Cess imposed under Meghalaya Cement Cess Act, 2010 is ultra vires as per the Constitution: HC

Case Details: Megha Technical & Engineers (P.) Ltd. v. State of Meghalaya - [2022] 137 taxmann.com 272 (Meghalaya)

Judiciary and Counsel Details

• • Sanjib Banerjee, CJ. and W. Diengdoh, J.
  • Dr. A. Saraf, Sr. Adv. for the Petitioner.
  • A. Kumar and H. Kharmih for the Respondent.

Facts of the Case

The petitioner filed writ petition and submitted that the cess imposed by the State of Meghalaya by the Meghalaya Cement Cess Act, 2010 was completely illegal, without any authority and grossly prejudicial to the petitioner and others connected with the cement industry. It was also submitted that the charging section levied cess on the person manufacturing or producing cement within the State and it would amount to a kind of additional excise duty imposed though in the guise of cess.

High Court Held

The Honorable High Court observed that cement was not included as one of the excepted products in Entry 84 of List I of Seventh Schedule of Constitution and State has no authority to levy tax or the like on the manufacture of cement in the State. Moreover, the Entry 54 of State List does not authorize State to impose a kind of excise duty on sale or purchase of goods. Therefore, it was held that Meghalaya Cement Cess Act, 2010 imposing cess on production of cement was ultra vires the Constitution of India as State was not empowered to levy such impost and State was directed to refund 20% of amount realized from manufacturers and invest 30% in procuring medical equipment for Government Hospital, Shillong.