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The Delhi High Court today held that the exclusion of individuals from the benefits of notification dated 03.05.2021 only because they chose to receive the oxygen concentrators as a gift, albeit directly, without going through a canalizing agency is violative of Article 14 of the Constitution.

The Division bench comprising Justices Rajiv Shakhder and Talwant Singh passed the above order on a plea by 85 years old Gurcharan Singh against the imposition of IGST on the import of the oxygen concentrator which had been gifted to him by his nephew.

The petitioner had assailed the notification dated 01.05.2021, on the ground that the import of oxygen concentrator by him, which was a gift, albeit for personal use, could not be placed at par with the import of oxygen concentrators for commercial use for the purposes of taking a decision as to the rate at which GST should be imposed on him. The discrimination, according to the petitioner, got exacerbated with the issuance of the notification dated 03.05.2021, which wholly exempted the imposition of IGST on oxygen concentrators that were imported through a canalising agency.

The Court after considering the arguments put forth by the petitioner, the State and the Amicus, Senior Advocate Arvind Datar devised the following issues which arise in the instant case.

1.Whether the State's action, of imposing IGST on oxygen concentrators, which were directly imported by individuals, albeit free of cost, without the aid of a canalising agency runs afoul of Article 14 of the Constitution?

The bench on this issue observed that the conditions prescribed in the notification dated 03.05.2021, prevent the petitioner from claiming exemption from imposition of IGST, although, the oxygen concentrator imported by him is gifted and is for personal use.

“Condition no. 1, which exempts from the imposition of IGST only those oxygen concentrators that are imported, for COVID relief through a canalizing agency creates, to our minds, a manifestly arbitrary and unreasonable distinction between two identically circumstanced users depending on how the oxygen concentrator has been imported. Imposition of IGST is, thus, as per notification dated 03.05.2021, completely waived, i.e., exempted, if the oxygen concentrator is imported through a canalizing agency.

The exclusion of individuals, such as the petitioner, from the benefits of the 03.05.2021 notification only because they chose to receive the oxygen concentrators as a gift, albeit directly, without going through a canalizing agency is, in our opinion, violative of Article 14 of the Constitution.

2.Whether Article 21 of the Constitution, which includes the right to health and affordable treatment, would require the State to demonstrate that levy and collection of the impugned tax in times of pandemic, war, famine, floods, and such like conditions would subserve public interest?

On this aspect the Court observed that imposition of tax by the State in good and normal times, is, ordinarily, sustained by the Courts in the interest of public, however in times of peril, the Courts must examine the stand taken by the State to defend an action instituted to lay challenge to a tax - on anvil of Article 21 of the Constitution.

The Court thus observed that “tax is an exaction that does not, ordinarily, recognize equity. It must, however, in our view, bend to the will of equity in times of calamity which causes wholesale degradation in the human ability to contribute to the coffers of the State.”

On the State’s argument  that no mandamus can be issued by the Court to grant exemption or waiver from tax, the Court observed that “a taxing statute can be tested on the anvil of Article 14, inter alia, on the ground that the justification for classification proffered by the State is artificial and unreasonable,”as has been held in the case N. Venugopala Ravi Varma Rajah vs. Union of India and Another, 1969 (1) SCC 681.

Nature of relief to the petitioner

On the question Whether condition no. 104, which is appended to entry no. 607A, of the General Exemption No. 190 should apply in this case, the Court  observed that each day counts for the person who requires an oxygen concentrator, the cumbersome certification procedure, provided under condition no. 104 is both impractical and inefficacious. Therefore, the bench said that compliance of clause (a) of condition no. 104 appended to entry no. 607A of the General Exemption No. 190, is sufficient. Thus, it would be sufficient if the persons, who are similarly circumstanced as the petitioner, furnish a letter of undertaking, to the officer designated by the State which would, inter alia, state that the oxygen concentrator would not be put to commercial use. Till such time an officer is designated by the State, it would be in order, if the importer were to address the letter of undertaking to the Joint Secretary, Customs and/or his/her nominee and handover the same to the officer detailed at the customs barrier.

The Court has thus quashed the notification dated 01.05.2021.