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Supreme Court rules against the government to impose higher GST

Supreme Court issued an order today to instruct the government that their action to raise GST through an ordinance is unconstitutional and the government must stop collecting it.

Government has issued an ordinance on June 13th to collect GST at 17% rather than the previous rate of 16%. Supreme Court in its ordered said that Article 77 of 1931 India Act is unconstitutional and can not be used by the government to collect a higher GST before the approval of budget by the parliament. Supreme Court also ruled that 9% additional GST on CNG is also unconstitutional.

The court instructed the government to submit the additional GST collected so far should be deposited with the registrar. The formula for money reimbursement to those affected will be decided at a later date.

This is a set back to the Nawaz Sharif government which was expecting to raise revenue to bridge the fiscal deficit of the current year.

Attorney General Munir a Malik represented the government and took the position that every government has used this provision to collect GST. Apparently this argument was rejected by the Supreme Court.

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