The Core Constitutional Question Behind the Dispute
The Madras High Court's decision in M/s Guru and Co. v. Union of India & Others, 2026-VIL-607-MA dated 15.06.2026, is not merely a dispute about pulses, brand names or tax notifications. At its centre lies a broader constitutional question within the GST framework: when the CGST Act requires the Government to act "on the recommendations of the GST Council", can the Government depart from those recommendations while issuing notifications under the Act? The Court answered this question in a way that gives real legal force to the GST Council's role in delegated legislation.
The judgment is especially significant because GST is built on a cooperative federal model. The Union and the States both surrendered independent fiscal space to create a harmonised indirect tax system. In that arrangement, the GST Council is not a decorative consultative body. It is the forum through which the Centre and the States arrive at a common position on tax rates, exemptions, coverage and structural issues. Therefore, when the statute itself says that a notification must be issued on the Council's recommendations, the Government cannot treat those recommendations as loose suggestions that may be expanded at the drafting stage.
The Court did not hold that Parliament or State Legislatures are bound by every GST Council recommendation while enacting primary legislation. That would have raised a different constitutional issue. The Court instead focused on subordinate legislation, namely notifications issued under Sections 9 and 11 of the CGST Act. In this narrower but practically important field, the Court held that the Government must remain within the recommendations. The reasoning is simple but powerful: if the parent statute makes the Council's recommendation a condition for issuing a notification, any addition that lacks such a recommendation lacks statutory foundation.
Background: How Brand-Based Taxability of Pulses Became Controversial
The petitioners before the Court were suppliers of pulses such as Moong Dhal and Thoor Dhal. They sold their products in unit containers under brand names, but these brand names were not registered under the Trade Marks Act, 1999 or the Copyright Act, 1957. This fact became central because the original GST notifications dated 28.06.2017 distinguished between goods bearing registered brand names and those not bearing such registered brand names.
Notification No.1/2017-Central Tax (Rate), dated 28.06.2017, levied Central GST at 2.5% on dried leguminous vegetables when they were put up in unit containers and bore a registered brand name. Together with the corresponding State tax, the effective levy was 5%. Notification No.2/2017-Central Tax (Rate), dated 28.06.2017, dealt with exemption. A corrigendum dated 12.07.2017 clarified that dried leguminous vegetables not put up in unit containers bearing a registered brand name were outside the taxable entry. Since the petitioners' brand names were not registered, their goods did not attract GST under the original notification structure.
This created a practical difficulty for the Revenue. The GST Council noticed that some assessees were de-registering their brand names but continuing to trade using those very names. In commercial substance, the goods continued to enjoy brand recognition, but because the brand was no longer registered, the supplier could claim that the taxable entry did not apply. The Court described this as the mischief that came up for consideration at the 21st GST Council meeting held on 09.09.2017. The problem, therefore, was not academic. It concerned the boundary between genuine exemption and tax avoidance through de-registration.
What the GST Council Recommended and What the Government Notified
At the 21st GST Council meeting, the Council discussed the avoidance of GST on pulses, cereals and flours sold in unit containers under brand names. The minutes noted a flaw in the original draft, as trademark protection is not limited to registered marks. A person using an unregistered but well-known mark may still have remedies in passing off under common law. To address this, the Council approved a proposal that a mark or name in respect of which an actionable claim is available should be deemed a registered brand name for the purpose of levying 5% GST.
The Central Government thereafter issued Notification Nos. 27/2017-CT(R) and 28/2017-CT(R), both dated 22.09.2017. Corresponding integrated tax notifications were also issued. The State Government of Tamil Nadu issued G.O.(Ms) No.114 dated 22.09.2017, substantially reproducing the Central notification language. These notifications included the expression "actionable claim". However, they also added the wider expression "enforceable right in a court of law". Further, they contained conditions regarding voluntary forgoing of actionable claim or enforceable right over the brand name.
This additional language changed the character of the notification. The Council had recommended that a mark or name in respect of which an actionable claim is available should be treated as a registered brand name. The Government notification went further and covered a brand name on which an actionable claim or enforceable right in a court of law was available. The Court did not treat this difference as a harmless drafting variation. It treated it as a substantive enlargement. The notified expression was wider than the recommended expression, and therefore it brought within the tax net cases that the GST Council had not specifically recommended.
The Petitioners' Challenge and the Revenue's Defence
The petitioners challenged the amending notifications and the consequential show-cause notices. Their primary submission was that the Government had exceeded the scope of the GST Council's recommendation. According to them, the Council recommended only "actionable claim", whereas the notifications added "enforceable right in a court of law". Since Sections 9 and 11 of the CGST Act require notifications to be issued on the recommendations of the GST Council, the additional expression was said to be ultra vires the parent statute and contrary to Article 279A of the Constitution.
The challenge was also directed against the Council's later ratification at its 22nd meeting on 06.10.2017. The Council purported to ratify the notifications issued on 22.09.2017, including the drafting changes made while implementing the decision taken at the 21st meeting. The petitioners argued that ratification cannot replace the statutory requirement of a recommendation. If the notification originally travelled beyond the Council's recommendation, later approval could not cure the defect unless the Council had a legally conferred power to ratify.
The Revenue took a more flexible view of the Council's recommendation. It argued that the Government is not required to reproduce a mirror image of the GST Council's recommendation. According to the Revenue, the notifications captured the actual intention and object of the 21st GST Council meeting. The Revenue also relied on the subsequent 22nd meeting, where the Council ratified the notifications. In substance, the Revenue's case was that the Government had merely implemented the object of the Council's recommendation and that any drafting issue stood cured by later ratification.
Why the Court Treated Sections 9 and 11 as Binding Conditions on Notification Power
The Court examined Sections 9 and 11 of the CGST Act closely. Section 9 is the charging provision. It authorises levy of Central GST at such rates, not exceeding the statutory ceiling, as may be notified by the Government on the recommendations of the Council. Section 11 addresses exemption notifications and uses the same statutory expression. These words are not incidental. They are part of the legal condition on which the Government's notification-making power rests.
The Court reasoned that a notification under Sections 9 and 11 must be preceded by a recommendation of the GST Council. More importantly, the notification must remain within the recommendation. If the Government could add matters not recommended by the Council, the statutory phrase "on the recommendations of the Council" would lose much of its meaning. The recommendation would serve only as a starting point, while the Government could unilaterally expand taxability or modify exemptions in ways not approved by the Council. The Court did not accept such a reading.
This approach is also consistent with ordinary principles governing subordinate legislation. A delegated authority must act within the limits of the parent statute. If the statute says that the exercise of power depends on a specified recommendation, then that recommendation forms part of the legal foundation for the delegated action. The Government may have the power to issue the notification, but that power is conditioned by the Council's recommendation. Therefore, where the notification contains an addition for which there is no recommendation, that addition is vulnerable as being beyond the enabling power.
Application of Mohit Minerals and the Cooperative Federal Character of GST
A major part of the Court's reasoning rests on the Supreme Court's decision in Union of India v. Mohit Minerals Private Limited, 2022-VIL-30-SC. In Mohit Minerals, the Supreme Court explained the nature of GST Council recommendations. It held that GST Council recommendations are not binding on Parliament and State Legislatures when they enact primary legislation. At the same time, it recognised that the Government, while exercising rule-making power under the CGST and IGST Acts, is bound by GST Council recommendations.
The Madras High Court extended this reasoning to statutory notifications under Sections 9 and 11 . It observed that both rules and notifications fall within the field of subordinate legislation and are required to be laid before Parliament under Section 166 of the CGST Act. Therefore, if the Government is bound by GST Council recommendations while making rules, there is no reason to treat notifications under Sections 9 and 11 differently. In both cases, the Government is exercising delegated legislative power, not primary legislative power.
The Court also emphasised cooperative federalism. GST was introduced to create a uniform tax system and a harmonised national market. The GST Council is a representative body consisting of the Union and the States. Its recommendations reflect the combined wisdom of both levels of government. If the Central Government could unilaterally go beyond Council recommendations while issuing rate or exemption notifications, it could disturb the federal balance built into GST. The Court therefore held that such recommendations cannot be lightly cast aside or exceeded by the Centre.
The Critical Difference Between "Actionable Claim" and "Enforceable Right in a Court of Law"
The Court then compared the expression recommended by the GST Council with the expression added in the notifications. "Actionable claim" is defined in Section 3 of the Transfer of Property Act, 1882. It refers broadly to claims to unsecured debt or to a beneficial interest in movable property not in the claimant's possession, which civil courts recognise as affording grounds for relief. It is a technical legal expression with a defined meaning and a limited scope of application.
The expression "enforceable right in a court of law" is much wider. The Court observed that the two expressions are not synonymous. An actionable claim may be an enforceable right, but not every enforceable right is an actionable claim. This distinction was crucial. If the notification had merely used different words to say the same thing, the Revenue's argument of drafting flexibility may have carried more force. But the Court found that the Government had not merely paraphrased the Council recommendation. It had added a broader legal category.
By adding "enforceable right in a court of law", the notifications widened the scope of taxability. They covered cases where a person may not have an actionable claim in the technical sense but may still have some enforceable right in court. Such an expansion could not be justified as the implementation of the Council's recommendation. The Court therefore treated this as a case in which the notification reflected the recommendation in part but also went beyond it. For the additional portion, there was no recommendation.
The Doctrine of Severability: Why the Entire Notification Was Not Struck Down
A key feature of the judgment is that the Court did not invalidate the notifications in their entirety. It declared the Central and State notifications ultra vires only to the extent they incorporated the expression "enforceable right in a court of law". After excluding that expression, the notifications were held to be intra vires. This approach preserved the part of the notification that was supported by the GST Council recommendation.
This is a balanced outcome. The Court recognised the legality of the Government acting on the Council's recommendation regarding an actionable claim. It did not frustrate the entire policy objective of preventing avoidance through the de-registration of brand names. At the same time, it refused to allow the Government to retain the additional language that had no Council recommendation. In practical terms, the Court separated the valid part from the invalid excess.
Why the GST Council's Later Ratification Failed
The second major issue was whether the 22nd GST Council meeting could cure the defect by ratifying the notifications already issued by the Central Government. The Court held that it could not. Article 279A of the Constitution empowers the GST Council to make recommendations on specified GST matters. It does not confer a power to ratify earlier unauthorised actions. The CGST Act also does not confer such a power.
The Court treated ratification as a serious legal concept, not a mere administrative approval. Ratification retrospectively validates an act that was improperly or unauthoritatively performed in the first instance. Such a power cannot be assumed. A constitutional or statutory body can exercise only those powers that are expressly conferred or arise by necessary implication. If the power of ratification is not found in the Constitution or the statute, the Council cannot create it for itself.
The Court relied on Marathwada University v. Seshrao Balwant Rao Chavan- (1989) 3 SCC 132 for the principle that ratification is alien to the exercise of statutory power when the authority had no power in the first place. It also referred to Brunda Infra (P) Ltd. v. Commissioner of Central Tax-(2025) 139 GSTR 657 - 2025-VIL-13-TEL, where the Telangana High Court held that ratification cannot be equated with a recommendation and that ratification after the issuance of a notification cannot revive the notification. On this basis, the Court held that the GST Council's ratification in the 22nd meeting was without jurisdiction.
Final Relief and Its Effect on Show-Cause Notices
The writ petitions were allowed. The Court held that the impugned notifications issued by the Central Government under Sections 9 and 11, and the corresponding State notification issued by Tamil Nadu, were invalid only to the extent they incorporated the expression "enforceable right in a court of law". The remaining portions of the notifications, particularly those dealing with actionable claim, survived. The first issue was answered accordingly.
The Court also set aside the ratification made by the GST Council at its 22nd meeting. It held that the GST Council lacked the power to ratify the Central Government notifications. The ratification was therefore without jurisdiction. This finding is likely to have importance beyond the immediate facts, as it clarifies that later Council approval cannot be casually used as a substitute for a prior statutory recommendation.
Since the show-cause notices issued to the petitioners were a fallout of the impugned notifications, they were set aside. However, the Court granted liberty to the department to issue fresh show-cause notices if such notices could be issued on the basis of the notifications to the extent they were held valid. This means the Revenue was not completely foreclosed. It could still proceed within the surviving legal framework, but not on the basis of the invalid wider expression.
A Clear Limit on Delegated Tax Power
The judgment reinforces an important constitutional principle of GST law: while the Government may implement GST Council recommendations through notifications, it cannot enlarge their scope by introducing concepts not approved by the Council. Any such excess is vulnerable to challenge, and a subsequent ratification by the GST Council cannot cure the defect in the absence of a specific power of ratification under law.
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