Mohit Mineral v. Union of India

CASE COMMENTRY: MOHIT MINERAL VS UNION OF INDIA
AUTHOR-AAYUSH KUMAR JAISWAL, STUDENT AT SCHOOL OF

LAW, GURU GHASIDAS UNIVERSITY
CASE TITLE UNION OF INDIA V. MOHIT MINERAL

PVT. LTD.
CASE NO. CIVIL APPELLATE JURISDICTION. CIVIL

APPEAL NO. 10177 OF 2018 (ARISING OUT
OF SPECIAL LEAVE PETITION (CIVIL) NO.
25415 OF 2017)
CITATION AIR 2018 SC 5318

DATE OF JUDGMENT 03.10.2018
JURISDICTION SUPREME COURT OF INDIA
CORAM HON'BLE DR. CHANDRACHUD,
SURYA KANT, PAMIDIGHANTAM
SRI NARASIMHA
AUTHOR OF THE JUDGMENT HON'BLE DR. CHANDRACHUD
APPELLANT UNION OF INDIA
RESPONDENT MOHIT MINERALS PVT LTD
COUNCEL FOR PETITIONER MR N.VENKATARAMAN

(ADDITIONAL SOLICITOR GENERAL)
COUNCEL FOR RESPONDENT MR V.SRIDHARAN

(SENIOR ADVOCATE)
ACT&SECTIONS INVOLVED GST(COPENSASTION TO

STATE)2017, SECTION 18 OF THE
101ST CONSTITUTION AMENDMENT
ACT 2016
INTRODUCTION
The landmark case of UOI v. Mohit Mineral Pvt.1 Ltd was the first case which deals with the
amendment to the new tax regime of Good and service tax 1. The constitutional validity of the Goods
and Services Tax (Compensation to States Act), 2017 and the Goods and Services Tax Compensation
Cess Rules, 2017, came up before consideration before the Hon’ble Supreme Court in this case 1.
BACKGROUND
The Constitution (One Hundred and First Amendment) Act, 2016 (Amendment Act),
introduced the Goods and Services Tax (GST) regime in India which came into force from
8th September, 2016 and became effective from 1st July 2017 1. By the introduction of this
GST it paved out and replaced many indirect taxes from the country and due to this act
enforcement various states raised concerns over the loss of income as a consequence of
introducing the GST regime.
THE ISSUE
The Goods and Services Tax (Compensation to States) Act, 2017 (CSA) was enacted in order
to compensate the States for this loss of revenue1. Section 8 of this act provides for levy of a
‘cess’ on intra-State and inter-State supply of goods or services, or both, as a means of
compensation for a period of five years, or for such period prescribed as per the
recommendation of the GST Council1. This cess collected has to be distributed amongst the
States in the manner prescribed under the Act and the corresponding rules framed under it1.
FACTS OF THE CASE
The Goods and Services Tax (Compensation to States) Act, 2017 (CSA) was enacted in order
to compensate the States for this loss of revenue1. Section 8 of this act provides for levy of a
‘cess’ on intra-State and inter-State supply of goods or services, or both, as a means of
compensation for a period of five years, or for such period prescribed as per the
recommendation of the GST Council1. This cess collected has to be distributed amongst the
States in the manner prescribed under the Act and the corresponding rules framed under it1.
JUDGEMENT
1
Mohit Mineral v. UOI: The Make or Break for the GST Regime https://cbcl.nliu.ac.in/taxation/mohit-mineral-
v-uoi-the-make-or-break-for-the-gst-regime/
The Supreme Court after analysing the constitutional provisions relating to levy of GST in
order to highlight the underlying constitutional and legislative scheme which is significant on
various counts. The Supreme Court 2has declared that cess “means a tax levied for some
special purpose, which may be levied as an increment to an existing tax”. Thus the legislature
has the power to impose GST which carries the power to impose cess on GST. Also there is
nothing in the draft of the Amendment Act “that henceforth no surcharge or cess shall be
levied”. The decision specifically highlights that it is already well settled that “two
taxes/imposts which are separate and distinct imposts and on two different aspects of a
transaction are permissible”. Thus insofar as GST and compensation cess operate in their
distinct spheres, the validity of both has been sustained.
CONCLUSION
After analysing the case of Mohit Mineral the Supreme Court’s decision in the Mohit Mineral
case is a big thumbs-up for the changes made to the Constitution to bring in a new system of
indirect taxes. By dismissing all objections to the GST compensation cess (a type of tax), the
court has cleared the way for the full implementation of the GST system as planned by the
lawmakers. Even though this case was about a specific part of the GST system, the decision
sets a precedent for how the courts might view future challenges, and it’s likely to discourage
such challenges.
The GST system is a big deal because it represents a major reform in how taxes are collected
in India. It also requires a high level of cooperation between the central government and the
states. The Supreme Court’s decision to uphold the GST compensation cess, which is meant
to make up for any loss of revenue the states might experience due to the introduction of
GST, is a big win for this cooperative approach. This decision is likely to give policymakers
the confidence to continue refining the GST system and fully realize its benefits.
In other words, the court’s decision is a green light for the GST system, and it’s likely to
smooth the way for further improvements to the system.
2
Analysis – Union of India Vs Mohit Minerals Pvt. Ltd https://taxguru.in/goods-and-service-tax/analysis-union-
india-vs-mohit-minerals-pvt-ltd-supreme-court.html
REFRENCES
https://indianlawportal.co.in/case-analysis-uoi-v-mohit-mineral-pvt-ltd/
https://taxguru.in/goods-and-service-tax/sc-judgment-mohit-minerals-refund-
igst-rcm-ocean-freight.html

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CASE COMMENTRY: MOHIT MINERAL VS UNION OF INDIA

AUTHOR-AAYUSH KUMAR JAISWAL, STUDENT AT SCHOOL OF

CASE TITLE UNION OF INDIA V. MOHIT MINERAL

CASE NO. CIVIL APPELLATE JURISDICTION. CIVIL

CITATION AIR 2018 SC 5318

RESPONDENT MOHIT MINERALS PVT LTD

COUNCEL FOR PETITIONER MR N.VENKATARAMAN

COUNCEL FOR RESPONDENT MR V.SRIDHARAN

ACT&SECTIONS INVOLVED GST(COPENSASTION TO

FACTS OF THE CASE

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