M/S.Sls Engineers vs. Assistant Commissioner (St) And 3 Others - Telangana High Court, 16 June 2023

Cause title — parties, addresses and appearances

[ 3311 I HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE SIXTEENTH DAY OF JUNE TWO THOUSAND AND TWENTY THREE PRESENT THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SRI JUSTICE N.TUKARAMJI wRtT PETTTION NO. 7917 0F 2023 Between: I M/s.SLS Engineers, H.No.4-1-'18, Snehapuri Colony, Nacharam, Hyderabad - 500 076, Ranga Reddy District, Telangana, represented by its Managing Partner, Smt T.Rupa. ...PETITIONER AND 'l . Assistant Commissioner (ST), Nacharam '1 Circle, formerly known as Commercial Tax Officer, Nacharam Circle, Hyderabad. 2. Deputy Commercial Tax Officer - ll, Nacharam Circle, Hyderabad. 3. Deputy Commissioner (CT), Saroornagar Division, Hyderabad. 4. State of Telangana, Represented by its Principal Secretary, Revenue (CT) Department, Telangana Secretariat, Hyderabad. ...RESPONDENTS Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ or order or direction particularly one in the nature of Writ of Mandamus setting aside the revision order passed by the third respondent in R.R.No.31/2022-23.vide D.C.No.654, dated 25.10.2022for\he tax period 2016-17 to 2017-18 (upto June, 2017), as illegal, arbitrary, vitiated against the principles of natural justice, unsustainable in law, barred by limitation, and without jurisdiction. lA NO: 1 OF 202'.t Petitior urcit r llection 151 CPC praying that in the cirr;r tmstances stated in the affidavit frled rr r;upport of the petition, the High Ccurt rnav be pleased to pending dispos;al of tre Writ Petition, grant stay of all fr-rrther rr-:rce:dings arising in pursuance of ttrr revision order passed by the t.ird respondent in R.R.No.3'1120122-23 ,rde D.C.No.654, dated 25 10.2022for11t: tax period 2016-17 1o2017-18 (upto Ju t,>,2017). Counsel for the l)r-. ilioner: SRI S. SURI BABU Counsel for the R,: ;pondents: SRI L. VENKATESWAR RAO, JPECIAL COUNSEL FOR GP FOR COMl[[ RCIAL TAX

The Gourt made thr fr:llowing: ORDER i

L ,/ .// t./' TTIE HON'BLE TFIE CHIEF IUSTICE UIIAI B IJYAN AND THE HON'BLE SRI IUSTICE N.TUKARSMII W.P.N of 20 RDER, (l'er rbe Hon'bh rhe ChteJ Jrirtct Ulial llb4an) Hcard Mr. S.Suribabu, iearned counsel for the petitioner and Mr. I-.Venliateswar llao, lcarncd Special Standing Counsel, Commercial Tax l)cparrmenr for thc respondents.

By filing this peution under Article 226 of the Constitution of India, petitioner has assaried legality and validiry of the revisional otder dated 25.10.2022 passcd by respondent No.3 under Scction 32Q) of rhe Telansana Valuc ,\dded Tax Act, 2005 ((briefly 'thr VAT Acr' hcrt.inaht.r;

Petitioner rs a rcgisrered dealer under the VAT Act and is engaged in the business o[purchase and sa]e of valve s and electrical goods etc. For the period Apll, 2016 to Jute,2017, assessmenr order was passed by respondent No.2 on 09.05.2018. 4. On the ground that assessing authoriry had aliowed excess input taii credit rnd that there rvas short levy oF tax, revisional

2 procecdinlirr \r rlo initiated b]' .csPonclenr No. l ilcl in rllts ccrnnecrion. shr r,i cause nr)ticc clated 04.01 .2022 lvts :' ucil to tltc pctitioner. lt 'uas thcrcaftcr that the inlf ir '11".1 tittlcr d'ttcd 25.1,1').2t1I I r-atne to be passecl b)' resPonclcrrt N'r )'

L,eat'nc<l r rttnscl for rhc pctitioner submirs thrt rrrlitatirxr filr revision is lbrrt a:irs from thc date of the assesst:lcnt r'r'' [cr' [[ rhis casc, thc irnprg re d rcvisional ordcr came to be :lass'.l'l lrcloncl thc limitauon of li ut vears. lIc submits that rcsl 'olrlc 'r Nl.i l'rad relied upon tlrr: ar-rendmcnt to Section 32(2) cti t hc \ ; r r\ :r tradc by 'l'elang:rna \ z.lne Acldcd -[ax (Second Amcrclrt.r r) \i:1. 2(-117 whereb-v the pe ir d of limrtadon of four vears \\:ls .r ':'rtlr cl to s1x years.

Horrrer.er this amendment has beco strLck ,.1:. rr bi' tl-ris Court as unc,ln iitutional in M/s. Sri Sri Enginecri'r1: V'orks v. Deputy Conur issioner (CT)l. 'I'hcrefore , the impr-r1lrLecl order is unsustainable ar <1 is liablc to be set aslde | 2022 SCC OnLflr lls 1367

Learned counscl for the respondcnts agrees that the impugned order was passcd bcyond four years but within six years.

I[ that be the position, rve arc r>F the view that this could have been done only by relying upon the amended provision

In M/s. Sri Sri Engineering Works (supra), this Court has held as follows: As noticed abovc, the Ordinancc rvas promulgated by the Govemor on 77.06.2017.,\s pcr pre:rmble to the Ordinance, it is stated that Government of India had enacted the CGST Act and Government of Telangana had enactecl thc l'GS'l' Act. But both the Acts had not been brought into fcrrce. Rcferring to the provisions of the VAT Act, it is stated that it empowets the State Govemment to levy tax on alcoholic iiquor fot human consumption and on pe troleum products. Accotding to the Constitution Amendment Act, lew of tax on those pettoleum products and alcoholic liquor for human consumption is within the competence of the State Legislature. It further stated that tepeal of the VAT Act except in rcspect o[ thc goods included in Ettry 54 of List II of the VII Schedule by the TGST Act, which was yet to be brought into force, would not affect any investigation, ioq"iry, veriEcauon (including scrutiny and audit), assessment ptoceedings, adiudication and any other legal ptoceedings or recovery of tr:cars or remedy in respect oE any t: I : .zl

I slrch l1r).: : obligatr, rn, ir.rvestillaticr any sut:h t ax .\cts h.td n, not tls,: alle revisior, rcr appoin tecl rl: such p roc,:,:r, repcalctl rr, strcngther c limitatlc,ns rr decidc<l tc undertakirLl; such cle cis i:r was flot fl powe[s cc r Cons trt r rtr,t n cxtcndr:d 1.tL< asscssnren hi, Lrrchatuc, lcnalry, fine, tntcrcst, ri15ht rrirrlcgc. rl riJr q,, ftrrlcirutc or punisl'rmcnt ar.rrl rtrr\ -.Lrclt ,ric.. mav bc instrtuted, continued or- t'n[:,rcet,l artcl -. urn:hargc etc, ma1' be levied or imposcd rr 11- thosc L lrecn so amendcd or repealed. SrLch te:t:ll ri'oLrll 'r any procecdlngs including those telaurlll I I xPPu:ti. iov or te fctcnce instituted beFrrrc. orr r, t rltt r: thc r undcr the satd amcnded,\cts or tepcaltri \cts ertrl Lir gs shall be continued under the ilmerrl ( ( -\,its o1- ts Thetcfbre. it u,as considerctl ne:t rsal\ t() :':iain provisions of the VAT Act r-o ,)\-(I(:a)n'lc anv I clp effective revefluc reahzauon. Il-rere , r -c. r t \\'AS arnend certain provisions of th,: \/.\ l \r:t bv rr legislation. Since it was dccidcd to !t! r 3m:ct t() r immediately and as the Lcgislature o['l elangana :( ssion, thtnForc, lltt' Corernor. in 1.16i.1',rr f:rred b1' Clause (1) of :\rticlc 211 ol thc promulgated the Ordinance wh ic L ba: icaiir limitation fi:om four years to six yr:ats in r:spr:ct ol reasscssments, revision etc. It is not r (r(:cssary for us to go into the aspect as o rvhcther the Orclinan r) was laid before the Assembly ()r 1r()t a rd as to whether it I-r, c[ ceased to operate aftcr six secks ftom -:rLsscmblv of the t,epi rl r,rrre. It may also not be necessary frrr: u r o l:,bour on the rspcc t.rat the Sccond Amcndment Act tl-routl publishcd in tlrc 'lelar qana Gazette ot 02.1.2.2017, rvas decnrctl to har-e

5 corne into force with effoct From )] .06.2011 r.e. the datc when the CJrdinance was pr;omulgatecl. '['his is bccause lcgislative competence cannot flow frorn ;rD earler L:gisiation, lre it an ordinance or afl enactmcnt. I-egislativc competence must be traceable to thc Constitution. 'I'hetefotc, no rcliance can be placed on the Ordinance in support of the contention rhat rhe Second Amendment Act had dcnved competencc from the Ordinance since it was a continuation o[ the law and had come into force from the date of promulgamation of thc Ordinance. Such a line of reasoning, in our considcrecl r.ierv, has no legal substancc. Thercfore, it is immarerial that thc ()rdinance was not challenged in Court. That apxt, the ostensiblc objecuve of the Ordinance as could be discerned from the preamble is to save any invcstigation, assessment, fecovely of dues, Iegai proccedrngs etc., pcflding on the date of coming into force of thc Constitution Amendment Act which is petfecdy understandable and valid. But that does not mean that Iimitation across the board could be extended by way of amendmenr to initiate fresh proceedings, such as, fresh revision proceedings, which otherwisc had become timc barred. !7ith effect frcrr, 76.09.201,6 the Consriturion was amended by virtue of dre Constitr.rtion Amendment Act. While Aticle 246A was inserred immediately after Article 246, the earlier Entry 54 of List II was substituted by the new Entry 54, in the process denuding the States from making any law except on the sale of petroleum crude, high speed diesel, motor spirit ( i i I

6 v.- ",. T ipctrril, tl.tt 't r l qlts' avtlltl()11 ntrbtrlc tucl ancl ''llc rl-r' rllc l lttt t tlrt hunt,ttr c' trl: I rtlllti()lI I ilLLs tllc Statcs clrtl fl()l lllt t tlr' Conllleltr]cc L ll.]ilkc lt\\: to lcvv \t \-I <lr such til\ )lr 'rr r ;" " 'J: ()thcr 111^r I rl: all<tvc qoocls Sccuon [9 oI tlrt: (', rtit rti'rrr ' -)"' ' '' r''r s''hicll cerl [lr: ctlnstrued ttl lle a rur:tt citttsc' ;-:':..i i,' '' 'u'"t"" of .nc vear. t(' '"]"::, t rc lrtr"s inconsis:t r t ' ' th r lrc (-onsnrution Amcnclment Act eit r: br t'irl oi atlrtrrtlrne ll cll by rvav o[ repeal' 'fhe wintlorv ltturcl rvts gl\-cn i) lc ll()\r(l thc inc:onsistcncies; flot ttl pr ri.,llq thc incottsirrit:t t t : ' 'llut s'llat thc State o[ 'fclen11t'r r c]rrl b]' prtlllr.rl llrrir:c the ( )rtltrrrtnce was not t('- ^-r('r l()\'Lr thc ': '"" i ' i" rhc \'\l' Act As mefltlo-le(i rl" 'r'c' Lhc llt('()ll\l: \1. t: i. tcl(llnl, ()rclinartci rl firct' intrtltlucecl ccrnil pr()\'li1()r linlttllior't t I :'rra[r[c u]1li1u1()!1 oI fresh ptocct:dirrgs uch as' revisior al pr: "-:cdings rvhicir are completelv irtconsir-' nt t'ith the scht:nrt c thc (-onstrnrtioo Amendment Act Oo t li' sr'rltncl itsclf, tlr': ()r' ir:ance can bc said to have no legal consclttertce f lo',r'rlvt:l . I r t1-rc Second Amendment Act' nrorc pT r icultd-r'' l;y Scction 7 t:lcleof' tlle ()rdinance was repe'rk:tl' \: alt e adv statcLl ilb()\:r , the Scconcl Amerrdmerrt i\ct crtrlr o derivc rcgrslaui,c (( rrpcrcncc rrom t,hc :1'T:r""tl:;:, ":r"i; lcgislatrie ( ( I:rpctcllce l-rom the (lonsfltuuoo' a€ter sul)sttlr-li('n ()f llfltrv 54 of f ist I1' Statc rvas d:rrudrd ol such c'lnlrl: crLce ttaceal)lc to Article 246 t\s a 'trtnd:lontl Icgislati"n' i cannol dcrivo iegitimacv tl:lcrr )lc t() ,'\rdcle '14( r\ ( 'l' tlle Constituflon as well 'fherelbrt:' t re Se :oncl

wr-:::; 7 Arnendmcnt Act made on 02.12.201j though give. rcrr.specdvc effect from 17.06.2017 cannor be sustained as the samc ls devoid of legislatrve competcnce. Needless to say, way back in 1964, Supreme Court in A.Hajec Abdul Shukoor (1 supra) was categorical in holdrng that whilc the State l,egislarure is free to enact laws which cou]d havc retrospectrve operation, its competcnce to make a law for a certain past period would, however, depend on irs prescnt legislative power and not on what ir possessed at the perio<J of time when the enactment would be in operadon. Insofar the decisions relied upon by the lcarnccl Advocate General ate concemed, we have already discussed why those would not be applicable to the facts and grounds of challenge made in rhis bunch oFwrit pedrions. Finaliy we may aiso Iook into the intenrion of the lrarliament in enacting the Constitution Amendment Act. .fhis is bccause it would give us a clear idea as ro why the Con turion Amendment Act was brought about and why the Second Amendment Act cannot be sustained being completely inconsistent urith the scheme of the Constitution Amendment Act and being denuded of its legislative competence. In tsaiju A.A. (10 supra), Kerala High Court held as follows: There is yet another aspect of the matter. It is trite that when a Court judges the constitutionaliw of a legislatn e enactment it should try to sustaifl the validity of the cnacrmenr to l" -. ::,., i

E-ll-\ 'i,# \ ifi \ ,Jft 8 rhe ('\ hlrl r is i.rpo:rs [\l r\1,',/ timr:. tlrr: Parrian- c - troi r r s Llr mis'hitI I appl cs th 201,r , | .:. t,as tcl l: r ( )Lrf aor rt ancl th: inclL dtnlt (,elrrc ar-- SLrnial ,r lil the ( r\r.J,l clati. oi- r Legt;lat r- r lcgis atior- repr:rlc,l t thc rreu, S ir e tte c:i r thcr<:a[tcr exccPl i11 po\\,rI "\. a 'cclmlc c i of tlxcs r: had to t,t unilatcrall l) )ssibie ancl ir sirould srrikc dorvn th,: Ia,,r't nlr s'hel it l,lc o sLrstrtin it, SraLc oI Bihar v. Bihal l)isti]lcn ;' l(t354i19) ,- : J I (1996) 10 SC tl54l 1t :he samc l',()urt must pr()cced to detctmine th,i irrtct 1j:rn rli tlrtr , ror onlv ir,rrn thc lar.rgr.rage use d in thc ;lrrll l t brLt llsc, , Lrrrcltng r:ir,:utrtstances ,,r,d 21 y ,-:rStant irrll r I thc: nr \ ls souqhl to bc rcmcdiccl bv rlle stalute \lu'hen onc ' :airl tcst to thc cvcnts that took placc rfttr lhc CA-\, rLnot but bc noticed that the very pur?ose,rI tl'rc CA,\ r:.r, alrout a changc ir.r thc system of ir.rdir:ect :irxalon itr l thtough thc introduction o[ a Goods and li,ltvicr:'l'ax, r rasing out of the multitude of indilect tlrx .evies, ,.1[Lre acldcd ta\cs, that were levied and colk(1:d bv the .l .hc States. Sccrion 1!) of the CAA :1016, ,',f ich is thc r,t,: irr the said er.tactment, enr.isageti tltc t oLr itruatlon of i c sr stctrt o l- ta\atiofl lor a period of onc fc at iro rr thc ractmcnt of the CAA or tili such ime a s thc Statc l, amendecl or lepealed ther respe( ti' e Vr\T ,. rvhrchcr-er was earliet. Whcn the State .:l3islaturc r: I(\'AT ,\r:t, rvhile simultaneously brinei t I lto fotcc zte (;ST Act, with a savings clause of lirnite,l r peration, rlv acknowledged thc absence of any powel ,, le1lslate r:l-r the subicct of tax on sale or ptrrchasr .,f goods, r:rspcct of the timrted conrmodities f.r uircL th,: said r r:taincd uncler the Constituuon. In respect ol ail other- ir:r;, thc legislative po\ver of the State r,,as onl\, ifl r(rspecr 'r -he supplv of goods ot services or t,oth, a 1;orvet thar ,: rercised simultaneously with the Prrrli'.rmt rr: anl not , rr cxclusrr.clv. Thus, at the trme of rep::'l c I tl.rt: .-l I i \r \

=:=-.. r i.,-- \ K\r.\'l' Act, and simultaneous enacurent oI rhe Stlrc GS.I. -\ct with a savings clause thetein, thc savings clause operated only rc., savc rights, privi-leges, immunitics, action taken ctc under the erstwhile enactment as it stood at the umc of its rcpeal, which includcd the amendmenrs brought in through the I(erala Financc -,\ct, 2017. There could nor havc bcen anv furrhcr lcgtslatir.c excrcisc by the Stare lcgislature in relauon to the repealed KV,\.I. Act. $7e arc in rcspectFul agreement wrth the vicws cxprcssed by the I(crala Iligh Court in Baiju A.A (10 supta). Intention o[ Parliamenr in ushering rn the GST regime through thc Constitution Amendment Act and enactmenr of the (.GST Act and simultaneous enacrment of various State GS-l. Acts by the State Legislarures is to avoid multiplicrry of taxes by subsumrng those indirect taxes in a single tax called GST It is in ttus conrcxt we have aralyzed Section 19 of the Constitution Amendment Act. Viewed thus the amendments broughr in by the Second Amendment Acg as discussed above, are wholly inconsistcnt with the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act. Thus, upon thorough consideration of all aspects of the matteq we have no hesitation in holding that thc Second Amendment Act is unconstirutional being devoid of legislative competence. It is accordingly declared as such. Consequently, thc notices issucd and orders passed under Section 32 (3) of the \ l t ri ..o. '

E-\ " -- -6tl \ ' ,rll :: l0:: \':\-I' \c;rr'l c I llar-c becn tntptrgrlcci in thc llreserlt lrlrr' lr "f 'r'rir l)ctitiotts ,trL lt ,'b' set asi(lc arltl tluashctl 10. 1'olltllirrll hc aftrrcsticl dccision' \\:c hrLvc rl() O TII Cf altcrrratir-c btt, i) sct rsrtlc thc impur5nccl revrsi 'nal otder datccl 25.1(r2{ -11 1'rssecl br tcsp'rrrdcnt Nr''3 11. \\'rtt l)clr' , 'rt ir accortlirlgh allorvcd No cc sts' As sr't1r cl, tnisccll:rnt'ous petitlons' PCnJiag 1' 2nrr' stand ckrscd To, :;D/.A. PRATHIMA ASSI: ;'I'AN-L REGISTRAR ///t ,r=5#i* oFFlcER The Ass'sta1t lt'mmissioner (ST)' Nacharam I 9lt^"1""' forr.erly known as c'.]""i'i.r"r,ii"r 'i ii otticer, Nacharam Circle' Hyderaoao - The Deptrty o )rrrmercral ''i'dtril"': ii Naciararr Circk: llvderabad' The Denutv (.; )rrrmrssroner (CYi"!;di""s"r Division' F 'n erabad' thg p n6irrirl secretary, i:i6'n;;ici)-Defartment i)late of Telangana' l:t ts t : ; i I i't'8h''Jfl E..3 l[t *""," rgpuf,r- . -^ ^ Two ccs; tc 3 F for corr"r'#r?llliiiti'c"r't rbr the ll:;,te r>f Telangana at Hvderatrad ( ttJTl Tiro CD Cc6'i :r; 1 2. 3 4 5 6 7 MP GJP *V -a I I I.IIGH COURT DATI:,D:'f Gl0612023 ,/'' .. -( 2023 'r'\ ''ll ;' il L. 't ll tlll -=" ORDER WP.No.'7917 of 2023 ALLOWING THE WRIT PETITION WITHOI.,T COSTS ll fi!it /l