reserve Bank of Eutopia, “the implementation of the GST so far also
appears to have had an adverse impact, rendering prospects for the manufacturing sector in
uncertain in the short term. This may further delay the revival of investment activity, which is
already hampered by stressed balance sheets of banks and corporate”.
11. Major fallout of GST is that the tax slab imposed is non-conducive to the ‘recycle-waste’ industry
and therefore unfavorable to environmental concerns. The tax imposed on plastic waste is 12%,
II JLU NATIONAL MOOT COURT COMPETITION 2018 II JLU NATIONAL MOOT COURT COMPETITION 2018

MOOT-COURT-COMPETITION-MOOT-PROPOSITION Anu

Uploaded by

Copyright:

Available Formats

MOOT-COURT-COMPETITION-MOOT-PROPOSITION Anu

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

MOOT-COURT-COMPETITION-MOOT-PROPOSITION Anu

Uploaded by

Copyright:

Available Formats

2018

Organized By School of Law

You might also like