[CGST Act] Penalty Is An 'Additional Tax', Cannot Be Levied Under State Act Without 'Charging Provision': J&K&L High Court

The Jammu & Kashmir and Ladakh High Court has ruled that the penalty under the Central Sales Tax Act cannot be imposed by invoking provisions of the State Act in the absence of an express charging section.

The Court held that the Central Act is a “self-contained code” and provides its own framework for imposition of penalties, which cannot be supplemented by state laws.

A bench headed by Justice Sanjeev Kumar, Justice Sanjay Parihar dismissed the petition challenging the absence of a penalty under Section 6 of the J&K Entry Tax Act, 2000, and underscored the constitutional mandate under Article 265 of the Constitution, which provides that no tax shall be levied or collected except by authority of law.

“Penalty, being a liability and a sort of additional tax, requires constitutional mandate for its imposition,” the Court observed, adding that “Section 4 of the Act of 2000 is a standalone charging section… Section 6 is merely a machinery provision.”

The case revolved around whether dealers transporting goods without reporting at the check post could be penalized under Section 6 of the repealed J&K Entry Tax Act, 2000, read with provisions of the Goods and Services Tax (GST) law.

The Court firmly held that the Act of 2000 did not contain any charging provision for such a penalty, and the machinery section could not be construed to create a new liability.

It noted that while there may be a "lacuna" in the law, allowing violators who skipped verification to escape with just tax payment, such gaps cannot be filled by judicial interpretation.

“This lacuna was required to be taken care of at the appropriate stage but the legislation has now been repealed, therefore, nothing more is required to be said on the issue,” the bench remarked.

The Court also criticised the parties for engaging lower forums in “unnecessary debates” involving the GST Act and J&K General Sales Tax Act, 2005, when the matter could be resolved solely by referring to the Entry Tax Act.

The ruling emphasized that Section 9(2) of the Central Sales Tax Act merely enables State authorities to enforce the Central Act but does not authorize the imposition of penalties beyond what the Central Act itself prescribes.

The court said “For all the aforesaid reasons, we find no merit in this Petition and the same is, accordingly, dismissed. Interim direction(s), if any subsisting as on date, shall stand vacated.”

APPEARANCE:

Case-Title: Commissioner State Taxes and anr. Vs M/s Reliance Jio Infocomm Limited, 2025

Mohsin-ul-Showkat Qadri, Sr. AAG with Ms Maha Majeed, Assisting Counsel For Petitioners

Sachin Sharma, Advocate for Respondent.

Click Here To Read/Download Order