Court directs GST Council to reconsider excluding ice cream from Composition Scheme, emphasizes need for comprehensive assessment.

The court entertained the challenge to the GST Council's decision excluding ice cream from the Composition Scheme under Section 10 of the CGST Act, 2017. After considering arguments from both parties and reviewing relevant legal precedents, the court directed the GST Council to reconsider the exclusion of small ice cream manufacturers from the Scheme, emphasizing the need for a comprehensive assessment of components used and GST implications compared to similar goods. The GST Council was instructed to address this issue in its next meeting and make a decision within three months. The petition was disposed of with this directive.

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Issues:
Challenge to GST Council's decision excluding ice cream from Composition Scheme under Section 10 of CGST Act, 2017.

Analysis:
1. The petitioner challenged the GST Council's decision excluding ice cream from the Composition Scheme under Section 10 of the CGST Act, 2017, citing violation of Articles 14 and 19 of the Constitution and principles of natural justice.
2. The court entertained the petition and issued notice to the respondents.
3. The respondent no.2 GST Council filed a counter affidavit, but it was not on record during the hearing.
4. The court proceeded with the hearing due to the urgency, as the ice cream sales season was approaching, and both parties were ready to present arguments.
5. Section 10(1) of the Act allows registered persons with turnover below specified limits to opt for a Composition Scheme, subject to conditions. Section 10(2)(e) empowers the Government, on GST Council's recommendation, to exclude specific goods from the Scheme.
6. The respondent no.2 GST Council recommended excluding ice cream from the Scheme, affecting small ice cream manufacturers with turnover below a certain limit.
7. Similar petitions on ice cream issue were pending in other High Courts, indicating a broader concern.
8. No previous High Court decision existed on this issue.
9. The court decided not to delay the judgment, as it could apply to similar petitions pending in other courts.
10. The petitioner argued against clubbing ice cream with sin goods like pan masala and tobacco, questioning the rationale behind the exclusion.
11. The petitioner contended that the reasoning for excluding ice cream based on GST on milk was flawed, as ice cream contains other taxable components.
12. The court examined the broad discretionary powers of the GST Council under Section 10(2)(e) and questioned its authority to substitute the Council's decision.
13. Citing legal precedents, the court emphasized limited judicial review over government economic decisions and policy matters.
14. The respondents highlighted that aerated water was also excluded from the Composition Scheme, supporting the decision on ice cream.
15. Legal precedents emphasized the state's discretion in taxation matters and limited judicial interference in economic policy decisions.
16. Additional legal cases were referenced to support the respondents' arguments.
17. The court reviewed the minutes of the GST Council meetings provided by the respondents.
18. The minutes reiterated the taxation impact as a key factor in excluding ice cream from the Scheme.
19. The court inquired about studies or considerations of tax effects on similar goods and services, which were not evident from the minutes.
20. Lack of evidence of comprehensive study or consideration for similar goods was noted by the court.
21. The respondents argued that socio-political factors also influenced such decisions.
22. The court directed the GST Council to reconsider the exclusion of small ice cream manufacturers from the Composition Scheme, considering components used and GST implications compared to similar goods.
23. The GST Council was instructed to address this issue in its next meeting and make a decision within three months.
24. The petition was disposed of with this directive.

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