M/S. Shree Ganesh Jewels vs. Govt. Of Telangana

The Cqurt made the following: ORDER

-7 /t // THE HON'BLE THE CHIE F IUSTICE UIIAI BHUYAN AND THE HON'BLE SRI ruSTICEN.TU I W.P.No.16709 of 2023 ORD R, (P,r the tlot'bh the Cbief lutie Uljal Bhryan) Fleard Mr. T.Nitender Singh, leamed counsel for the petitioner and Mr. L.Venkateswar Rao, leamed Special Standing C-oursel, C-ommercial Tax for the resPondens.

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3 mvesfigarion, ioq*y, verification (including scrutiny and audit), assessment proceedings, djudi.rtio., *O *, ;ther leSal proceedings or recovery of arrears or remedy m respefi of any such tax; surcharge, penalty, fine, inrerest, right, privilege, obligation, li"biliry.f";;* ". punishment and any such investigatr."' .*., ,r, * instituted, continued or surcharge etc, may be L"i.d'f";;:"fi #j:: tr had not been so amended not ars o arr ect anyr-Jil;:'#,:#;T:T'*:*: to appeal, revision, review or reference instituted before, on or after the appointed day under the said amended Acts or repealed Acts and such proceedings shall be continued under the amended Acts or or.rLd *... Therefore, it was considered necessary to strengthen cenarn provisions of the VAT Act to overcome any limitations ro h.lp effective revenue realization. Therefore, it was decided to amend certain provisions of the VAT fut by undenaking a legislation. Since it was decided to give effect to such decision immediately and as the Legislature of Telangara was not in session, therefore, the Govemor, in exercise of powen conferred by Clause (1) of Article 213 of the Constitution promulgated the Ordinance which basically exended the limitation from four )€ars ro six years in respect of I assessments, reassessments, revislon etc. I

1 It is not necessary {or us to go into the aspect as to whether the Ordinance was laid beforc the fusembly or not and as to ptrether it had ceased to operate after six seeks from reassembly of the kgislature' It may also notbenecessaryforustolabourontheaspectthatthe Second Amendment Act though published. in the Telangana Gazttte on C2'12'ZOL| was deemed to have .orrr."*o force with ef{ect from 17 '06'2017 i'e' the date when the Ordinance was promulgated' This is because legislative comPetence cannot flow f rom an earlier Iegislation, be it an ordinance or an enactment'' Legislative comPetence must be traceable to the C-onstitution.There{ore,noreliancecanbepiacedonthe Ordinance in support of the contention that the Second Amendment Act hatl derived comPetence from the Ordinance since it was a continuation of the law and had come into force from the date of promulgamation of the Ordinance. Such a line of reasoning, in our considered ,iew, has no legal substance. Therefore, it is immaterial that the Ordinance was not challenged in Court. 'Ihat apart, the ostensible objecti"e of the Ordinance as could be discemed from the preamble is to save any investigation, assessment, recovery of dues, legal proceedings etc., pending on the date of comng ntO force c,[ the Constituti on Arn"nA^^^. tr -. t . I pedectlyuderstandab.le t Amendment Act whr':h rs ,nd valid. But that does nOt / / "t':

5 mean that limitation across the board could be extended by way of amendment to initiate fresh proceedings, such as, fresh revision proceedings, which otherwise had become time barred. 'With effect from 16.09.2016 the Constitution was amended by vinue of the Constitution Amendment Act' \X/hile Anicle 246A was insened immediately after Aricle 246,the earlier Ent ry 54 of List II was substituted by the new Entry 54, in the process denuding the States from making any Iaw excePt on the sale of petroleum crude, high speed diesel, motor spirit (petro[), natural gas, aviation turbine fuel and alcoholic liquor for human consumption. Thus the States did not have the compercnce to make law to levy VAT or such tax on any goods other than the above goods' Section 19 of the Constitution Amendment Act, which can be construed to be a sr.rnset clause, provi&d for a window of one laar to remove the laws inconsistent with the C-orstitution Amendment Act either by way of amendment or by way of repeal. The window period was given to remove the inconsistencies; not to prolong the inconsistencies' But rtat the State of Telangana did by promulgating the Ordinance was not to remove the inconsistencies in the VAT Act. fu mentioned above' the OrCinance' in fact' introduced ceftain Provisions extending limitation to enable initiation of fresh proceedings' such as' revisional I

r:.i { 6 proceedmgs which are c()nrplcrely inconsistent wth the scheme of the Constitution Amendment Acr. Ch this ground itself, the Ordinance can be said to have no legal consequerlcc. Houever, by the Second Amendment Act, rnore panicular\., by Section 7 thereof, the Ordinance was repealed. As already stated above, the Second Amendment Act cannot derive legislative competence from the Ordinance. It musr derive legislative comperence from the (irnstitution. Unfonunarely, after substitution of Enuy 54 of I-ist II, State was denuded of such cornpetence traceabie rc Anicle 246. fu a standalone legislation, ir cannor derive legitimacy traceable to A.rticle 246 A, of the Constitution as well. Thercfor,r, 02.12.2017 the though Second Amendment Act made elven retrospective effect from 17.06.2017 cannor be sustained as the same is devoid of legislativ.: competence. Ncedless to say; .,,ray bac k n 1964, Supreme Coun h AFIrr." Abdul ShLrkoor (1 supn) was categorical in holding rhat while the State kgislature is free to enact lews which could h.rue retrospective ope,arion, i15 on competence to malre a law for a certain past period would. lrowever, dept.nrl r anct rror on what ,, o.rr"rl"1 I ffi.ir'rdT;; the enacrrnenr would be in opemtion.

7 Insofar the decisions relied upon by the leamed Advocate General are concemed, we have already discussed why those would not be applicable to the facts and grounds of challenge made in this bunch of writ petitions. Finally we may also look into the intention o[ the Parliament in enacting the C-onstitution Amendment Act' This is because it would give us a clear idea as to why the Constitution Amendment Act was brought about and why the Second Amendment Act cannot be sustained being completely inconsistent with the scheme of the Constitution Amendment Act and being denuded of its Iegislative competence. In Baiju AA 00 supra), Kerala Flgh Court held as follows: There is yet another aspect of the maner' It.is uite that *(.tt " Court iud-ges the constitutionality of a legisladve enactment it should try to sustarr it. uliairu of the enactment to the extent possible *a i, tt.i"fa suike down the law only when it is ""t"ttrUf. to sustain it, Sute of Bihar .v' ^Bihar ;[1tt.,Ii- r'r'laNuusczo354/rse7 : J-r (1ee6) l0 iC s5if. At tht same time'.tle .C-oun.must o-...d- to determine the intentron 9t tl' tn:;li;J;";.J/r..-tr" 4g*g: used in the ;,;** ^6,,.'ko f.o* surrounding :yt*Plattt ,J*-*at"tandins of the mischiel that was ilJ;,;il-'".n"di'? bY the statute' M:n :n' ,tr"fi.t ,fr. said test 1o the events that took pnce :frH,il"tin-zoie' it cannot but be noticed that .fr. "..y p"rp;se of the 94n * to bnn-g about a ;'il;;; ti-" '1o"- of indirect Exauon rn our

Iii tl country through the inrroduction of a Goods and Ser-,rice T.r-r. and rhe plr.rsng out of the multjtude of Lrdirect t:-r lcvies. irrchd"ing ualue added raxes, that we re levied and collected by the Centre and the States. Section 1,) of the CAA 2015, which is the sunset clause in r-hc said enactment, envisaged the continuation of the enrwhile sptem - of taxation for a period of one par from the date of enactment of the CAA or rill such time as the State kgislatures amended or repealed their respective VAT legislations, whichever was earlier. \Xhen rhe State Legislature repealed the KVAT Act, while simultaneously bdnglrg inro force the nevu- State GST Act, with a savings clause of lirruted operarion, it ellectivell acknowledged the absence of an v power ro legis l.1s thereafter on the sub ject of rar on sale_ or purchase of goods, .*..pi i., respect of the limired commodities for wluch the said power was ret:rined under the C_onstitut.ion. In respect o[ all other commodiries, rhe lesislative pow.'r o[ the Stare n..u onII in respect of tlxe, on the supply of goods or seruices oi borh, , ;;;; rhal h.rd to be exercised simu.ltaneoulv *iih th. Parli,rment and rrot *ilrt..rlly o..-;,..l*;;i;. lhu',. at the rhre of rrpeal "f r# ftvnf ^.,:;i smrrutaneous en.r(.rl)rent of the State GSTAct wrth a savings clause therein, ,t. ,r"_g. 1fr;i operar ed,onJy to s,rve rights, privileges, dilil.. acl ft )n raken , etc .under- the ersrw,hili enacl ment ; ll t,""o ar the ruD(, ol its repeal which ncluded (ne amendments lrrought in tfuough thc Kenla Frn.rnce.Acr. 201,. ft; .ouH nor--hlr. il;;; I :n,1... legislative exercise Uy *."i,r"'f.eisil# ur rrlatron to the rePcaled X VAT Act. We are in respectful agreement with the views expressed by the Kcrala High Coun in Baiiu AA (10 supra). lntenri on of I,.trlia ,.gi*. ,h,ough ; #::::_'.*** rn rhe Gsr rtutron Amendmen r Aq and ,.,j- I i i I

9 eflactment oI the CGS'I Act and simultaneous cnactment of various State GS'l- -,\cts by the State Legislarures is to avoid multrplicity o[ taxes by subsuming those indirect taxes in a single tax called GST. It is in this context we have aniyzed Section 19 of the Constitution Ameodment Act. Viewed thus the amendments brought in by t-he Second Amendment Act, as discussed above, are wholly inconsistent wlth the scheme o[ the Constitution Amendment Act read with the CGST Act and the TGST Act. Thus, upon thorough ccxrsidcrauon of all aspects of the matter, we have no hcsitauon rn holding that the Second Amendment Act is unconstitutional being devoid of tegrslative competence- It is accordingly declare<l as such. Consequently, the nouces issued and otdcrs passed under Sectron 32 (3) of the VAT Act which have bcen impugned in the present batch of writ petitions arc herebv set aside and quashed'"

' -tl'r{ ,iF :: [0:: declarcd unconsrlru[i(),tal bv tlrrs (_ourt, we atc at a loss as to u.h], rcspondent No. I hacl issuecl rlrc, impugncd nodce bascd on such a Provtst()n 7 In vierv of rbor-c and tirJlou,ing the judgmcnt of this Court in M/s. Sri Sri Enginecring Works v. Deputy Commissioner (CT) (supra), impugned norice dared 21.06.2.023 issued by respondent No.4 rs hcrcbl,se . aside \\rit Petrdon is accotclinglv allowed. No costs. As a scgtrcl, r.niscellrrreous petitions, pending if any, stancl closed B To . MOHD. SANAUL //II ASSISTANT LAH ANSARI REGIST SECTI OFFICER '1 . The principal Secreta ry, Govt. of Telangana, Commercial Taxes Department, Secretaria Hyderabad The Commrssroner of mmercial Tax ES (ST), Comme rcial Taxes Co Departmen Nampa llvstation Road Hvderabad. 500 00'1 Joint Commrsstoner (CT), Commercial Taxes Deparlment, Abids Division, c Hyderabad 500 001

HIGH COURT DATED:0310712023 ORDER WP.No.1G709 of 2023 //' -a g Sl At€ g )+ ( )) L,\+ t1 IU\ NrI \l IIESPA gO a i ,, * A,L-L.OWING THE WRIT PETITION WTHOUT COSTS to