United Spirits LTD. (Erstwhile Mcdowell And Co. LTD.), Rep. By Its Aut. Officer, Dr. Huma Ali vs. State Of Goa, Thr. The Chief Secretary And 4 Ors

The petitioners in this batch of petitions challenge the non- implementation of this Court's decisions in Writ Petition No.424 of 2018 and connected matters despite Special Leave Petitions against the same being dismissed by the Hon'ble Supreme Court on the specious plea that such decisions "stand nullified" or are "rendered ineffective" after the passage of the Goa Value Added 20th April 2023

The Assessing Officer assessed the Petitioner's returns for 2011-12 and, by an assessment order dated 10.12.2014, determined an amount of ₹3,08,24,730/- as refundable to the petitioner due to the excess tax paid by the Petitioner for the said year.

By an order dated 06.12.2017, the Commissioner of Commercial Taxes sanctioned a refund of ₹2,49,05,784/- and this amount was actually refunded on 14.12.2017. However, no statutorily prescribed interest at the rate of 8% per annum was paid to the Petitioner.

After raising several demands for payment of such interest, the Petitioner instituted Writ Petition No.720/2019, which was allowed by judgment and order dated 19.11.2019. Accordingly, the Court issued a mandamus directing the respondents to pay the Petitioner an amount of ₹54,62,665/- together with interest at the rate of 4% per annum to be computed from 14.12.2017 till the date of actual payment within eight weeks.

The respondents failed to honour the mandamus within the timeline or beyond. At the belated stage, the respondents filed Misc. Civil Application No.154/2020 seeking an extension. An extension of four weeks was granted by order dated 24.02.2020. 20th April 2023

6 The Petitioner and the respondents exchanged correspondence regarding compliance with the Writ of mandamus issued by this Court. Assistant Commissioner's communication dated 23.07.2020 informed the Petitioner that a Special Leave Petition (SLP) had been preferred in the matter, and the request for the honour of the mandamus would be processed after the outcome of the SLP.

The address of the above communication dated 23.07.2020 was shocking and unfortunate. This is because the Hon'ble Supreme Court had already dismissed the SLP on 08.06.2020, even without any notice to the Petitioner. In any case, the time limit for compliance had already expired, and the Hon'ble Supreme Court had granted no interim relief. Thus, even after the SLP was dismissed, the mandamus was not honoured.

Accordingly, the Petitioner was constrained to institute Contempt Petition under Stamp Number No.1304/2020. After seeking several adjournments, the Assistant Commissioner of Commercial Taxes filed an affidavit in reply on 05.11.2021. 3. 9. In this affidavit, a reference was made to the impugned 20th April 2023

Accordingly, the Petitioner was constrained to institute the present petition. PETITIONERS' CONTENTIONS :

The learned Counsel for the petitioners made the following submissions in support of their respective petitions:-

1 The impugned Amendment is an instance of impermissible legislative override and infringes the doctrine of separation of powers. The fundamental bases of the judicial decisions sought to be nullified or declared ineffective remain substantially untouched by the impugned Amendment Act. Even the Statement of Objects and Reasons to the impugned Amendment Act admits that the impugned Amendment Act was introduced simply because the interpretation in the decisions of this Court was "different from the interpretation/intensions of the Government of the said provisions of the Act, regarding payment of interest on refund of tax". 20th April 2023

2 The learned Counsel for the petitioners submitted that the doctrine of separation of powers is accepted as one of the essential facets of the rule of law under our constitutional scheme. Therefore, based upon the impugned Amendment Act, the State cannot simply refuse to follow the binding judicial decisions of this Court, particularly after the Special Leave Petitions against the same were dismissed by the Hon'ble Supreme Court.

3 The learned Counsel for the petitioners rely on several Karnataka & Ors. vs. Karnataka Pawn Brokers Association & & Anr. vs. Union Of India & Anr.6, Cauvery Water Disputes Tribunal, In re7, S.R. Bhagwat & Ors. vs. State of Mysore8 1. 1969 (2) SCC 283. 2. (2014) 12 SCC 696. 3 (2018) 6 SCC 363 4 (1999) 6 SCC 418 5 2005 (187) ELT 5 (SC) 6 (2005) 4 SCC 214 7 1993 Supp (1) SCC 96 (2) 8 (1995) 6 SCC 16 20th April 2023

4 The learned Counsel for the petitioners submitted that in terms of Section 19 of the Constitution (101st Amendment) Act, 2016, any law relating to tax and goods on services or both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent legislature or other competent authority or until the expiration of one year from such commencement, whichever is earlier. The learned Counsel, therefore, submitted that as of 16.09.2017, the Goa Value Added Tax Act, 2005 (GVAT Act, 2005) would have lapsed. However, the State legislature enacted and introduced Goa Goods and Services Tax Act, 2017, effective from 01.07.2017, to align the tax on goods and services law with the Constitution (101st Amendment) Act, 2016. Therefore, in terms of Section 174 of the Goa Goods and Services Tax Act, 2017, GVAT Act, 2005 was repealed except in respect of goods included in Entry 54 of the State List of Seventh Schedule to the Constitution, viz. petroleum products and alcohol for human consumption.

5 The learned Counsel for the petitioners, therefore, 9 2021 SCC OnLine Sc 463 20th April 2023

7 Learned Counsel pointed out that this position was clarified by the State legislature in Section 174 of the Goa Goods and Services Tax Act, 2017, by which the GVAT Act, 2005 was repealed except in respect of goods included in Entry 54 of the State List of the Seventh Schedule to the Constitution viz. petroleum products and alcohol for human consumption. Again, learned Counsel relied upon several decisions in support of this contention. These include Reliance Industries Ltd. (supra), Sri Sri Engineering Works and Ors. (supra) and Baiju A.A. (supra).

8 The learned Counsel for all the petitioners submitted that the impugned Amendment Act is manifestly arbitrary and violates Articles 14 and 265 of the Constitution. Second, they proposed that the impugned Amendment Act is confiscatory and confers unfettered discretion in the sanctioning authority withholding sanction to refund excess tax, almost indefinitely, and without any liability to pay interest. Third, they submitted that the impugned Amending Act retrospectively takes away vested constitutional rights. Finally, they offered that these are good grounds to strike 20th April 2023

1 The learned Advocate General defended the impugned Amendment Act by submitting that the same was a validating Act that had removed the bases of the judicial decisions the petitioners sought implementation of. He offered that the judicial decisions were entirely based on the interpretation of Sections 10 and 33 of the GVAT Act, 2005. Now that these Sections and even some linked Sections were substantially amended with retrospective effect, the bases of the judicial decisions stood altered, thereby rendering the judicial decisions ineffective and unimplementable.

2 The learned Advocate General submitted that this is a time- WP-23-2021,

The first question that falls for consideration is whether the impugned Amendment Act is an instance of impermissible judicial override to reverse or set at nought the judicial decisions of this Court even after SLPs against the same were dismissed by the Hon'ble Supreme Court. The petitioners contend that the Legislature has not removed the fundamental bases of the judicial decisions. On the other hand, the learned Advocate General 26 (1996) 4 SCC 281 27 (2014) 1 SCC 126 28 (1989) 3 SCC 483 20th April 2023

Several decisions of the Hon'ble Supreme Court have fairly settled the legal position of validating statutes. However, there are always issues of application of such principles depending upon facts and circumstances peculiar to the cases that fall for consideration.

Since both sides relied strongly on Shri Prithvi Cotton Mills Ltd. (supra), reference to this decision at the very outset would be appropriate. This is a leading case on the legal effect of validating statutes, and the principles explained by the Constitution Bench have stood the test of time.

The Constitution Bench has held that the Court examining the validity of a validating statute must first examine the issue of legislative competence. Secondly, granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind, for that would tantamount to reversing the decision in the exercise of judicial power, which the Legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally 20th April 2023

The super-session of judicial verdicts through legislation sometimes involves the violation of the separation of powers doctrine under the Constitution of India. The Hon'ble Supreme In the above decisions, the Hon'ble Supreme Court held that even without the express provision of the separation of powers, the doctrine of separation of powers is an entrenched principle in the Constitution of India. This doctrine informs the 29. (2022) 9 SCC 593. 20th April 2023

The Hon'ble Supreme Court held that the independence of Courts from the executive and Legislature is fundamental to the rule of law and one of the basic tenets of the Indian Constitution. Separation of judicial power is a significant principle under the Constitution of India. Accordingly, breaching the separation of judicial power may negate equality under Article 14. Separation of powers between three organs – the Legislature, Executive and Judiciary, is also nothing but the consequence of principles of equality enshrined in Article 14 of the Constitution of India. Thus, legislation can be invalidated based on a breach of the separation of powers since such a breach negates equality under Article 14 of the Constitution.

The Hon'ble Supreme Court further elaborated that the doctrine of separation of powers applies to final judgments of the Courts. Therefore, the Legislature cannot declare any decision of a Court of law to be void or of no effect. It can, however, pass an 20th April 2023

On the scope of judicial review and the nature of the inquiry, the Hon'ble Supreme Court pointed out that the law enacted by the Legislature may apparently seem to be partly within its competence. Still, in substance, if it is shown as an attempt to interfere with the judicial process, such law may be invalidated as being in breach of the doctrine of separation of powers. In such a situation, the legal effect of the law on a judgment or a judicial proceeding must be examined closely regarding legislative prescription or direction. 20th April 2023

In such matters, the questions to be asked are, (i) Does the legislative prescription or legislative direction interfere with the judicial functions? (ii) Is the legislation targeted at the decided case, or whether the impugned law requires its application to a case already finally decided? (iii) What are the terms of law, the issues with which it deals and the nature of the judgment that has attained finality? Suppose the answer to questions (i) and (ii) is in the affirmative, and the consideration of aspects noted in question (iii) sufficiently establishes that the impugned law interferes with judicial functions, in that case, the Court may declare the law unconstitutional.

Almost all the other decisions the Counsel for the Petitioners and the learned Advocate General relied upon reiterate or elaborate on the above principles. Therefore, adverting all such decisions might be repetitive.

Accordingly, applying the law in Shri Prithvi Cotton Mills Ltd. (supra), State of TN V/s. State of Kerala (supra) and James Varghese and Ors. (supra), the issue as to whether this is a case of impermissible judicial override or a matter of whether the principle of separation of powers has been breached or not will 20th April 2023

Therefore, to begin with, we must advert to this Court's bases of this Court's decisions. In short, the scope of inquiry is whether the impugned Amendment Act is genuinely a validating Act or an instance of impermissible judicial override.

In USL, the main issue involved was the date from which simple interest at the rate of 8% per annum would become payable on the amount refundable under the provisions of the GVAT Act. The Court held that such interest would become payable on the 91st day from the expiry of the refund order, where such refund is not paid within 90 days of such determination.

To support the above conclusion/decision, the Division Bench of this Court did refer to and rely upon the provisions of Sections 10 and 33 of the GVAT Act. However, such reliance was 20th April 2023

This Court clearly and unequivocally held that a sanction order under Rule 30 of the said Rules relates back to the date of the refund order made by the Assessing Authority, at least to the extent of the amount referred to in the sanction order. This Court noted that it was not as if the sanctioning authority, for the first time, was determining whether any refund was due. The sanctioning authority merely sanctioned the determinations already made, either wholly or partly. Therefore, a sanction order would essentially relate back to the date of the refund order. This Court also held that the provisions of Section 33(2) of the GVAT 20th April 2023

The reasoning and, consequently, some of the crucial bases for the decisions said to have been rendered ineffective by the impugned Amendment Act are found in paragraphs 51 and 52. In these paragraphs, this Court held that unlike in the case of assessment or reassessment, there was no time limit prescribed within which the Revenue was required to obtain sanction under Rule 30 of the said Rules. Therefore, if the Revenue's interpretation of the effect of the sanction order were to be accepted, then the Revenue would virtually be permitted to take undue advantage of its own delays in obtaining or issuing a sanction order under Rule 30 of the said Rules. In paragraph 52, the Court concluded that, therefore, it would be reasonable to proceed on the basis that the 90 days time limit prescribed under Section 33(2) of the GVAT Act is the time limit within which the appropriate assessing authorities must obtain sanction under Rule 30 of the said Rules.

This Court held that, for any reason, no sanction was obtained within 90 days from the date of the refund orders under 20th April 2023

Thus, it is clear that this Court's decisions, whether in Writ Petition No. 424/2018 or the connected matters, were not solely

(2011) 10 SCC 292. 31. (2016) 6 SCC 621. 20th April 2023

In addition to the above base concerning the interpretation of the provisions of Sections 10 and 33 of the GVAT Act, the Court based its conclusion/decision on at least six other bases.

Firstly, the schematic interpretation of the provision of Sections 10, 29, 30, 33 and 39 of the GVAT Act and Rule 30 of the said Rules; Secondly, on the harmonious construction between Sections 10 and 33 on the one hand and Rule 30 of the said Rules, on the other; even if we assume that the amendments to Sections 10 and 33 marginally affected the interpretation of the two provisions, the effect was only marginal. Besides, the other bases referred to hereafter were not in the least dented by the amendments.

Thirdly and significantly, the Court based its decision on the principle that the Revenue could not avoid payment of 20th April 2023

Fourthly, this Court ruled that the sanction order in terms of Rule 30 of the said Rules would "relate back" to the date of the refund order, at least to the extent of the amount referred to in the sanction order made under Rule 30 of the said Rules. Thus, one of the fundamental bases of this Court's conclusion/decision was that the delay in issuing the sanction order would not operate to the prejudice of an Assessee who had paid excess Tax and the assessing Authority had already determined the refundable amount. To prevent the Revenue from taking undue advantage of primarily ministerial delays in issuing the sanction orders, this Court ruled that a sanction order, whenever issued, would relate back to the date of the refund order so that Assessee was not deprived of interest on the excess tax paid by him. The impugned Amendment Act has not even touched this finding about relating back which attained finality after the dismissal of SLPs by the 20th April 2023

Fifthly and again, to ensure that no interest is denied to an Assessee due to procrastination by the authorities to issue a sanction order, this Court held that the 90-day time limit provided in Section 33(2) of the GVAT Act was, in fact, the time limit within which the assessing authorities "must obtain sanction in terms of Rule 30 of the said Rules"; Even this finding remains relatively untouched except that now it could be contended that the time limit under Section 10 or 33 is about 180 days. Accordingly, the principle remains unaffected by the impugned Amendment Act.

Sixthly, this Court also held that if, for any reason, a sanction order under Rule 30 of the said Rules was not obtained within these 90 days, the Assessing Authorities could not avoid liability for payment of simple interest at the rate of 8% per annum on the specious plea that such a liability commences only from the date of expiry of 90 days from the date of the sanction or under Rule 30 of the said Rules. Again, the principle remains unaffected by the impugned amendment Act.

The fact that the impugned Amendment Act has not 20th April 2023

The above Statement of Objects and Reasons reflects the following:- (a) that the impugned Amendment was "in light of recent judgment of the honourable High Court based on interpretation of Section 33 of Goa Value added Tax Act, 2005 read with Rule 30 of the Goa Value Added Tax Rules, 2005, which is different from the interpretation/intentions of the Government of the said provisions of the Act, regarding payment of interest on refund of Tax"; 20th April 2023

Therefore, the Bill that ultimately culminated into the impugned Amendment Act proceeded on the basis that this Court's decisions were solely and exclusively premised on the wordings of unamended Sections 10 and 33. Once they were altered, the judicial decisions would become ineffective, and the State would stand relieved of the obligation to implement them. The clear intention was to legislatively overrule or reverse the judicial decisions simply because the Court's interpretation and findings did not align with the Government's viewpoint. The fundamental base about the arbitrariness involved in the State drawing undue advantage from the tardiness and procrastination of its own officials was never addressed. This fundamental defect continues. Such an exercise does not qualify as some genuine validation Act.

The impugned Amendment Act comprises five sections and is transcribed below for the convenience of reference : "Notification 7/16/2020-LA

Amendment of section 29. - In section 29 of the principal Act, after sub-section (9), the following sub-section shall be inserted, namely:

The primary amendment applies to Sections 10 and 33 of the GVAT Act, 2005. Because the judicial decisions (that are now sought to be rendered ineffective) had provided that interest on excess and found refundable tax was to be paid from the 91st day of the "refund order" under Sections 10 and 33 of the GVAT Act, 2005, the impugned Amendment Act now provides that such interest would become payable from the 91st day of "sanction order". The other bases, which were fundamental, have not been touched by the impugned Amendment Act.

Apart from the wordings of unamended Sections 10 and 33 of the GVAT Act, 2005, the foundation of the judicial decisions of this Court, as affirmed by the Hon'ble Supreme Court, was that the Revenue could reap no undue advantage from its own delays or due to the procrastination of its officials. The Court felt such a situation would be arbitrary, and even the statutory scheme did not support such a construction. Therefore, the 20th April 2023

Therefore, the impugned Amendment Act can not be called a legitimate validating Act. Instead, this is an impermissible legislative override to overrule or reverse judicial decisions in exercising legislative powers. The doctrine of separation of powers is breached in such a process. This doctrine is an essential constituent of the rule of law and Article 14 of the Constitution. Accordingly, such an exercise is unconstitutional, as explained by 20th April 2023

Despite the impugned Amendment, this Court could have and perhaps would have taken the view that the Revenue cannot extract any undue advantage based on the procrastination of its officials. Such a view would be entirely consistent with the law laid down in Ranbaxy Laboratories Limited (supra) and Hamdard (WAQF) Laboratories (supra). Such a view would be consistent with the harmonious interpretation of the provisions of the Act, and the said Rules. Such a view would be consistent with the schematic understanding that the sanction order in terms of Rule 30 of the said Rules would relate back to the date of the refund order made by the Assessing Authority. Such a view would be consistent with the finding that 90 days time limit provided in Section 33(2) of the GVAT Act (even after its Amendment) would be the time limit within which the appropriate Assessing Authority must obtain sanction in terms of Rule 30 of the said Rules. Finally, such a view could be taken by adverting to the Constitutional provisions in Articles 14, 265 and 300-A.

Therefore, we cannot accept the contention that the 20th April 2023

More importantly, the impugned Amendment Act has not even dealt with the findings recorded by this Court that the Revenue could not deny interest on the excess tax retained by it based on its own procrastination or by taking undue advantage of its own officers delaying sanction. These findings relate to the 20th April 2023

Retention of an excess tax unreasonably and without liability to pay any interest by taking undue advantage of the procrastination by the authorities in making a sanction order would amount to arbitrariness, which Article 14 of the Constitution shuns. Similarly, acknowledging the liability to refund excess tax, but postponing the actual refund almost indefinitely or unreasonably without liability to even pay interest, might involve infringement of Article 265 of the Constitution. By this method, the Revenue could freeze the interest for the period during which the Revenue Authorities fail to make a sanction order for a tax refund, which the Assessing Authority already determined as excess and, consequently, refundable.

The findings in the judgment and order dated 16.10.2019 about the scope and the object of sanction, about sanction order 20th April 2023

Moreover, because they relate to the provisions in Articles 14 and 265 of the Constitution, such findings could not have been nullified or watered down by simply amending the requirements of the GVAT Act. Accordingly, notwithstanding the attempt, we think the impugned Amendment Act has not displaced the base or all the bases of this Court's decisions. Some dent to one of the bases is not the same as a complete obliteration of all the grounds or premises on which the two decisions were founded. Therefore, notwithstanding the form of the impugned 20th April 2023

The learned Advocate General argued that a Court's judgment could be nullified if the decision is based on a statutory provision and the relief is granted based on the interpretation of such statutory provision. He submitted that the competent Legislature could amend the statute based on which the judgment is delivered and upon which relief is granted to the party. He, however, submitted that where a judgment or a mandamus is granted not based on a statute but independent of a statute, such a judgment cannot be overruled by legislative intervention. Written submissions were also filed, precisely transcribing such arguments. In the written submissions, it was contended that if a statute is struck down as unconstitutional and relief is granted to the party, the State Legislature cannot enact an identical statute which is contrary to the ruling/ratio of the judgment as regards the interpretation of the Constitution. 20th April 2023

Broadly, we agree with the submission of the learned Advocate General. However, as noted above, the judgment and order dated 16.10.2019 in Writ Petition No.424/2018 were not based solely or exclusively on interpreting the provisions of Sections 10 and 33 of the GVAT Act. Therefore, by amending the provisions of Sections 10 and 33 of the GVAT Act, the decision's bases were not removed or obliterated. There were other provisions considered as well by the Court. The Court considered the scheme of such provisions and the interplay between the GVAT Act and the said Rules. No attempt was made to amend all the statutory provisions or rules.

In any case, some of the critical findings in the judgment and order were based upon the constitutional provisions in Articles 14 and 265. In particular, the critical findings and observations about the Revenue being precluded from taking undue advantage of its own procrastination or delays, or the findings about sanction order relating back to the refund order or the requirement of obtaining sanction order within 90 days' time limit prescribed in Section 33 of the GVAT Act, are all findings and observations relatable to the principle of non-arbitrariness enshrined in Article 14 and the principle that no tax should be levied or collected except by authority of law as provided by 20th April 2023

The Hon'ble Supreme Court stalled a similar attempt at 32 (1999) 6 SCC 418 33 2005 (187) ELT 5 (SC) 34 (2005) 4 SCC 214 20th April 2023

The Division Bench of the Karnataka High Court upheld the provisions' validity. But relying upon Jagdamba Paper moneylenders/pawnbrokers were entitled to interest on the security deposits at the prevailing interest rate the scheduled banks paid on a fixed deposit for one year. Furthermore, the Division Bench held that though there was no specific provision providing for payment of interest, there was no prohibition on the payment of interest. Therefore, non-providing of any interest on such a security deposit would be arbitrary and violative of Article 14 of the Constitution of India. No appeal was filed against this decision by the State of Karnataka, but the 35 (2018) 6 SCC 363 36 (1983) 4 SCC 508 20th April 2023

The State of Karnataka amended the two Acts with retrospective effect. Regarding amended Sections 7-A and 4-A of the said Acts, the security deposit amount was directed to carry no interest. Based upon such retrospective amendments, the State declined to implement the Court's direction for interest payment.

The Hon'ble Supreme Cort upheld the High Court's decision striking down the amendments. The Court held that the judicial decision sought to be legislatively overturned was based on the premise that there was no prohibition on paying interest on refundable security deposits. Regarding whether the impugned amendments could undo the effect of such a decision, the Hon'ble Supreme Court relied upon Shri Prithvi Cotton Mills Ltd. & Anr. vs. Broach Borough Municipality & Ors. 37, Cauvery Water Disputes Tribunal, In re38 and S.R. Bhagwat & Ors. vs. State of Mysore39. 53. The Hon'ble Supreme Court held that on analyzing such 37 (1969) 2 SCC 283 38 1993 Supp (1) SCC 96 (2) 39 (1995) 6 SCC 16 20th April 2023

The Hon'ble Supreme Court, by applying the above 20th April 2023

Therefore, the petitioners filed a petition directly before the Hon'ble Supreme Court under Article 32 of the Constitution seeking a declaration that the impugned Act in so far as it sought to confiscate the financial benefits made available to the petitioners by the Writ of mandamus issued by the High Court was null and void, as it amounted to the legislative overruling of binding judicial decisions.

The Hon'ble Supreme Court, after considering the rival contentions, concluded that Section 11(2) of the impugned Act was clearly ultra vires the powers of the State Legislature as it encroached upon the judicial field and tried to overrule the judicial decision binding between the parties. Section 11(4) of the impugned Act was also read down accordingly. The Court ruled that it is now well settled by a catena of decisions that a binding judicial pronouncement between the parties cannot be made ineffective with the aid of any legislative power by enacting a provision which, in substance, over-rules such judgment and is 20th April 2023

The Hon'ble Supreme Court noted that the High Court had not struck down any legislation sought to be reenacted after retrospectively removing any defect by the impugned provisions. The Hon'ble Supreme Court pointed out that this was a case where the High Court had given certain benefits to the petitioners on an interpretation of the existing law. The order of mandamus was sought to be nullified by enacting the impugned provisions in a new statute. The Court held that this would be clearly an impermissible legislative exercise.

The Hon'ble Supreme Court referred to the "overriding effect clause", based upon which the State sought to deny consequential financial benefits to the petitioners and held that the State had tried to get out of the binding effect of the decision by resorting to its legislative power. The judicial decisions which had become final against the State were sought to be done away with by enacting the impugned provisions. Such an attempt cannot be said to be a permissible legislative exercise. Instead, it 20th April 2023

The precedents in Karnataka Pawn Brokers Association and S.R. Bhagwat (Supra) address legal and factual issues similar to the present case. The State of Goa has attempted to replicate the Karnataka model, assuming it could be called a 'model' after the Hon'ble Supreme Court struck down the legislative exercise as an instance of impermissible legislative overruling. Based on these precedents, we believe the impugned Amendment Act must suffer 41 (2019) 13 SCC 185 20th April 2023

Most decisions relied upon by the Learned Advocate General concerned genuine validation Acts where the defects pointed out by the judicial decisions were removed and the fundamental bases of the judicial decisions altered. Again, most of these decisions reiterate the principles in Shri Prithvi Cotton Mills Ltd (Supra) and other decisions referred to above. Accordingly, by accepting the propositions of law in such decisions, the impugned Amendment Act cannot be regarded as a validation Act as contemplated by such decisions.

For all the above reasons, we hold that the impugned Amendment Act is an impermissible legislative override. Therefore, based upon the impugned Amendment Act, the respondents cannot decline to implement this Court's decisions in Writ Petition No.424/2018 and connected matters. These decisions have attained finality after SLPs against the same were dismissed by the Hon'ble Supreme Court. Accordingly, notwithstanding the impugned Amendment Act, which is an instance of impermissible legislative override, the respondents will have to comply with the directions in this Court's decisions in 20th April 2023

Given our finding on the first question that arose for determination, it may not be necessary for us to go into the other issues raised in these petitions. However, we propose briefly touching upon these issues and recording our prima facie observations on some of them. AMENDMENT TO A REPEALED/LAPSED STATUTE WITHOUT ITS REVIVAL :

The impugned Amendment Act purports to amend the GVAT Act, 2005, with retrospective effect. This Amendment was made in 2020. Before that, the Goa State Legislative passed the Goa GST Act, 2017, which entered force on 01.07.2017. 66. Section 174 of the Goa GST Act, 2017, repealed explicitly with effect from 01.07.2017, the GVAT Act, 2005, except in respect of goods included in Entry 54 of the State List of the Seventh Schedule to the Constitution. The goods that the petitioners in Writ Petition No.23/2021 and 229/2022 deal with are not included in Entry 54 of the State List of the Seventh Schedule to the Constitution. Therefore, at least, prima facie, qua such goods, the GVAT Act, 2005 stood repealed with effect from 20th April 2023

The two Division Benches of the Gujarat and Telangana High Court relied on the principle that repeal at common law obliterates the statute as if it was never enacted except for past and closed transactions. The Gujarat High Court, after referring to decisions of the Hon'ble Supreme Court, Craies on Statute Law, 7th Edition at pages 411-412, Bennion on Statutory Interpretation, 6th Edition at Pg 276 and Justice G.P. Singh in his Principles of Statutory Interpretation, 12th Edition 2010 concluded that at common law, a statute becomes non-existent on its repeal, unless saved by some saving provision.

The arguments based on the General Clauses Act or the provisions of Section 19 of the Constitution (101st Amendment) 20th April 2023

The Division Benches also relied upon the decision of the Federal Court in Jatindra Nath Gupta (supra), wherein it was held that it is competent to the Legislature in exercising its plenary powers to revive or reenact legislation which has already expired by lapse of time. The Legislature is also competent to legislate with retrospective effect, but neither of these things seems to have been done in the present case. The Legislature proceeds on the footing that the old Act was alive at the date. Then the new Act was passed, and the new Act merely purports to amend one of the provisions of the old Act. There could be no amendment of an enactment which is not in existence. From the fact that the Legislature purports to amend an Act, it could not be held as a matter of construction that the Legislature intended to renew a dead Act or make a new enactment on the same terms as the old with retrospective effect. To the same effect are the 20th April 2023

Therefore, at least prima facie, the impugned Amendment Act, 2020, in so far as it applies to goods other than those included in amended Entry 54, would be ultra vires, null and void. Therefore, based upon the impugned Amendment Act, the relief granted to the petitioners in Writ Petition No.23/2021 and 229/2022 could not have been withheld. LEGISLATIVE COMPETENCE :

Regarding legislative competence, we must refer to the Constitution (101st Amendment) Act, 2016, which entered force on 16.09.2016. This Amendment brought about several changes, including the insertion of Article 246-A and the substitution of 20th April 2023

The Division Benches of the Gujarat High Court, Telangana High Court, Kerala High Court and Allahabad High Court have held that post the Constitution (101st Amendment) Act, 2016, the State Legislatures lost legislative competence to make laws on taxes on sales or purchases of goods other than the six specified goods in substituted Entry 54, List II of the Seventh Schedule to the Constitution. Even in respect of the six specified goods, the State Legislature would lack the legislative competence to tax sales in the course of inter-State trade or commerce or sales in the course of international trade or commerce of such goods.

In Mohit Mineral Private Ltd. (supra) or VKC Footsteps India Pvt. Ltd. (supra), the Hon'ble Supreme Court has held that Article 246-A defines the source of power as well as the field of legislation (with respect to goods and service tax) obviating the need to travel to the Seventh Schedule. Further, Article 246-A embodies the constitutional principle of the simultaneous levy as distinct from the principle of concurrence, which is operated within the fold of the Concurrent List. However, the issue about the State Legislature having a legislative competence to enact tax 20th April 2023

In Mohit Minerals Pvt. Ltd. (supra), the bone of contention was whether an Indian importer could be subjected to the levy of Integrated Goods and Services Tax on the component of ocean freight paid by the foreign seller to a foreign shipping line on a reverse charge basis. In VKC Footsteps India Pvt. Ltd. (supra), the Hon'ble Supreme Court was concerned with the divergence between the views of the Gujarat High Court on the one hand and the Madras High Court on the other, on the question of whether Explanation (a) to Rule 89(5) which denied the refund of "unutilized input tax" paid on "input services" as part of "input tax credit" accumulated on account of inverted duty structure is ultra vires the provision of Section 54(3) of the CGST Act, 2017. In both these decisions, the Hon'ble Supreme Court held that Article 246-A defines the source of power as well as the field of legislation obviating the need to travel to the Seventh Schedule and, further, this provision embodies the constitutional provisions of the simultaneous levy by the Parliament and the State Legislatures. 20th April 2023

The Full Bench of the Bombay High Court in United Projects (supra) did make some observations on this issue. However, the decision of the Division Bench of the Gujarat High Court in Reliance Industries Ltd. (supra) was not dissented from but only distinguished in paragraph 124 by observing that the said judgment "clearly indicates that Section 84A considered by case of the petitioner".

Thus, on facts, the present cases are similar to the facts before the Gujarat High Court. The primary Amendment in the Maharashtra Act was enacted within one year of the coming into force of the Constitution (101st Amendment) Act, 2016. However, Gujarat and the Goa amendments were after one year, i.e., 2018 and 2020 respectively. Further, there is a similarity 20th April 2023

Therefore, based upon the Division Bench decisions of Gujarat, Telangana, Kerala and Allahabad, the petitioners in Writ Petition No.23/2021 and 229/2022 have an arguable case based even on legislative competence. This ground may however not be available to the petitioners in the remaining petitions. MANIFEST ARBITRARINESS :

In Union of India V/s. Tata Chemicals Ltd.43, the Hon'ble Supreme Court, precisely in the context of interest payment on refund of excess tax, held that when such amount is refunded, it should carry interest. Interest is a kind of compensation for using and retaining the money collected unauthorisedly by the Revenue. When the collection is illegal, there is a corresponding obligation on the Revenue to refund such amount with interest since they retained and enjoyed the money 43 (2014) 6 SCC 335 20th April 2023

In Sandvik Asia Ltd. (supra), the Court noted that where interest was granted after a substantial lapse of time, interest must normally follow. The Court noted that while charging interest from the assesses, the Department first adjusts the amount paid towards interest so that the principal amount of tax payable remains outstanding. Therefore, they are entitled to charge interest until the entire outstanding is paid. But when it comes to granting interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence, as 20th April 2023

The State of Goa does not dispute liability to refund the excess tax amount in the present cases. The State does not even dispute the liability to pay interest at 8% per annum. However, the State contends that interest would not become payable from the 91st day of the refund order but the 91st day of the sanction order. As noted earlier, no time limit for making the sanction order is fixed. No reasons are required to be provided for any delay in making the sanction order. Thus, the State contends that it can, based upon its Officers' tardiness or procrastination, retain the excess tax amount for an indefinite period or at least an unreasonably lengthy period without obligation for payment of any interest. At least, prima facie, such a provision would be arbitrary and unreasonable given the reasoning in the decisions of the Hon'ble Supreme Court on the issue of the necessity to pay interest by way of compensation where tax refunds are unduly delayed. 20th April 2023

Further, in the facts of the present case, by giving retrospective effect to the impugned Amendment Act, the right to the interest which was crystallized in the petitioners' favour is sought to be taken away. The learned Advocate General's only contention was that the right to receive interest was not fundamental or constitutional but only a statutory right which could always be taken away. He relied on CMD/Chairman, Bharat Sanchar Nigam Limited & Ors. vs. Mishri Lal & Ors.48. 88. In CMD/Chairman, Bharat Sanchar Nigam Limited & Ors. (supra), the Hon'ble Supreme Court held that the expression "vested right" could only mean a vested constitutional right since WP-23-2021,

The provisions providing interest on delayed refund of excess tax collected by the Revenue created statutory and constitutional rights. Even though Article 19(1)(f) is no longer a fundamental right under the Constitution, Article 300-A provides that no person shall be deprived of his property save by the authority of law.

Therefore, by depriving the Assessee of interest on excess tax paid, the State is depriving the Assessee of his property save by authority of law. Besides, there is a constitutional bar under Article 265 about the levy and collection of taxes except by the authority of the law. Even Article 14 would shun the retention of excess taxes determined as refundable either indefinitely or for unreasonably lengthy periods only due to the tardiness of revenue officers making sanction orders without liability to pay any interest on the delayed periods. Therefore, this is also a case of taking away vested constitutional rights with retrospective effect. The grant of retrospective effect is consequently liable to be 20th April 2023

Very belatedly and after these matters were reserved for orders, the Additional Commissioner of Commercial Taxes filed an affidavit on 13.04.2023. We are unsure whether copies of such affidavit were furnished to the learned Counsel for the petitioners. However, paragraph 2 of the affidavit states that the same is filed for the limited purpose of bringing certain facts on record that have recently come to her knowledge.

In paragraph 3 of the affidavit, she states that if any parties claim interest on tax refunds based upon the unamended Value Added Tax Act, the State may have to pay interest in an estimated amount of 69.64 crores. Similarly, it is stated, though not ₹ clearly, that the accrued liability for payment of interest (possibly to the petitioners in these petitions) would be in the range of 30.61 crores. ₹

In effect, therefore, the affidavit acknowledges that the State/Department, based upon the procrastination and delays of its own Officers, has deprived parties, including the petitioners, of interest at the statutory rate and the object of the impugned 20th April 2023

Independent of the impugned Amendment Act's validity or applicability to the petitioners' case, this Court could and is directing interest payment to the petitioners as determined in the earlier judicial decisions. This is because even under the impugned Amendment Act, the State is not absolved from making sanction orders within a reasonable period. The learned Advocate General submitted that the provisions of the impugned Act may not be struck down simply because no period within which sanction orders must be made may have been specified. He submitted that even where no time limit is prescribed, the concept of reasonable time must be read into such provisions. He agreed that powers must be exercised within a reasonable time even where no time limit may have been prescribed. He even relied on decisions in support of such contentions.

In all these cases, there is no explanation whatsoever for the unreasonable delay in issuing the sanction orders. Even in the latest affidavit, no such explanation was even attempted to be 20th April 2023

Therefore, by simply not issuing sanction orders or delaying the issue of sanctions indefinitely or unreasonably, the State cannot arbitrarily deprive the parties' interest by way of compensation. Such a deprivation, as noted earlier, would fall foul of Articles 14, 265 and 300-A of the Constitution of India.

Therefore, even independent of the validity or applicability of the impugned Amendment Act, a mandamus in terms of the earlier judicial decisions must reissue for the payment of interest on delayed refunds. CONCLUSIONS AND RELIEF :

Thus, we hold that the impugned Amendment Act is an impermissible judicial override defying the doctrine of separation 20th April 2023

Accordingly, we allow these petitions and direct the respondents to implement the judicial decisions in the earlier Writ Petitions instituted by the petitioners within four weeks in terms of the following chart:- Sr. No. Present Writ Petition Earlier Writ Petition 1 Writ Petition No.23 of 2021 Decision dated 19.11.2019 in Writ Petition No.720 of 2019. 2 Writ Petition No.139 of 2022 Decision dated 26.11.2019 in Writ Petition No.674 of 2018. 3 Writ Petition No.140 of 2022 Decision dated 16.10.2019 in Writ Petition No.427 of 2018 read with order dated 24.02.2020. 20th April 2023

The respondents are directed to deposit in this Court the amounts in terms of the above referred earlier decisions together with interest within four weeks from today. Upon deposit, the petitioners would be at liberty to withdraw the said amounts after furnishing bank details to the Registry so that the amounts can be directly transferred to their bank accounts. 20th April 2023

The rule is made absolute in all these petitions in the above terms.

However, there shall be no order for costs. BHARAT P. DESHPANDE, J. M.S. SONAK, J. 20th April 2023 NITI K HALDANKAR HALDANKAR Date: 2023.04.20 11:24:24 +05'30'