Supreme Court Upholds GST–Compensation to States Act, Says Parliament Fully Competent To Enact It 

The Supreme Court has held that the Goods and Services Tax (Compensation To States) Act is not colourable legislation in its recent judgement, MoneyControl has reported. The Centre had appealed against a Delhi High Court order which had questioned the validity of the Act. Colourable legislation is a law made by Parliament with an objective to regulate a matter which it is not competent to legislate on.

“We have held that Parliament has full legislative competence to enact the Act and the Act having been enacted to implement the Constitution (One Hundred and First Amendment) Act and the object being clearly to fulfil the Constitution (One Hundred and First Amendment) Act's objective, we reject the submission of the petitioner that Compensation to States Act, 2017 is a colourable legislation”, the Supreme Court said.

A bench of Justices consisting of A K Sikri and Ashok Bhushan said the Act does not violate the Constitution (One hundred and first amendment) Act, 2016. It also rejected that the claim that the Parliament was not competent to make the law.