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ARTICLE · 14 NOVEMBER 2018

Supreme Court Validates Compensation Cess

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The Apex Court vide its recent judgement lays down clarity with respect to the constitutional validity of the compensation cess.

IndiaTax
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The enactment of the novel tax regime of the Goods and Services Tax (hereinafter referred to as "GST") as a single taxation system applicable on value addition at each state subsuming excise duty, additional excise duty, service tax, value added tax, sales tax, octroi, luxury tax, etc.

Compensation Cess

GST compensation cess is collected to provide compensation to the States for the loss of revenue arising on account of implementation of GST. The question regarding the validity of GST (Compensation to States) Act, 2017 (hereinafter referred to as "GST Compensation Act") enacted by the Parliament as well as GST Compensation Rules, 2017 (hereinafter referred to as "GST Compensation Rules") framed by the Central Government. The Supreme Court of India vide its judgement dated October 3, 2016 provides clarity on the validity of compensation cess.1

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