GST Registration Doesn’t Substitute For Mandatory Licensing Requirement: J&K And Ladakh High Court

The Jammu and Kashmir and Ladakh High Court has held that GST Registration does not substitute for mandatory licensing requirements. The bench of Justice Wasim Sadiq Nargal while hearing the brick dealers, observed that registration under the GST Act neither dispenses with nor substitutes the requirement of licensing under the Brick Kiln Act. The contention that payment of tax legitimizes the business, even in the absence of a valid licence, would lead to an absurd result effectively allowing tax compliance to override statutory prohibitions or public welfare measures. The bench held that registration under the GST Act, 2017 does not exempt the brick dealers from obtaining a licence under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010. The petitioners are dealers and not manufacturers of bricks contended that the said Act and Rules apply only to brick kiln owners engaged in manufacturing within the Union Territory, and not to dealers dealing in finished bricks imported from other States. They allege that the orders are arbitrary, without jurisdiction, and violative of their fundamental right to trade and commerce under Article 19(1)(g) of the Constitution. The writ petition has been filed by the petitioners under Article 226 of the Constitution of India challenging the orders issued by the District Magistrates of Kathua and Samba directing seizure of vehicles transporting bricks imported from outside the Union Territory of Jammu and Kashmir and imposing penalties under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010 and the the Jammu and Kashmir Brick Kiln (Regulation) Rules, 2017. The issue raised was whether registration under the Goods and Services Tax (GST) Act, 2017 exempt the petitioners from the requirement of licensing under the Brick Kiln Act. The petitioners have sought to draw a parallel between their registration under the Goods and Services Tax Act and the licensing requirement under the Brick Kiln Act, contending that compliance with the former should suffice for carrying on trade. This contention is vitiated by a fundamental misconception of the true nature and object of the two statutes. The Goods and Services Tax (GST) Act is a fiscal enactment concerned with taxation of supplies of goods and services. It regulates revenue collection, not the legality of the trade itself. Licensing statutes, on the other hand, are regulatory instruments designed to ensure that the activity being taxed is lawful, safe, and compliant with public policy. The two operate in distinct and non-conflicting fields. A trader’s GST registration merely signifies that they are registered for tax purposes and it does not authorize them to engage in any particular trade without fulfilling sector-specific regulatory obligations. To hold otherwise would mean that payment of tax legitimizes any activity, however illegal or harmful, which would be an absurd proposition. Hence, the plea of the petitioners that GST registration exempts the petitioners from the requirement of obtaining a brick trading licence is devoid of merit. The petitioners have sought to equate registration under the Goods and Services Tax Act, 2017 with compliance under the Jammu and Kashmir Brick Kiln (Regulation) Act, 2010 and the Rules of 2017, contending that once they are registered under the GST regime, no separate licensing under the Brick Kiln Act is necessary for carrying on their business. The GST Act is a fiscal legislation, enacted to regulate the levy and collection of tax on the supply of goods and services. It does not confer or regulate the right to conduct any specific business or activity; rather, it presupposes that such business is otherwise lawful and duly authorised under applicable laws. The Brick Kiln (Regulation) Act, 2010, on the other hand, is a regulatory statute intended to govern the establishment, operation, and environmental compliance of brick kilns, to protect public health, agricultural land, and ecological balance. Its licensing requirement is a condition precedent to the lawful conduct of the activity itself. The court held that the two enactments, therefore, operate in distinct and non-overlapping fields as the former is in the domain of taxation, and the latter in the domain of regulation and control of trade in a specified commodity. A registration under the GST Act merely enables the State to levy and collect tax on a transaction and it cannot, by any stretch of interpretation, legalize an otherwise unlicensed or prohibited activity. The court ruled against the brick dealers and in favour of the department. Case Details Case Title: Kehar Singh Versus Union Territory of J&K Case No.: WP(C) No. 2790/2025 Date: 06.11.2025 Counsel For Petitioner: Vikram Sharma, Sr. Adv. Counsel For Respondent: Monika Kohli, Sr. AAG Click Here To Read Order Read More: Exporter Entitled To Duty Drawback Once Goods Are Exported Outside India Irrespective Of The Fact That It Reached The Destination Or Not: CESTAT

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