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The Supreme Court (SC) has asked the Goods and Services Tax (GST) Council to take note of anomalies in the present act and look into the assessment formula for claiming refunds.

While pronouncing its judgement, the SC said, “Provisions of Article 246a are available to both parliament and state. Article 246a embodies the constitutional principle of simultaneous levy.”

“Cannot expand the regime beyond what the legislature has provided. Anomalies in the law is a matter of legislative policy. GST council should take note of the anomalies,” the court added.

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The case is primarily related to claims of GST refunds and unutilised input tax credit (ITC). Citing the law under the GST Act, the court said refund of the input tax credit will be in specific conditions.

The court said that the legislature has made the distinction for claims of refunds clear and added: “With reference to exports, the ITC on input goods and input services brought in the fold of the Act in contrast with domestic supplies.”

“While discharging function, the GST Council will be guided by the need for harmonised structure for GST,” the court said in its order.

The court also said the second stage cascading effects of GST must be kept in mind. “There cannot be any gainsaying of the fact that fiscal legislation makes complex balance between diversity,” SC said.

The SC further added that the dual system of GST law operates within the federal structure and has to be progressively realised.

“While adopting the constitutional framework of GST regime, the parliament had to balance GST of state, consumption of alcohol by humans, taxation in states,” said the judgement.

In conclusion, the Supreme Court said that fiscal policy cannot be dictated by the judiciary, and it cannot order the government to bring in stamp duty on alcohol and coal.

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