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October 27, 2020

SC grants liberty to move representation with GST Council against 5% GST on disability aids

by CA Shivam Jaiswal in GST

SC grants liberty to move representation with GST Council against 5% GST on disability aids

Under GST, all goods and services transacted in India are classified under the HSN code system or SAC Code system. Goods are classified under HSN Code and services are classified under SAC Code. Based on the HSN or SAC code, GST rates have been fixed in five slabs, namely NIL, 5%, 12%, 18% and 28%, with lower rates for essential items and the highest for luxury and de-merits goods that would also attract an additional cess. A writ petition was filed in the Supreme Court (SC) challenging the imposition of Goods and Services Tax (GST) on products meant for the aid of persons with disabilities. (Nipun Malhotra vs Union of India)

A disability is defined as a condition or function judged to be significantly impaired relative to the usual standard of an individual or group. It refers to individual functioning, including physical impairment, sensory impairment, cognitive impairment, intellectual impairment mental illness, and various types of chronic diseases.

The Rights of Persons with Disabilities Act was formed with the main objective to uphold the dignity of any person in the society and prevent any discrimination against any individual in the name of disability.  It just speaks of “inclusive society”, accepting every person, irrespective of disability, if any. The main objective includes –

  • respect for inherent dignity
  • non-discrimination
  • inclusion in society
  • respect for difference and acceptance of persons with disabilities
  • equality of opportunity
  • accessibility
  • equality between men and women
  • respect for the rights of the children with disabilities.

It is notable that tax rate on disability equipment has been revised even after rolling out of GST on 1st July 2017. A press release by Ministry of Finance India, dated 4th July 2017, states that most of the specific devices used by physically challenged persons have been fixed at 5% GST. According to the final GST rates, Braille Books will be taxed at 0% i.e. they are exempted from any tax. However, assistive devices and rehabilitation aids for physically challenged persons, listed below, have been kept at the concessional 5% GST rate.

The SC heard a writ petition on 26th October, 2020 challenging the imposition of GST on products meant for the aid of persons with disabilities. It was submitted by the petitioner that a normal person is not required to pay tax for walking. However, a disabled person is required to pay 5% tax for walking. He submitted that most disability equipment’s are imposed GST at a rate of 5%.

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The Attorney General for India, informed the bench that further to the discussions he had held with the Ministry of Finance on the issue, it was conveyed to him that it was difficult to accept the plea of the petitioners. He said that while he understood the difficulties of the petitioners at a humanitarian level, mere imposition of tax could not be held to be infringing the fundamental rights so as to warrant judicial interference.

In response, the advocate of the petitioner submitted that the imposition of tax resulted in denial of equal opportunities for the differently-abled persons and created barriers for them to access the resources available to other people. The GST on disability aids was also a violation of the guarantee of equal opportunities made by the Rights of Persons with Disabilities Act 2016. He also added that, civilized jurisdictions waive tax on products meant for disabled persons.

Justice Chandrachud said that the court had doubts about whether it can interfere with a policy decision to impose tax. The judge said that, in matters related to taxation, the scope of judicial review was very narrow.

The senior counsel replied that the decision to impose GST was taken by the GST Council and the Ministry of Finance only executed the Council’s decision. Therefore, he sought liberty to move a representation before the GST Council seeking waiver of GST on disability products.

Accepting the counsel’s request, the Supreme Court granted liberty to the petitioner to move a representation with the GST council for no GST on disability products. The writ petition is posted after three months to await the decision of the GST council.

Earlier this year the Supreme Court, in a significant decision, confirmed that persons suffering from disabilities are entitled to the same benefits of relaxation as Scheduled Caste/Scheduled Tribe candidates in public employment and education. The decision by the Justice Nariman Bench came on a petition filed by Aryan Raj, a special needs person represented by senior advocate Colin Gonsalves, and advocate Rajan Mani, against the Government College of Arts, Chandigarh. Candidates with disabilities were often not able to get the benefit of reservation in education and employment because of not meeting the general standards. Now, public sector employers and colleges / universities will have to allow the same relaxations to them as to SC / ST candidates.

The Punjab and Haryana High Court also earlier this year passed a ruling reaffirming the right to work and confirming that a person with a physical disability has the right to continue his job and a mere disability cannot be a reason to terminate employment and discontinue his services in the case of Rawel Singh vs State of Punjab and Others. In this judgment, the High Court has seized an opportunity to hold the governments and employers accountable as they have not done enough to transfer benefits enshrined in the law to the beneficiaries. The disability rights discourse seems to have found momentum once again.

These fine judgments have reinforced the disabled-friendly judicial activism and have provided hope for exemption on GST on products meant for the aid of persons with disabilities.

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