M/S.Pvv Infra Limited vs. The Commercial Tax Officer And Another
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Cause title — parties, addresses and appearances
COMMON JUDGMENT & ORDER: (PerIIon'ble the Clrit:l .Jusll((' L i-till IjlrLr,,,rrr) Issue raised in :Lll the ri rit petitions being identical, those judgment ancl or-der were heard togcthcr irncl ruc l;cit'rg disposed of by this common
We har,e hearrl \lr'.S.Ravi, learned senior counsel, Mr.S.D.,varakanerth, lr,arnecl st.rrior counsel, Mr.S.R.R. Viswanath, Mr.V.Bhaskar Reclcl-r'. lVlr.Shrrik .Jeelzrni Basha, Mr.Karan Talu'ar, Mohith ancl Mr. Vcnkarrarn Rc.rlrlv Mantur, learned counsel for the petitioners; ar-rd Nlr.ll.S.l)t-etsirtl. Ie:rrned Advocate General for the Mr.G.Narenclrir Cht'rtr. \1r'..\.\/.A.Siva Kartikeya, Mr.P.Karthik Ramana, Mr.B.Srinivrrs. Ilr.Tr.j Prakash Toshniwal, Mr.Pasam State of 1'clarrg:rnrr rrlong ,.r irlr \lr.li.Raji Reddy, learned senior standing corrnsel for Cornmcrc itrl l'axes. 169o3 0F 2o2o, 494. 7 12a, 705.4, 9622. tOO46. LL414. Lt996. L277q, -!s215, 15822. 15841. 2556t. 27 294,275_33, 28797, 297 43, 32L29. {
Challenge made in this batch of writ petitions is to the constitutionality of Telangana Value Added Tax (Second Amcndmcnt; fut,2017. 4. lt is the contention of the petitioners that Telalgana Value Added Tax (Second Amendment) Act, 2Ol7 is ultra uires the Constitution of India and thus unconstitutional. As a corollary, pra)-er ha:; been made that all notices and orders issued or passed on the str':ngth of the extended period of limitation of six Yeerrs in terms ol the aforesaid amendment ect should be declared as illegai, nrr I and void and quashed accordingly.
Belirr, proceeding further and to understand the pror,'isions in its prol't'r- pcr-spective, it would be apposite to first advt'rt to the Telang:ur,, \'rillrc Added Tax Act, 2005, more particularl-r', thosc' provisions n hrch have been either omitted or amc'nded or substit Llte(l b-r virlue of the Telangana Value Added Tax (Second Amendtttt t t1 {t t. )017. 6. Tht' 'l'elarrgana Value Added Tax Act, 2005 s't'r s initiall-i' enacted ;r; the ,Andhra Pradesh Value Added Tax Act. 2005. After bifurcatjorr o: rire State, insofar State of Telalganzr is cotrcerned. the abovl ,'r).i('irncr"rt has been renamed as "The Telatlgrlrla Value Added Tir:; A,:t. f005 (briefly, 'the VAT Act", hereinafic'r). h is arrr
Act to provide for and consolidate the law relating to lew of Value Added Ta-x (VAT) on the sale or purchase of goods in the State ol Tclangana and for matters connected therewith and incidental thereto.
Chapter V of the VAT Act deals with procedurc and administration of tax, returns and assessments. It comprises of Sectiorrs 20 to 1O. Section 2O deals ',vith returns and sell asscssments. As per Sub-Section (1), every dealer registereri r:rrclt-r Scction 17 of the VAT Act, shall submit such return or retLlrns along ri'ith proof ol payment of tax in such mannr'r. s itltir-r such tirne ancl to such authority as may- be prescribecl. Sr-rlt Scction (-1) savs that every dealer shall be deemed to h:rvc bccn assessed to ta-x based on the return filed by him, if no asscssment is marlc rlithin a period of four years from the date of filing of thc retLtrl)
Section 21 deals with assessments. Sub-sectiorr (1) of Scctiorr ) 1 s:rl s that u,here a VAT dealer or a Trlrrtor.'cr Tux (TOT) clealer i:rils to file a return in respect of an-y tax periocl u.ithin thc prcsc rilrt-cl pcriocl, thc authority prescribed shall zrssess tltc dealer Ior tlrt's:tid period lor such default in the manncr presr.rilrt'rl
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As per Sub-section (2]r, if a VAT dea.ler or TOT dealer submits a. return along with evidence for fuil paymerlt of tax, subsequent to the prescribed time the assessmellt made under Sub-Section (1) shalt be withdrawn without prejudice to arty interest or penalty leviable.
Sub-Section (3) deals r,r'ith a situali';n u'here the authority prescribed is not satisfied '"vith the rettl rn filed by the VAT dealer or TOT dealer or the return appears tt; lle incorrect or incomplett:, in which event, he shall ma-ke the ass,:'ssment to the best of his judgment within four years of due datc of the return or within fou.r years of the date ol filing of thc retur-rr, u l'richever is 1ater.
Power to conduct scrutinv of accounts is provided in Sub-section (a) and making of assessment in the e vent of willful evasion of tax is dealt with in Sub-Section (5). In Sub Section (6) the presr:ribed authority has been empos t't cd to make reassessment when the assessment was made under Sttb'Sections (i) to (5) and such assessment understates the corrc:c--t tiL\ liability of the dealer, within a period of four years frorn thc date of such asse ssmerrt. As per Sub Section (7), s'here an\ iisst'sslllctlt has been deferred by the Commissjottcr undcr Sr-rl-r St rtron (5) of 7 Section 32 or as the case mav be, bv the Appellate Tribunal under the proviso to Sub-Section (4) of Scctiorr 33 on account of any stay granted by the Appellate Tribunal or- lrv thc llish Colrrt or b,r, the Supreme Court, or whereas appcirl or othcr proceedings 1S pending before the Appellate Tribunztl or the High Court or the Supreme Court involving a qnestion ol'lnu hrrving er rlirect bearing on the assessment in question, tl-re 1;t,riocl rlr-rr-ing rvhich the stay order was in force or such appeal or pr-occcriinrl s:rs 1;cnding shall bc excluded in computing the pcriod of four years or six years as the case may be for the purpose of rnal<ing th(, ilsscssntent.
Sub-Section (8) sa.vs thi t rr lrer-c irl .rssessment made has been set aside by an_v Court or ll tlte;\ppclktlr"l'ribunal, the period between the date of such irssrssrncrrr and tl-re date on rvhich it has been set aside shall bc t'rclurlt'cl in computing the period of four years or six years :rs rhc cfts(' nral bt, for making arrv fresh assessment.
Section 3l provides for appcal ro rrppcllate authoritv. As per Sub-Section (1), any VAT dealer or T()T rlealer or an-\'other dealer objecting to any order passecl or ltroce,,rlirrg recorded by any ar-rthority under the provisions of r}-re \ A'l Act. r-rther t han an order passed or proceeding recorded lt-i :rrr .{clclitional Conrmissioner or It Joint Commissioner or Deputl, Commissioner, may within 3O days from the date on u'hich the order or proceeding was served on him, appeal to such authority in the manner prescribed. As per the first proviso, the appellate authoriry- may admit an appeal within a furthcr period of 3O days if he is satisfied that the appellant had sufficient cause for not preferring the appeal within the initial period ol 3O ciar-r's. Thc second proviso says that unless the appellilnt produces proof of payment of 12 YzVo of the disputed tax, penal --v, intcrc'st or .url otircr amount, the appeal so preferred shall not tre adrnitted b-r, the appellate authority. Sub-Sections (2) to (6) lay dow'n the proi cclttrt' to be followed by the appellate authority; the relit'f therl ma\, f 1: granted and the finality attached to such appellate r,rrlt r.
Revil;ion b_r' Comnrissioner and other prescribed authorities is dealt "r'itl'r in Sectron 32. As per Sub-Section (1), the Commissi<lner ma\' .suo rrrotrr call for and examine the record of any order passed or procceding recorded by any authority, officer or person suborclinirtc to hirn under the provisions of the VAT Act and if sur:ir or<lt'r. or' Proceecling recorded is prejudicial to the interest (ri r-cvrrrrLrr'. l;rirr rniti<c sucil cnquirv or cause such enquiry to bc nrrr<lt' rrnci sr-rb-jcc't ro the provisions of the VAT Act,
() may initiate proceediltgs to rcr-ise , modif_v or set aside such order or proceeding and ma-r pass such order in reference thereto as he thinks lit.
1 As per Sr-rb Scction (2), such power may also be exercised by the Adclitional Commissioner, Joint Commissioner, Deputy Commissioner' :rnd Assist:rnt Commissioner in the case of orders passed or proceedings rccor<led by the authorities, officers or persons subordinarte Lo llttrn. Ho'"r'ever, S per the proviso, such porr,'er sharll not be ercr-c'iscrl lt,r' the revisional authority in respect of an issue or qucstion ii ltit,-h lr,as decided on appeal by the Appellate Tribuna,rl under St'c riorr 33 1O.
Sub-Section (3) sar s rlrat in relation to an order of assessment passcd uncler thc VA'l' Act, the powers conferred by Sub-Sections (1) ancl (2) shrrll bc exercisable only ryi!]rin a period of four years from the date on u itit.lr the order was seryed on the dealer. Hou,ever, as per Slrl: Sccrion (.1), no such order enhancing any assessment sh:rll be pzrsscri l i{ hout giving an opportunity to the dealer to shos'carrse agirirrst tlrr: proposed enhancement.
3 Unclcr Sul; Scctiorr iit llre rcvisional authoritv mav defer arrv sut:h procecciir-rgs il an rrppeul or other proceeding 1S pending beforc thr: Appcllatr. 'l'r'ilrLrnrrl r>r the High Court or the t0 Supreme rlourt involving a question of law having a direct bearing on the orcler or proceeding in question.
As pcr Sub-Section (6), where an order passed under Section 311 is se:t asidc by any Court or other competent authority under Lhc VAT Act for any reason, the period betrveen the date of such orcler irrrrl thc date on which it has been so set asicle. shall bc exclrrci:c.l rrr conrputing the period of four years spt:cified tn Sub St'ctror-l (.i1 lirr the purpose of making a fresh revisiott, if anr
Urrrlcr Sub-Section (71, where any revisiot-t:rl proceeclinlls r rrr r,lei' Section 32 has been deferred, on accollnt of an-\' st.r\- orclt'r qrrurted b1, the Appeltate Tribunal or b5' the High Court or b-r' tlrt Supreme Court in any case, or b1-reasorr of the fact that an appe:a1 or other proceeding is pending bcfore thc Appellate Tril;r,'nal or the High Court or the Supreme Court involvir-rg ir qlrcstion of law having a direct bearing on the orcler or proceedir-r1i irr rlur'stion, the period during which the sta-r' ordcr u'as in force or strch appeal or proceeding was pending shall be excludecl in r-onrprrting the period of four years specificci ir-r Stllr Section (31 ftrr rhe purpose of exercising the revisional poucr lrndcr Sec' iorr .l l.
ll I 1 . Section 57 u'hich finds place in Chapter Vlll dealing n.ith oflences and penalties provides for penalty for unauthorized I excess coilection of ta-x. Sub-Section (i) prohibits an,v clealer from collecting an,v sum b,v way of tax in respect of sale or purchase of :tnv goocls s hich are r-rot liable to tax under the VAT Act il.1 i:rll\ stit\ Srrb-Sections (2), (31 and (4) say that if an-r' per.sor.r collects tax in contravention of the above provision, the sum so c'ollccte-d shall be lorfeited either whollv or partl-r' to t hr: (lovernnrr:nt- lr-r addition, such a person shail be lial)le to l):i-\' yrt'nall-r of an arnount equal to the amount of tax so collected 1 1. 2. Sr-rb-Section (5) says that no order of forfeitr-rrc sherll be mlrrie alrer erpiraLion of three years from the date of collectiorr of I h(' ,rmollnt relerred to in Sub-Section (4). As per the proviso. in ('()nrpLlting thc s:rid period of three yeaIs, the period durir-rg u hiclr order rvas in force or ary appeal or other proceedinq in 1'('spcct llrereof u,as pending, shall be excluded. I 2. Thc Coods ancl Services Tax (GST) regime came rc.r be r'('lr'\'.tn1 pror, rsions of the Constitution (10 I "1 Arnendntellt) Act. intr'oclrr< ecl in the coLlntry by way of the Constitution (101.r .'\nrcncinrcnt) Act. 2016. In this context lve mz1\' ad\,('rt to the f O l(;. As per St'c:tion 2 of tlte aforesaid Cor-rstitution Arnendmc.nt
ll Act, after Article 246 of the Constitution of Inclia a nerv Article 246-A canre to l:e inserted. Article 246-A reads as r.tndct' "246A. Special Prouision u.tith respect to goods attd serruices ta):- - (1) Notu.tithstanding anything containcd ir arlitlcs )1(t ttnd 254, Parliament, and, subject to clause (2), the Legislature oJ cuery Stc,lc haue pouer to make lanus uith respect to gootis 'tnd strr uicr:-s tax ir.tposed bg the Union or bg such State. (2) Parliament has exclusiue potr.)er to tnake lctttts utitlt respec to goods and seruices tax uthere tlle supplu ol .tloo</s. rtr rti seruices, or both takes place in the course of iTter-St'le tntrlc or comme rce. Explanation.--The prouisions of this articlc, ut r esstt c'l rtf ctoods and scrvices tax referred to in clause (5) cl tfu' rLrli<-kt -l7t)A. take e..,-fect from the date recommentled bu thL' (ioods ,'nti .{1'1;'1 6'-5 Tac Council.' 12.I. As per Section 7, Article 268-4 of thc Coustitr-ttion has been omitr.ed. 1)') After Article 269, Articlc 269-A hars i'lt:t'r'r ttrscrted. Article 26!)-A is as under: "269A. Leuy and collectiort of goods cttr.l .sc'rt ir ('s t.r-\' u? course of inter-state trade or commerce - (1) Goods and Seruices tax on supplies irr l/r(' cL,r{?\r' {,/ inter-;tqte trade or commerce shall be leuied urtd colltt'le<l ltrl ltte Gouernment of lndia and such tat shnll be apportiortt'u lrcltt:,',-:rt the Ii,ion and the Srafes in tlte ttrctnner o.s nr({t/ Ltt' ltr.r:itiL <l i"r Parliament bA lqtu on the recommend ution s oJ'the (j,ro./.s (,fr.l Seruices Tox Council. Explanation--For the purposes of thi.s clau-sc, ;tt!\ltt t,l qoods, or of seruices, or botlt irt tha course of intgtrl ir:lr.r lltt' teritor,l of hdia shall be deemed t<t be supl y of tlrx ds. or 'l senace.;, or both in the course of inter-State trede or contrnerr,'. (2) 7'1rc amount appotlioned to c Sl(ilc uncl<:r i lLrti: , shall nrtt forn part of the Consolidate<l Funcl o.f lru)kt. (3) Where an amoutlt collectetl as to-t leuied utttii'r t it.r'rst' l1) lrus lteen used for payment of th<' ltct leuiad by (l .ql(tlt'r/rr l, '
tl article 246A, such amount shall not form pefi of the ('ottsolidated Fund of India. (4) Where an amount colleckd cts la.': let,ierl bq u State under orticle 246A hcts been used Jor paqtncnt c;f tht- ta-r k:oied under clause (1 ), such amount sltcrll rtr l{r:,it !)et1 ol the Consolidated Fund of the StcLte. (5) Parliament may, bA lou, Jbmtultttt: lhet pirtciples for determining the place of suppl1.1, and uhen a sttltp[t1 oJ qoods, or of seruices, or both takes place in the cours<: ol inler Stete treda or commerce." I Z.J. As per Section 10, altcr Clrrrrse (l) oi Article 270, Clauses (lA) and (18) have been insertcrl Cllzrrrses (1A) ar-rd (l B) ilre as under: "(14) The tax collected by thc [irtiort undtr <kruse (l) ctf article 246A shall also be distiltuted ltt'trt't,trL lltt, Iirriott crnrl the States in the manner prouided irt clarrs,' 1-'7 (18) 'IfLe tax leuied and colli;t:trrl )tq tttt, I trion uruler clause (2) of article 246A and erti(1.' -)t)t)..\. u.lti( lt hu:; [)t'ctr used for payment of the tax leuiecl ltq tlt.: Lirti'rt lntd( r clau:;( (l) of article 246A, and the amount apponton.'(l to tlL(, I inK:)n utlder clause (1) of article 269A, shall al.so 1x, r/istri/rr ttt'Ll lx,ttt't,tlt tlte Ilnion ond the States in the mantrcr ltroutlt rl ir c/rrrrsr, 12l. "
Section 12 says that after Article 279 zr ncl Article 279-A shall be inserted. Article 279-4 rea<ls as rrrrder: "279A. Goods and Seruices Ta-x Cottrtt:il (1) The President shall, tu[thin.sr-ttr7 cftrr7.s itotL tllt tlute ctf cornmencement of the Constitutktn (()rrt' I !ruttlrt't,L rutrl Frrst Amendment) Act, 2O16, bg orcler, corr.\lrlr1I., ,r ('rriurr'r/ io lrc cttlle,d the Goods and Seruices Tax Council. (2) The Goods and Seruices 7'a-r (irurrlil sliull r'irrrsi.sl ol thc Jbllowing members, namelg: (a) the Union Finance Ministt:r .......( lrrrrr7.,. rs,,rr (b) the Union Minister of Sttttc in < irtrt1. o.f'Reuenue or Finance-..-.. ll, rn|t r (c) The Minister in charge oJ Finrurct ,tr 'l tut<rtion or ang other Minislar n{ )DrIl1r'r,r l
l.l bg each Stclte Gouernment --...Members. (3) Tlte Members of tlte Goods artcl Seruices Tox Cctuncil refened to in sub-clause ( c ) of tllc clou (2) shatl, (rs soon os ntag be, chnos( one anTonllst thernselues to be the Vice-Chairperson of the Council for sucll period as thery ntay decide. (4) lhe GoorJs ttttd -S-eruiccs Toi Council shall make recomt4end.aliotls to the [./nion ancl the State on - (a) tL e taxes, cesses arrrJ surclutrges teuted bg the Union, the States and the local bodies tuhich maA be subsumed in the goods and seruices tax; (b) thz goods and seruiccs tllet ntag l:e subjected to, or exempted from tl e g<tods artd.sr:ruir"r's lo,r: ( c ) ntodel Goods cut<1 Senrices Tat Lau.ss, pintiples of leug, apport,onment ol' ()ctocls rrrrrl Scn,icc.s Tcu leuied on supplies in the course of intcr'stote tru(lt \)r con)iterce under article 269-A and tle principles thctt 91ow:nt tlte y;ku:e oJ sttpply; (d) tle threshold linit oJ' tuntouer belout uhich goods arld seruices rnag be cxernple(l liom goods and seruices tax; (e) the rotes tt"cludig lloor rcltes utilh bands of goods and set-uices tr;'t; (fl ar,g specictl r(tt(, t)t t-utcs lir o speaifed period. to roise a.dditional re-sorrr-cc-s tltutrttl urtl trrtturol calamitg or disa-ster; @) sl'ecial pruntisictn ri,ilh re'sPc'r'l lo the Stetes of Arunachol Pradesh, zlssnm. ,,Irrnrnr,.t ond Kashmir. Manipur, Meghalaga, Mizorain, Naqakurcl. .Srkkrrn. Thpurc, Himttchal Pradesh and Uttaral-huttd: attLl (h) ang olher rn(rtl.r rr'l(rtrng to llrc goods and seruices tax, o.s *Le Councit maA decide. (5) Tt e: Goorls and .sirr/,rce-s 'frtx {'ouncil shall recomtnend the date ol whiclt the goods ond .senrices tax be leuied on petroleum crude, 1iqh.s'/rcr-rl rJrrr-c,'/. rttotor slitit (cornntonlq knoLun as petrol), naturol <1tts ctlcl ttitittitctrt trlitir.-r lirel. (6) Wile rli-schrrr,iilrT rlr('/ilrtcl-r,,rs cortrt:rred by this article, the Goods trtcl Se'rlir'.,s 'l cts' t'.rnutul sltttll lt<: glLided bA the need for a harmor ized r--lnr('lr{re ttl aoods rrrrd .senrices tox and for the deueloy'ntcrtt o/ rr lrrrr-rrr,rrr..;t'Ll tttttrortal ntarket for qoods and sentice,,;- (7) Or t luL|l ol ll.' roinl 'tLunlter of ilfetrtbers oJ'tlte Goods and Seruice s Tif.t: i otUt il:irrrl/ r'on-slitrrle the quorunt at ils meetirlgs.
(8) '|'he Gootls oncl Sr:ruice.s 'liu ( rntrtt:il shull determine the procedure in lh<, perlbnrtuncc o/ il.\ luttt.ttrtrrs. (9) Iiue-ry r]ecisiort oJ'llt" (;oods rurrl .Slrr,,rr:e.s 'l'ru Council shctll be taken et a rntt,littl, Ltrl tt rttctjortltl of rrr.rl /r,s-s tht.tt't th.ree fourtls of the ueiqhted I rll€r)^ .)/- ahL, r)t(./,,b€,r:-- /rrc-senI and uoting, in accordctnce utith tl,te .lollouinq l)t inL'ipkts. ne Lelll: (a) tht: ucttr: trl' th( ( \,rtlrcil ()orlernment shall be a Lueight1Lge of orte third (tl tlk) f()lQl ry)tr.s (yr.sl, (.ind (b) the rnte:s ol ctll tl.u: St?tc ( ;(ruantments taken together shall houe a u.,L'irlhtctgt, o/ tlL\) ilttKls ol tlrc total uoles cast, tn that meeting. (10) No act or proct t:rlitrls oi'IlLr Orr s rlrrl Sr:ruices Tax Counctl sholl lrc int ali,l ,,t, r, 1 , I t1 ', ,,' " ,'. (a) arry uctcrtnctl irt. Council; or t)r (uttl tlt'li,t't irt. the constitution of the (b) any defett in the ep!)ointtnertt of rt rr).,r-son a.s a Member of the Council; or (c) arul procedurctl in'<,tlrtktritu ()l tl)c (-cruncil not affecting the meits of lhe cusc . (11) 'lhe Cjorrr./-s rurrl St,r-r rrr,:. l,tt ( rturcil sllall establtsh a mechQ ni s m. k t u c I jt t r I it' t Ll,' r ui-r7 r/i-s1'r r t,. (a) betweerr tlt< ()or;t:r'r'trrtt nt ttJ lr\lttt tuitl ()ne or nlore States; or (b) betueen the (loL,entrrrcnt ol lldi.e rtnd nnu State or States on one side and onc or tnora olharr.\'l(,ld-s on lhe other sicle; or ( c ) bctLl)een /ti,() r)/ rt/)ri, .Saa{l, .i. oisitlq out t,l' tltt' r 'r , ( . r' ) I / I I / I ( |rl(it.,',-j of lhc: CounctL or imPletnt ttltlt!"tI :1 ' ,, ,!
Se ction 1 -1 srrr s rhrrl rrl-1r,r' (tlause (12) of Articie 366 a new clause being Clar.rst. (12,A) shall lrc inserted. Likewise after Clause 26, Clause's (26-A) and (2tr Bl slrall be inserted.
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A crucial amendment made was in the VII Schedule to the Const tution. As per Section 17 (a) in List I (Union List) for Entr1, 84, li-re foilor.vir.rg entry shall be substituted:
"
Luties .rf t:.rcise otl the following goods monufachtred or ltroduccrl t lndu, rtamcly:-. (a) Pelrolcurn crude; (b) High spet'cl diesel; (c) Motor spiit (commonly knoun a.s petrol); (d) Noturel t/1/-s: (e) Aliation turbine Juel; and (f) 'fobacco utrd tobacco products."; 12.7 l 2.c) 12 8 l,ilic ,r isr'. zrs pcr Section 17 (b), in List II (State t,ist) Flntrr' 52 irir:s irccn on'ritted and for the existing Entrv 54 thc follou,ir-rg c rrtrr liirs bccn substituted: .:i I 7,, ' r'., ;nt the sole of petroleum crude, high speed dic::' , nt,r,tr -tlitlt (coutnTonlA knoun as petrol), natural gos, et)tttit')]) ;.t1,;tt.' -lual and, alcoholic liquor for lturrcttt con: rtrttltt it,,t ]utt nol utcluding sale in tle course of inter-State trad . or.i)'nnr( rcc rtr sole in the course of intemational trad<: or Coit t|(rt:c ..,1 :;:tt it r1oodS." Errtrils ti2 and 92 C have been omitted. Sccl orr 1.1 salis that notwithstanding an,\'thi11g corrtainecl in tht ( ,-rrstitution (i01st Amendment) Act, 20 16. :rrtr provision rf an'. liru relating to tax on goods and services or on both in tor-i'r' ir. .rn\ Stiltc immediately before commencem('nt t.l1' tl'rc afores;ricl A('t \\'hrch is inconsistent with the provisions ot thc Constitr-rtirrn i'r,:'s1 :;Lrr'lr rrmendment shall continue to be itl forcc until anrc' rcled ,,r r tpr.rlcd by il competent legislatttrc or ()tllcr
competent authoritv or until expiration of one year from such com mcnccment \\,hichc\rer is earlier.
Thr-rs, ,"r'hat the Constitution (101"t Amendment) Act, 2016 has done. amongst othcrs, is that it has introduced a neu :irticle called Article 246-A and has substituted the existing trntrv 54 in List II ol the Vll schedule to the Constitution. Clause (1) of Article t7 2-+6 A st.rrts u ith a non-obstante clause. It savs that Il ( )\\ notu itlrstrrrrtling iLn-r,thir-rg contained in Articles 246 :rnrl 25-1, Parliamcrrt and subject to Clause (2), Legislature of even' Statc hitve iro$ t'r to ntirkc la$,s u.ith respect to goods and se r\rlccs tax (CiST) irrrpost,.cl lrr the Union or by such State. This is clarified in Clirtrse (-2) ir-r saling that Parliament has the exclusive po\\'cr to mal<e larr s ri ith respect to GST where the supply of goods or of scr-r'ices or bor h takes place in the course of inter-state tr.l(lc or cornmcr(c. F-ntn 5-l of List II i.e, the State List post amendment prc;r,icles t hat State Legislature may make larvs on tz]-\es on thc s:rI.' of pctroleum crude, high speed diesel, rnotor spirit (r'r.urur-ronh knorr n as petrol), natural gas, aviatiolt turbine fuel :rn<l :,rlcolrolic 1i<1rror for human consumption but not ir-rcltrdir-rg sirlt' irr tht' <:oursc of inter'-State trade or commerce <lr salc irr tl-rc cor.lr-se of internationai trade or commerce of sucl-r goocls
r8
As rer Central Government Notification I\Jo.SO.2986 (e) dated 16.06.2O19, the Central Government in txercise of the po\ rers crnferred by Sub-Section (21 of Section (1) of the Constituti:n (101st Amendment) Act, 20 16, appoinlcd thc' 16'h day of September,2016 as the date on $,hich pro\,isions of Sr:ctions 1 to 1 i and 13 to 2O of the said Amendment Act u'ou1d comc into lbrce
Follcrning the Constitution (1O1.-t Amendment) A('1. 2016, Parliamcn: enacted the Central Goods and Scn'iccs'las Act, 20i7 (briefly, 'ttLe CGST Act', hereinafter) to make provisicn for levv and collection rl tax on intra-State supply of goods or scrvicr':- or- both bv the Cc -rtral Government and for mattcrs conttL ctc(l thcrcn'ith and incidr ntal thereto. As per Section I (3). thc (-l(iS'f .\ct sl-rall cornc'into force on such date as the Central Govcrnmcrtt mar bt' nolificatiorl in the official gazette appoilrt. Set't-r-al (lalcs \\'ere notified b1 the Central Government as thc datc for conting into force of r,;r:ious sections of the CGST Act, such as, liecttotrs 1 to 5, 10, 22 to 30, 139, 146 and 164 came into lbrcc c,n l-2 06.)0 l7: solnc sections czrne into force on 01.07.2017 "r'hct:as St ctirrrl 52 ctrrnc inLo forcc on 0i.10.2O18. Likeu,ise. Irarii:rmcna t'n.rc'Lrci iitt: Intr-gratecl Goocls and Services Tax Act, 2017 (l(iST Act) for lcvr'
l9 and collection of tax on inter-State suppl,r' ol goocls or sen,ices or both bv the Central Government and for m.rttcrs connected thcrcu,ith or incidenta-l thereto. Like the CCIST Act. Central Ciovernment notified various dates as thc clate lor coming into force of relevant provisions of the IGST Act, sr:ch trs, 22.06.2017 ttnd Ol.O7 .2017. Further, t'"vo more Acts ri erc' t'rracted bt. the Parliament post the Constitution (lOlst Arncnclrnr.'nt) .Act, )016
Legislature of the State of Telangan:r t,nirr'1cri tlre Telangana Cloods and Services Tax Act, 20 17 (T(iS'l Act lrtrr'rrr:rl-tcr) to make provision for ievy and coliection of ta-r on irlr:r Stirle su1;1t1-r' ol soods or services or both by the Startc of 'l-r'ltrnrlirnrr. T(lST Act r-cct:ived the assent of the Governor olt 25.(.).,.10 1 i irrrci s as first pr-rblished in the Telangana Gazette on rl:.05.1017. Various pro|isions of the TGST Act came into f{)r('(' on r lrrious rlates While Sections l and 2 (definition clausc) r':,u.nc' into force on 2).06.2017, Section 174 which provides lirr rcpc,:r) :rnd silving ( .rnrc into force on 01.O7.2017. lf As noticed above, Section 17.1 proviclcs flr-:r'ptrrl :rncl s:rving .'\ s pcr Sub-Section (1), save as othcr\\'is(' 1;r olirlL:rl in thc TGST {ct. on and from the date of commenccrnclr r,1 rirc 'f(lS-l' Ac't. the \/A"l'Act arnongst other Acts except irt respct i of qorirls ir-rclrr<led in 2t) Entry 54 ,rf the State List of thc Vll Schedule to the Constitution were repealed. Sub-Section (2) clarifies that such repeal would not revive an_vthing not in force or existing at the time of such repeal or eLffect the prcvior,rs opcration of the repealed Act etc.
Govr,rnment of TelangaLna in the Revenur: (Commercial Taxes-II) Department issucd G.O.Ms.No.1O7 dated 24.06.20L7 directing rublication of a notification in tl-re gazette appointing 22.06.2017 as the date' on rr hrt'i'r provisions of Sections i to 5, 10, 22 to 3A, 139, 146 and I b.l ol thc TGST Act r,'ould come into force. Li<eu'ise, G.O.Ms.No l'r3 datcd 30.06.20 17 was issued whereby it. '*,as notifiecl tirat O1.07.2017 r.vould be the appointed date for coming into l-or-cc ', rrrir-rLrs provisions of the TGST Act including iiection I 7,{
Telangana Ordinancc No., of 'rO 1 7 s'as promulgated by the Governor on 17.06.'2O 17 to fr.rrther arnend thc VAT Act. Preamble to the Ordir-rance sals that (iotcrrrrncnt of Ir-rdia hzrd enacted the CGST Act and Government of Telangana had enacted the TGST Act. Both the Acts hacl rrot l)ccr l:r or-rsht irlLo force. Though the VAT Act 'ur as repe;rlcd br tire T(;ST Act, the same was vet to be brought into lbrcc. [t u as mcntiorcd that sttch rcpeal rvould not affect anf irlve stieart it)n - irrr;r-rin.. r cr-ification incltrding scrutiny
ll and audit assessment proceedings ctc, ri'hich may be instituted, continued or enforce d, u hcreafte'r ta,r. strrcharge, penalty, fine, interest, forfeiturc or punishn-rent llirv be lcvied or imposed as if those Acts had not been so amcnclecl or repealed. That apart, such repeal would not aflcct :rn-r' Jrroceed ings, such as, appeal, revision, revien or rcferencc ri ]rich sl'rall bc continued under the amended Acts or repealed Acts. lt r,r';rs also mentioned that it was considered necessarv to str'('ngthclr ('(:1-r iun provisions of the VAT Act to overcome .ln\- linrit:rtion s to ht'lp elfective revenue realizatron besides prevenl ing It';rli;rs,rs. Accordingly, it was decided to amend the relcr':rnt plor isions of the VAT Act by undertaking legislation. Since it ri rs clccrrled to give effect to the above decision immccli:rtelv ancl tlrc' l.e gislature was not in slt)( t' session, and as tht' (]or,ernor of 'l'clrrrLqilna r'r:as satisfied that circumstances exist u,hich renclererl i1 neeessary for hi.m to take immediate action; thcrcfbrt'. in crt'r i'isc ol lhe polvers conferred by Clause (1) oI Articlc 213 of tlrc (,'onstitution of India, the Governor promulgat<'cl Tclangeur:r ( )r'rlin:rrrr:c No.2 of 2Ol7 called the Telangana Valr-re Adderl Ta,r (Arnc rrrl rnc r-r L) Ordinance, 2017, which came into I'or-<:e s'itl-r irnmccli.rtt: t'lii'c't i.e,17.06.2017. By the said amendment, certarin pror,.isiorrs o1' t lre VAT Act, such as, in Section 20 (.+). Scc'tion 2l (3), (4). ((r). r:| rrnd (B), Section 32 (31,
22 (6) ancl (7 and in Section 57, the u'ords four years'or'four ycars or six years' or 'thrct' -.,,ears' stood substituted by the u,ords 'six years'.
Tela.rgiinar Legislzrture enacted the Telangana Va,lue Added Ta-x (Secorrcl Anrendmcnt) Act, 2017 . It received the assent of the Governor rn .29.1 1 .2O17. and was first published in the Telargana Gazctte orr 02.',2.)O17. Thc Telalgana Value Added Tax (Second Amendme rt) ,{('t. 2O I l' iras been enacted to further amend the VAT Act. {s pr:r' S{r('tion 1 (2), the Telarrgana Value Added Tax (Second Anrcndmcnl) Act. 2017 (briefly, 'the Second Amendment Act'. hcrei raft.er 1 h:rs t'orne into force with effect from 17.06.2OL7 Basic tlrnrs( oi- rrtl Scconcl Amendment Act is to extend the limitalron :r[ loLir \ rlr-s to six -vears. Accordingly, in Section 20 ('1) arr cl in Sec tion 2 I (3). (-+). (6), (7) and (8), the words 'four years' or 'foLrr .\'ears or six lr.:rr-s' havc been substituted by the words 'six vears'; so rlso in Srrlr Sections (3), (6) and (7) of Section 32. The Secor-rd Anrendnrent Ar:t also provides for insertion of Sub-Section (1A) altcr liub Scctrorr (11 in Section 21; besides omitting the firsr proviso in Strb Secl ion (1) ol- Scction 31. In Section 57 (5) ar(l the pr'oviso tirr:r'c'to. Lirr' ',r,rr-cis 'titree years'has been substitute:ci b-r
thc s'ords 'six vcars'. The Second Amendment Act reads as follou's (1) 'l'his Act may be called the Telangana Value ,,\clclt'cl'f:rx (Second Amendment) Act, 20 17. (.2) It shall bc deemed to have come into lorce with c.lTcct from 17 .06.2OI7 . In tl-rc 'l'elangana Value Added Ta-x Act, 2005 tht'rcinafter referred to as the Principal Act), in Ser:tion 20. in Sr-rb-Section (4), for the '*,orcls 'four vrars the rvords 'six ycars'shall be substituted. li In the prir-rcipal Act in Section 21,- ril irftcr sub section (1), the following sub-section shall be inserterl, namely,- ''{ I A) (a) Dvery VAT dealer shall within such tinrc irs ma_r. bc prescribed, furnish certihcates of '-{nnrral Cor-rsolidated Statement of Turnor.ers'. along uith other statcments as may be prescribccl, cLrrlv ct'rtified by a Charted Accountant urithin thc rncanirrg of thc Charted Accountants Act, I949 or Salcs 'l'ax Practitioner, enrolled with the L'onrmcrcial Taxes Department. l'rovidcd that the VAT dealer. rvhosc lrlrnover is lcss than Rs.SO lakhs per anrlum! mav ol)t t() submit thc statements as r)ay be prt scribed, trv sclf certilication, or celtificrl lx' thc Sales Tas Practitioner, enrolled -\iith the Conrnrercial'l':r,res Department. 1b) i\n.1. \rAT dealer, who fails to furnish tl-rc cljrtificates along with other statements under filarrst (a) on or before the prescribed date in tht' nriurr)cr prescribed shall be liable to pay pcniilty:rs nrar lre prescribcd." (ii) In sub-section (3), for the words "four years" occrrrring ert t$,o places, the words "six years" shall trc su bstit u ted. iiii) in sub sections (4) and (6), for thc rvords 'for.rr l'cars' the words 'six years' shall bc s rr bsr itu ted. l I
21 (iv) in sub-sections(7) and (8). for t hc worrls 'four years or six years, as the case miry be. the rvord.s 'six years'shall be subsrituted. In the principal Act, in section 31, in sub-sectior.r (r ),- (i) the hrst proviso shail be omittr:rl: (ii) after omitting thc first protiso. in thc existing proviso, for the words "provirlrd furtlrr:r that" the words "provided that' shall be substituted. In the principal Act, in scclion 32, in srrb-sectiorr (3), (60 and (7), for the u,ords '[ortr' ,.,t ars' thc words 'six years'shall be substitute<I. In the principal Act, in Section.57. in srrb-section (5) and the proviso thereunder, ftrr thc uorrls 'three years', the words isix t,e.rrs sh:rll be substituted. Thc Telangana Value Added T:r-r {An'cndrr('n1) C)rdinance, 2O 17 is hereby rcpcalcrl. I1. Follor'ving the Second Amendment Act, as c\tractcd ;rbovc. r-r'levant prt.rvrsions of the VAT Act would now rcad trs undt'r Scctir 'n 20 (.1): Every dealer sha,ll be deemed to har c iri en asscsscil to ta-\ rased on the return filed by him, if no asscssmenr is nlrrlr. u,ithin r period of six yeats from the date of hling of rhe relunr Sectit n 21 (3): Where the authority prcscribccl is not satishcil rr rtlr .r retur r filed by the VAT dealer or TOT dealc-r or tir(' r(:turn irl)l)('.tr s 1o be incorrcct or incomplete, he shall assess to llre l;r'st oi-lrr: -jrrclgnrrnt \vithin six years ofdue datc of the rcllrrn or s'ithirr six years c f the date of filing of the return rvhichevclis Lrtc'I . Secticn 21 (4): The authority prescribcd mar. b.rl;ecl orr arr inforrn;rtion :r,ailable or on any other basis. t:ortrluc :r <lcr.rrlc:l scrttLirtv of the aocounts of any VAT dealcr or TOT cle :rlcr and rr.lrcr. an\' its iessmcrlt as a result of such scrulinl- Lrt'conre:; neccssitn . sLtch ;r;sessment shall be made within a periori of six years li'or:r t ltc' <:nri trf the period for which the assessment is to be nradr-. Scclion 2I (fi): The authority prescriltcd lnar. rcilssr,ss. n hcr c lrr ilsst'ssr rcnt rvas already made under sub-sectiotrs (L) to (:i) ir!]11 suclt ri:;scssrnclrl understates the corrcct tix li:rlrilit! o: tlre rl,.'rrL r. rr itlrin .r periotl of six years from the datr of such asscssment. .+ o
Section 2 1 (7) : Where any assessment has been riclt rrcrl br, l he Commissioner under sub-section (5) of Section 32 or irs the c:lse rnav bc, the Appellate Tribunal under thc proviso to sul) scction {,+) of Scction 33 on account of any stay order grantcd b,r' thc Appellatc 'l'ribunal or as the casc may be, the High Court or thc Supreme Clourt respectively, or whereas appcal or other proctttiings is pcncling before the Appellate Tribunal or the High Corrr'l or Supreme Court involving a question of law having :r rlirer:t lrt rrring on the asscssment in question, the period during u,hich the stirl orclcr u as in force or such appeal or proceedings rvas penrlirrg shall ];c cxcluded in computing the period of six years as thc citsc mal be Iirr thc purpose of making the assessment. Section 2 I (8): Where an assessment maclc ir:rs l)('r'r r s( t asidc bt, anv Court or as the case may be the Appel)ate Trii;ttnirl. th,' periocl l)ctu.een the date of such assessment and the dalc or) r',lrich it h:rs i)een set aside shall be excluded in computing tht' pt riocl cif six years as the case may be, for making an1' frt:sir iiss(-sstn( nr. Scction 31 (1): Any VAT dealer or TC)T dcalcr or anv otlrcr cjcalcr olrjecting to any order passed or proceeding r.ccorrlt:ci bl un1, ;ruthority under the provisions of the VAT Act. ()tlicr tlrrrn lhc orcler passed or proceeding recorded by anv arrthoritr rrnrlr:r the Provisions of the VAT Act, other th:rn ttrc or(lr'r l).rssc(l or procceding recorded by an Additional Comrnissionlr , rr .Ioirrt Commissioner or Deputy Commissioncr, mav u-ithirr . jo <lir,, s iiorrr thc date on which the order or proceeding nas st:rrctl <rn hinr. :rppeal to such authority in the manner prcscribt'rl Provided that an appeal so preferred shall not br' :rrlrniltcd lrv the ;rppellate authority concerned unless the cle:rler prorllrccs proof of I)avment of tax, penalty, interest or any oth('r arr()lrnr ,rrlnrittccl to bc clue, or of such installments as have l:et'n gr:inlcrl. irrrrl lirrr prool' ,,I p,ayq€n!.ol_!l{g!gggd-}4lEfg.lt o[ the _clilIcrencc ()l thc ta\, Pcnaltv, interest or any other arnount, ussrssccl I^ tlr, rrrrrhoritr' prescribed and the tax, penalty, intercst or irn\ ()tll('r' irlnoLlnt ir(lmitted by the appellant, for the relevant t:rx periorl. r) n sl)e(:t ()f r,r hich the appeal is preferred. Scction 32 (3): In relation to an ordcr o[:rsst ssnrt rr prrsst'tl under thc Act, the powers conferred by sub-set'tions II) .rnrl tJ) shall lx' ( \.rcisable only within a period of six years fronr tlrc rl.rtc on rr hich l trc ordcr was served on the dealer. Section 32 (6): Where an order passcri urrdrr tlris Sr'< tion has lrcen set-aside by any court or other coml)( tc1l1 .rLllll()r 11\ rrrrcler the .\r-t for any reason, the period between tlrc (lirl(r llf srrtlr ,rcler uncl tlrc dilte on which it has been so sct-ir:ii({c shrrll lrt' r'xt ltr<lcd in (()rllputing the period of six years spr.cil)t'rl in srtir sct'tion (3), tbr tlrc purpose of making a fresh revision, if irrrr-, rnrllcr rl)is S{ ('tion- 25
)6 Section :12 (7): Whcrc anlr procccding under this Section has been deferrr d on account of any stay ordcr grantcd by the Appellate Tribunai or the High Court or Sttpreme Court in any case, or by reason of the fact that .ur appeal or othcr procecdinfi is pending before the Appellate Tribunal or the High Court of t)re Supreme Court invoh,ing a question of lag having a clirect bearing on the order or proceeding in question, thc period during which the stay order rvas in force or such appeal or proccctling rv:rs pencling shall be exc..uded in computing the pcriod of six years specrfied in sub- sectior (3), for thc purposes o[ cxcrcising the po*'er under this Section. Section 57 (5): No ordcr for the fr;rfeiture under this section, shall be ma<le a{ter the expiration of six years fiom the date of collection of the irmount referred lo ir-r sul; scction (.1).
According to the denuded of legislative petitioners, Statc of Telangana was cornl)('tencc (() enact the Second Amendmert Act after tl-ie Corrstitr-ltion (101.' Arnendment) Act, 2016 and after enactment of the CGST Act and TGST Act.
To appreciate thc challe:rgc. it mitv bc useftrl to place the factual context. Randomlr' falcts ()f t\\ o cases are taken up for consideration. In W.P.No.705-l ol' 2O21 M/s. Rahul Trading Company is the petitioner. Pt'tit:r'rner is a proprietary concern ca-rrying on the business in paclclr'. For the t:ux penod 01.04.20 10 to 27.O3.'.2O 15, Comrner-cial T;r-r ()lficer had completed audit assessmerrt proceedllllls or-r 31.O3. )015, r-ipon authorization made by the Deputy Commissioncr. Corn rnercial 'Ia-x undt:r the VAT Act. However, rnuch later. the Dcprrtl Commissioner, Commercial Tax in exercist of pou'ers Linclcr Srr'1i()n .32 (2) of the VAT Act suo nrotu proposed r-o revise thr: orir{inlrl rruclrt asscssmcl-lt proceedings. In 21 this connection, shori (';tLrse notice u'its issued on 30.11.2019 stating that on scrutin.r' of assessment records lt rvas found that petitioner had importe cl 7I rnctric tons ol llasmnthi Rice valued at Rs.60,35,000.00 rvhich u ars neithc-r rcportcd br, the petitioner in the returns nor subjected to asscssment. Therefore, the assessment order datcd 31 .03.2015 ri.as lirrrrtd to be pre.iudicial to the interest of revenue. Accordinglr' :1 \'i('\\' \\'i:ts taken that revision under Section 32 (21 of t ht' VAT Ar:t s as u itrranted.
Petitioner filed explanu rtion on I7.11.20lc-). It -"vas followed by subsequent letters scrl<irrg c:r'rttrilr irrirrlrrrir1iorr on the allegation made.
It is contended that rr ithor-rt consi<lt'ring the explanation of the petitioner and without providing itn opl)ortunity of personal hearing,. Depgty Commissioner, Comrt'tt'r'r'ralTax passed.the order dated 14.09.202O conlirming the revision proposed in the show cause notice.
It is this order s'hich is impugr.rcd rrr \V.P No.7054 of 2021. 27. Amongst the varior-rs .qrounds Llr-g('(l l)\' ti-re petitioner, it is contended that thr: :rss('sslncnt ol(l( r is (latecl 31.03.20i5. Therefore, the revisional orclcr ought tri Ir.ivt' ireen passed within
28 four 1'ear':- i.t-., '.ln or br-'fore 30.03.2019, in terms ol Section 32 (2) of the VA'l' Act. Hou'evcr. the revisional order rvas passed on i4.09.2020 ri hich is bc1-oncl four years but within six years. In so far the Scconcl Amendrnc'nt Act is concerned, it is contended that the said amcndment is nor valid in the eye of law as it u,as made a-fter the GST rcgime had come into effect. Therefore, the extendecl ut:rioci of limitatior-r of six years instead of four yeal-s was not ar.ailurlrlc to thc Dcputl Commissioner.
Dcprrt.r' Commissioncr, Commercial Tax, re-designated AS Joint Con n-rissroner (Statc Ta-x) has filed counter affidavit. After making lr,'cr'rrlrrlLs on rnt:r'it, it is contended that the Deputy Commiss:,rrcr rr,as.jrrst il'irrl nr passing the revisional order r-tnder Section 3 2 (ll oi thc \irYI' Act. Due notice was given to the petitioncr-. In lon'natiorr rt <lrrired by the petitioner were sor-tght lor from thc Fii'groral \,'igil:rnt r' :rnd Enforcement Officer but thc s:rme $:as not r':ct'ive'cl. As srrch those could not be furnished to tl-rc petitioncr. Nonetirelr-ss. petitioner also did not submit any details/<lo.-rrrncltts, bor,l<s Lrl:rccounts etc., in his defence
It is state,l th:it Sc(rrrorr 32 \\'as amended and limitatior-r for revisiorr hrrs l.recn cxlcrrrir.,cl ll'orn four years to six years rvith cffcct from i7.() r.2017 bv tlrt' ( )r'(iurance dated 17.06.2O17 r'r,l-riclt ri,as :e rcplerccd bv tl-re Seconcl Amendment Act r.r,hich is in force Thereforc, contelltion ol the petitioner that the amendment u'.rs carried out ciuring ()ST rcgime lacking legal sanctity has bccn denied. The in'rpr-rgned notice and revisional order u,ere passc'd ,"r,ithin tl're limitation periorl of six years. Therefore, those are legal ar-rd valicl. 30. ln its re'pl-r' afficlavir petitioner has stated that the limitation per Section 3 ) of tl're VAT Act is only four years. Original assessment ordcr l-raving been passed on 31.03.20 15, tlrt revisional orcler oltsirt to havc been made on or before 30.03.20 IC), whercas thc rmpuenccl order of revision is dated 14.09.2020; tht-ts, being barrcrl b-r' lin'ritatior-r. The Second Amendment Act extencling limitation fron'r tbur lcars to six years is contrary to thc Constitutron {1 01.' Amendment) Act,2016. 31. ln \\i.l).\o.J',S93 oi 2020, petitioner is a partnership firn-r cngirgt:cl in tire biisincss ol nrilnufacturing dilferent kinds ol' plarlt :rrrrl rntrt lrinrrr-\ r'tc. ['ctilionc'r u'as registered as a dealcr ltn<lt'r tl.re tlrt'n .\nrllrrir ['r:rr]i'sh Cierreral Sales Tax Act, i957 arllrl tht'n'af1r'r' Lurcler- llrc .Anclhra Prirdcsh Value Added Tax Act. )[)():r. r\i1t'r' iril',u-t'.rijLrir rrf llrt Strrtt. I)('tlti()ltet' continued as a reqistt'l t'tl \i.Al' cicalt-'r- r-inclcr t]'ic \'.\-l' Act. I'-or tlre period from 0l .O-1. )(l 1() trr
-r0 3I . 10.201 I , covering the entire financial year 2101 0-20 i 1 and partlv the financial year 2O11- 12 petitioner filed returns under the VAT Act. Altcr availing the input ta-x credit to rvhich lt rvas entitled, it paid the taxes due at the prescribed rate ?'
Commcrcial Tax Officer conducted audit and on completion thereof passed the assessment order dated 24.03.2014. 33. Deputr- Commissioner, Commercial Tax issr-i,:d prc revision shorl causc notice dated 09.11.2017 proposing to rc'r'isc the ilssessmcr)t rnzrde by the Commercial Tax Offi<:r'r- ancl to levr' adrlitional tax of Rs. 1,03,26,998.0O on the grou;rcls rnentioncrl tlrcrein .l+. Petitioncr filed detailed reply dated 06.03..2o 18 to the prc revrslon s ro\\' cause notice. However, the Deputr' (lommissioner ciicl not consider such reply of the petitioner a:rcl passcd thc' revisional orclcr on 05.O3.2020 le'vying aclclitional tax of Rs. 1,O3,2(r,9!t8.00 by imposing tax at a higher rate [rollou.ing the t'cvisiorral orcit'r, the assessing authority passecl tht' consecltrentiai or<ler datcd 07 .O3.2O2O giving effect to the revisioni-l order
Aqsri('\ ('d. present Writ Petition has bee n lilcri
3l 3(:. [t is contended that under Sub-section (3) ol Section 32 of thc VAT Act, limitation prescribed for passing rcr,isional orcicr ri as foLrr vears lrom the date of service of thc original orclcr sought to be rcvised. Referring to the Second Amendment Ac1, it is st:rted that bv the aforesaid amendment, the period four vears appezrrir-rg in Sr-rb section (3) of Section 32 amongst other provisions u as sLrl)stitLlted b-v the period six years. In other rvorcls, thc iimitation pcrio<1 to complete the revision was extended fronr ior-rr veetrs to sir ., ears. Since the original assessment orclt'r u irs passccl :rncl scr-r,cd on 24.O3.2014, as per the four years limitation preriod the l.rsl (lzrtc for passing order of revision u'as 23.O3. )01,3 btrt the irn1;trgncd order was passed on O5.03.2O20. Rt'icrling to the tunt rrcle-d provision extending limitation to six vcars. rt is st.rt('cl tliirt tl)c last date as per the amended provisiorr s rrs lll.03.f 010 Il the Second Amendment Act is held to be un-con stitrrt ional. the :rclclilional t\\'o years of limitation lvould not be rtr trillil;ltr to tltc tcsporr{icnts and consequently the relision.rl ot-tlt't cllLtt'cl O.;.o.1.1020 uolrld be beyond limitation. It is in tllirt ('i)nte\1 thirt r,irr's of tl-rc Sccond Amendment Act has bcen pttt to t lr;rllctrqc
Therefore, petitioner seeks a declar:rtirrrr 1llir1 tlle St't'ortd Anrt'nclrrent Act is un-constitutional zrrrd consc'11u('nth to clt'clare
-12 the revisional order dated 05.03.2020 as being barred by limitation and thereafter to quash the same as n ell as the consequerrtial order dated 07 .O3.2O2O.
Likewise, in all the Writ Petitions lolrning parr. of the present batch, the challenge is either to the revisional order passed during the exten<led period of limitation or to the notices to shorv cause issued during the extended period of lirnitation of six yeerrs as to why the orders of assessment shouild rtot be i-evisc-d. Adclitionally, constitutionalitv of the Second Anrc'rrrlment Act has been questione(1. 39. Let us now briefll' higtrlight tht' snbmiss:ons made by learned ccunsel for the parties. Lc:rding thc argun-rents on behalf of the pettioners, Ms. S.Rar.i, lcar-nr:d scnior coLlnsel, has at the outset, relerred to rvhat hc termed as tl-rc 'list ol importar-rt dates' He pointe d oltt that on 08 ()!).1r0 l(r llr'.' Constitution (1O1., Amendment) Act, 20 16 (rcfcrrecl to hcrcinirftc-r as 'tlle Constitution Amendme:rt Act') received the asscnt of th<' Presrdent and was published in the official gazette . 1(r.O9,2016 $'as the appointed date when various provisior.rs of the Co nstit r-rtior-r Anrcndment Act came intc, forcc. He then rcfcrrerl to 'r7.O5.20 I7 u,hen the Telangana State lx:gislatrlrc cn.r('ted tlrc T(]ST Act s,l-rile repealing
l-l the VAT Act except for thc soods listccl in Entn 5-1 ol List II of the VII Schedule. Ordinancc No.2 of 20 1 7 ri:rs promulgated by the Governor of Telangana uncler Articlc 213 ol tl-rc Constitution of India on 17.06.2017 rvherebv limitation u'ns c'rtended from four years to six years. O1.O7.2O17 is tl-rc datc otr and from which TGST Act became enforceirble. Sccl iott l7-1 ol the TGST Act repealed the VAT Act in respecl o[ :rl1 goods except those mentioned in the substitLrtc(l Entrr' 5-1 of t lrt' State List. On 29.II.2017 the Second Amcnrlmcrtt Act re cr-irt'<l the assent of the Governor whereafter it n'as pttblisherl ir-r ti'tc Tt'1itt'tgana Cazette on 02.12.2017 giving retrospective effect ll-onr I 7.Lt(r.2017
Mr. S.Ravi, learncd scnior courrst'I. su1>rrrits that prior to the Constitution Amendment Act comir-tg inlo firrce, States had all goods except ne\\'spapcrs in the collrsc ()l intra State trade pursuant to Article 246 rf tl)e Constit Lltiott rt';tcl rvith Entry 54 of List II of the VII Scl'recitrlt'. Con sl it t-tti()r i \ir('rt(itnent Act has amended the Constitution of lndia tt-r rcdistrilrute tl-re legislative powers to give eflect to the rtcu ()ST rt'gimt lrlrst'rl on cooperative federalism-pooled sovt'reigntr'. The Seconcl .\rttctrclment Act was adopted on 02. 12.2017 s.ith rctrospective cflt'r't liom 17 .06.2017 legislative competencc to lt'r'r' Valuc Atlrlccl -l:ix (VAT) on sales of 3J enlarging the period of limitation more particularly under Sections 21 and 32 of the VAT Act from four vears to six years. He submits that after the Constitution Amendment Act, State oi Telangana did not havc Lhe legislative competence to enact the Second Amendmcnt Act li:r all goocls either on the basis of the erstwhile legislativt: scheme 1>rior to tl-rt: Constitution Amendment Act or on the basis o[ Articit 246 r'aci ri,ith Entry 54 of List II, as amended, or undei Arricic 246 A or in terms of Sectisn 19 of the Constitutrc,n Antt:rtdntenl Act or on the principle of poolecl sovereigntr or on rlle basis t-r f C.lrdinance No.2 of 2Ol7 or in terms of Section l 7J of tlrr: TCIS'l At r
Elal,or;rtin., on the abovc aspect, Mr. Ravi submits that the Second Anrenclrntnt Act sccks to retrospectively amend the VAT Act to ci larqc tlrc linritation pcriod with retrospective effect to assess tirx ill rcsllc('t o[ tltosc assessment years when it had legislalir',: ('orlllltlcltce [(.) irnpose VAT on all goods except newspap( rs. Ho$ cvcr, hc points out that tl.e Second Amendment Act rv:rs p:rssed rirr 02.12.).O17 .rfter the date of enforcement of thc Constitr.rt on Amc'ncimerl A(.t. Referring to a deeision of the Suprenr, ( ()r i1', nr A.Hajee Atrciul Shukoor Vs. State of Madrasr i AIR 1964 )C 1729
.15 he submits that 1}-rorish the State Legislature IS competcnt to enact lau,s having r-ctrospective operation, its competence to make a lau, for a certarin l).rst period depends on its present legislative polver and not on rr h:it it possessed at the period of time r,",hen its enactment is to h:rve operation. On 02.12.2017 State of Telangana did not have thc le'gisl:rtive competence to enact the Second Amendment Act
Proceedin{ lirrt irer }re submits that there is no savings compctelrc(] oI t]rt' Starc based on the erstwhile distribution of legislative po\\ crs Ilt' submits that Section 6 of the General Clauses Act. lli()7 clocs not apply to the provisions of the Constitution of Irrrli;r since Constitution of India is not an enactme-nt. In this t'orrr-rcction, learned senior counsel has placed reliancc on :r rlivisrorr l;ench decision of the Gujarat High Court in the Stat. ('.umot rr'lv rrpon the erst"r,hile legislative scheme reflecterl in Jr-e rurrcndt'rl Flntn' 54 ol List II prior to 16.09.20 16 lor legrslativt' ('olnl)('t('n( r on thc grourrd that the Second Amendmcnt Act is retrospccti\'(' rrnd rntcnded to deal rvith VAT demamds prior 2 2O2O 82 GSTR 32 (Guj.) clause irr the Clonstitulion Amendment Act saving legislative
36 to the corrilrg into force of GST. Thus, Section 6 of the General Clauses Act, I897 cannot be pressed into service to save the pre amended lntrv 54 of List II -13. While on legislative competence, Mr. Ravi sul>rnits that after the Consl, lntion Amendment Act, Entry 54 ol List II is confir-red to onl-r' five petroleum products and alcohol for hum:rn consr.tmption Statcs ha.,c lost legislative competence after 16.09,.20 16 to make Ias's imp,rsing VAT on other goods i.e., goods ger-rerali_r. To supl)ort his above submission, learned senior coutrsel i'r a.s placed rcliancc c, r the follorving decisions: Hinrlalco Industries Limited Vs. State ot' Kerala3, and r 2o21 (10) ',rMI 583 (A ) ++. .rrccr rcling to him, there is no provision in the Cotrstrtution Au'r c'r'rcirnc n t Act which postpones or dilutes tl-rc effcct of .11'ncncinr.r'rt in Entry 54 List II of VII Schedule. On and frorn l().(.t.) .)(rl(r, ti:e State l,egislature is competellt tc, nral<e la\\'s pror.rclinil for tax on sale of alcoholic licltr,t' lor hutn:rn colr:t.r-r-rrrl i,rrr erircl a ra-nge Of petroleum prorlr:r:t,r r-r:t1r br-tt ttcrt
37 goods t general. If this distinction is not ildhered to. rhe Constitr-rtion Amendment Act would become otiose. Tlrtrs. tl're Seconcl Amendment Act could not have been enactcd for all goocls lf thc cor-rstitutionality of the Second Amendment Acr is to be savcd, then it has to be read down as applving onh' to thc fivc- petrolt'um products and alcohol for human consumptiorr .
Arlverting to Article 246 A of the Constitution ol Inrlirr, tis instrtt'<1 bv the Constitution Amendment Act. he coltten(ls l ltrtt ur-rrler Article 246A simultaneous power is ervarilaltle to lloth Parliirnrt,'nt and State Legislatures to legislate regarrling rrt\('s on sr-tpplr of goods and services. Elaborating on this .rspr-cl. ltc ltns plact'rl r'e liance on the decision of the Supreme Colrrt in Union of India Vs. VKC Footsteps India Pvt. Limiteds. llc also r'l'li'r's to thc r lt t ision ol the Gujarat High Court in Reliance Industries Limited (2 supra). According to him, Artic:le J-1('r..\ r't'iltrir-irrg sirntrltaneous legislation by both Parlitrment :mtl St.rtc c<-ropCr':rtiVe fccicralism. Further, he subrnits that all sr-rch legislirl iolrs nrlrst be based on recommerr<ltrl ion s of tlrt' (iS'l' Cot rncil. Thcrc,lore, he contends that legislirtivc conrpctt'rrc'e of [-egisirrt rrres is based on the principle of poolccl sovrn.ignt-r ,/ s 2O2 1 SCC Online SC 706
38 Telangana State Legislature for enactir-rg the Secortd Amendment Act cannot flow from Article 2464. 46. Mr. Ravi also highlighted the transitional provisions contained in Section 19 of the Constitution Amendment Act ald points oul: that the said provision is in pari mateia to Article 243- suspends constitutional invalidity or postpones sur:h invalidity for a period of one year to enable the competetlt legislalllres to remove the incon sistency by amending or repealing suc h law to Lrring them in consonance r.l,ith the post amended provisions. Object of such tra:rsitional provision is to providc for a transition by suspendirlg invaiidity of inconsistent icgislirtior-r lor a period of one year to errable the competcnt legislatures to amend / repeal their laws to bring them in consonance u'itl-t posi atnc'uded provision. Therefore, Section 19 of the Constitution Amettdme'nt Act does not eciipse the amendment to Erltn' 54 oi Lisr ii or c'otlier iegisiative 6 {2O10) 7 SCC 129
19 competence upon the State for makirrg amendments to the VAT Act qua goods other than alcol'rol for human cor-rsunrption and the five petroleum products. 'l'herefore, ri'hat Section 19 provides is that the State can continue to lcn- t:r.x unrler the \iAT Act lor the window period of one year or till the VAT r\ct is amended or repealed whichever is earlier. This transition:rl provision does not enable the States to make ermenrlrnents to the VAT Act in contravention of the amer-rclccl Llrrtn :,-1 o[ List IL Hc submits that Section 19 of the Constitution Anrcrrrlmcrrl Act cannot be understood as a source of lcgislative po\\'cr'. nor as a saving provision in respect of legal coml)('len('(' to ilrnCrl(l tirt' VAT Act. To buttress this point he has 1:rcssccl ir-rto sr-n'icc tlre clivision bench decision of the Gujerrat IJigh Cor.u-t in Reliance Industries Limited (2 supraf. Accordir-rg to irinr, evcrr tlrc single bench of Kerala High Court in Sheen Golden Jewels (India| Pvt. Limited Vs. State Tax OIficerT }-ras t:r}<en sirnrlal' r, rt '.r tlrotrgh the said decision is relied upon b,r, thc respcrnrlt-ut
Even assuming but no1 .rdrnil[ing theit S( ction l9 empowers the State Legislatures to mal(c atncnclmt:t-tts to tlrc VAT Act in respect of assessment limitation for :rll gorrrls irr g.'ncnl as if Entry ? 2019 SCC Online Ker 973
{(l 54 had lot Jret beetr a-mended, even then also the Second Amendment Act having been passed on O2.l2.2ol7 was beyond the one \.cal period in terms of Section 19 of the Constitution Amendmc nt .Act and tltcreiorc invalid.
Mr. Ravi fur-tl-rer subrnits tl-rat iegislative competence cannot be derived on a qeneral princ'iple of sovereignty without any constitutioniii provisior-r providing for such legislative competence He subm ts that \rtrcle 2.i(r read u'ith Entry 54 of List II, Article 246A an<l Sr-'ction 19 of tlrc Cor-rstitution Amendment Act have inbuilt restrictiorrs rcgerrding ti-rc subjects in respect of which the State Legislal ures can legislate
Turr-rirrg hi:s ;Lttcntion ro ()rclinzrnce No.2 of 2017, he submits Constitution. [t cannr.rt flolr fi-orn a previous piece of legislation. Thus anr rclirirrct' pitrr:ccl ol) th(' Ordinance to support legislative competencc of t he Sccon<l Aincndment Act "vouid be wholly misplace 1. As a r-natter of l:rct. the f)rdinance was promulgamated on 17 .O(' .2O I 7 u'ithin the onc r c.rr uindow period permissible under St'ction 1!) of the Constitution Amendment Act. However, tirat bv rt seli r, ill not confer ('oml).'tcncc on the State Legislature to enact th,t Scr:,rrrrl Amcndmcnt i\e t \\'l'rich r.l'as passed after expirv that legislative coml)etelrcc rnust be traceable from the JI of the one year ri'indo\\' pcriod. On the day ol enacting the Second Amendment Act, tl'rc State l-egislature had lost its competence for making lar.r,in respect of ollter goods barring the goods mentioned in the amended Entr-r' 5-l ol List II. State Legislature must have the competence both on the date of enactment i.e. 02.12.2O17 and also on the day n hen it u'as brought into force retrospectively i.e t7.06.2017
Referring to Article 2 13 (3) of the Constitution of india he submits that the Ordin:rncc s'ou1d be ultra uires for the verv same reason for rllrir:h lhe Scconcl Amendment Act is ultra uires. He further submits that lil'c oi tlrc Ordinance \ /as onlv six weeks from date of conr.ening oi tlrc State Legislature. This period, he Ordinance \\:.1s not r:hallenged because the Ordinance u,as submits, \\'as tiii 08.12.2017. Even assuming that the State Legislature \\'as compctcnt to enatct and apply the Ordinan ce qua the goocls not nrelttiolrecl in amended Entry 54, such operation could not have continrred bcvond 08.12.2O17 as per Article 213 of the Con stitr-rtior-r. Cllarilving the position, he submits that the repealecl b.r' ti'rc Scconcl Amendmer-rt Act and is no longer i11 existence. Bcsicles. tht' Scconcl Amendment Act was brought into force rr-itl'r cllect from 17.06.2077 u.hich u.as the date of the 12 Ordinamct. Tirus, even for the period r,r'hen the Ordinalcc u,as in existence ii ri,as the Second Amendment Act q,hich occtrpit:d thc legislativr, {letcl ald not the Ordinance. Therefore, an. reliance placed on tht Orclir'r.tl." would be misplaced and tne fact that the Ordinanct \\irs not challenged would have no legal bear-ing. Section l'/ I of the TGST Act provides for repeal and savir-rgs. It cie:rrlv s:t,'s lhilt on and from the date of comme;lccmcnr of the 'l'CS-l' .Act thr \,'AT Act stood repealed except in rr:spc-cr o1- g<;ods inclucle d in Enlr y 54 of List II of the VII Schedule. To that (,xtcnt, Ser.:trrir r I 7 4 of the TGST Act vindicates the stand of the pctitirrnc'r ; Vlr-. Ravi submits that Section 174 oi tht- 'l'(iS'f Act rlas blolillrt inLo lorce with effect ftom Ol.O7.2Oi7. Thc e ftect of reireal rr t, rl<l l;,: that the VAT Act with respect to all goocls r-rther tl-r:rn llro:,t' inr:ntioned in amended Entry 54 oi Lisr II stoocl oblttcrltt'rl irnci rvas not in existence any more on tutcl frorrr 0l.O7.2oli frrom 01.07.2017 t}:re VAT Act was alive onlv in rcsp('ct oi- t lrr' goocls mentioned in the amended Errln- 5-l of l-ist Il Thc san'rt s'rrurid also apply to the date 02.12.2O17 s.hc'n the Sccon(l .\nl('r)dnlent Act u,as enacted. Therefore, thc Sccond
Firrrrllv Mr. Ravi refers to Section 174 of the TGST Act.
43 Amcr-rdmcnt Act can only be in respect of the VAT Act as existing on 02 .12 .2O 1 7, er''en if given retrospective eflect from 17 .06 .'2O 17
Summing up his arguments, Mr. Ravi submits that both the ()rclinance as r.r.ell as the Second Amendment Act arc l;cnch irr lhosc t\\,o cases. un con stitutronal being devoid of iegisiative compctcncc. I Ic surbmits that division bench of the Gujarat High Cor-rrt r r-r Reliance Industries Limited {2 supra) and a later sir-rgle bench ciccrision of t hc licr:rla Hreh Court in Hindalco Industries Limited (3 supra) herve struck dou,n VAT legislations enacted post 16.09.201fr. He slrbmits l hat hc n,ould adopt the detailed reasonings sivcn bl t ircr
As a corollary to the above he submits that as thc Vr\T Act repealeci on O 1.07.2017 except for five petroler.rnr prociricts \\'a1s m:rcle on l)2.12.2O 17 to amend the VAT Act u,lrich alrearlv stoocl rt--pcalcri ancl s'as non-existent as on 02.12.2O17 e.rccpt ior- lir r- repe:rlcri lan is permissible. Therefore, the Second Amendrnent Act petrolet:nr pr-orllrcts and alcohol for human consumpti{)n rlotrlrl bc im permi ssil;le in las'. NIr. \'isr,ian:rth, learned counsel for some of tfie petitioners, u-hile acloptinq the arguments advanced bv N4r.S.R:rli, lerirned 5.+ ancl alcohc,l for- human congq4qplien,. no amcnclncnt Lo lilc
tl senior counsel, submits that the State Legislature passed the Telangana Goods and Services Ta-x Bi1l, 2Ol7 on ',.6.01.2017. It received the assent of the Governor on 25-O5.2O 17 u'hereafter the Telangana Goods and Services Tax Act, 2017 (a1rc ach, referred to as 'the TCST Act') u,as published in the Telangana Extraordinar5r Gazette or 27 .O5.2017. He thereafter submits that t1're Ordirrance rvas promtrlgated on 17 .06.2017 rl,hereas thc Sccr-rncl Amendment Act was riade on 02.12.2017 giving retrospective effect from l7 .06.201 7 . He submits that the Second Amt:ncirnent Act is unconstitrrtional as the State Legislature hacl iost ts competence to make s rch amendments after thc Constil ution Arncndment Act came into force from 16.09.2016. On ar-r cl from l (r.09.20l6 only concurrent juri iction could be exe rcrscd simulta:reouslv bv the Centra] G rvernment as u,eii as bt, the Statc Govct'nincnt insofar GST is concerned; that apart, exercise of pou cr un.ler Article 246 A can only be carried out on thc r<--conr mcnd:rtron of the GST Council.
Adverting to Section 19 of thc Const itlrtior-r Arnendment Act, he submil s that it is a transitional provision :rnd a transitional provision oannot be useci fbr ur-tir-rtcnclcrl or obiiqlre l)Lir-pose,
-15
Referring to Article 213 (3), Articlt'2+6 (3) reacl uith Entrv 54 for want of power. While highligiiting thc drlTercrtce betu'een amendment to the Constitution iutd antctrdmcl't t to othcr la"l's, he submits that post the Constitution Amcr-rdrr(.'rtt Act coming into effect lrom 16.09.2016, legislative pou cr s hich flos s from Entry 54 of List II ceased to have eflect frorn 16.01).2016 irr respect of goods other than the petrolettrn procittcts ittrrl litlLtor for humar consumption. Being a constitutiontrl ittrtc'rrrltnt'trt, Stction 6 of the General Clauses Act, 1897 u'outld trol ltt' irpltlic:rlrlt-'. i{e also submlts -th-af flTe--Ord'inance ancl the Second Amcndment Act cannot be traced to Article 2.16A. Fr,rr-tlier, irt r ic$ ol Section 174 of the TGST Act, amendment of zt repcalecl At'l is nol 1 ossible. He also places reliance on Hindalco Industries Limited (3 supraf ancl Reliance Industries Limited (2 supra) 3 AtR 1957 SC 699 e (2or7l 3 scc 1
,16
Mr. K.P. Arnamath Reddy, learned counsel for some of the petitioner i. submits th.rt extcnsion of limitation for making assessme rts. reassessments ard revision under the VAT Act from four yearr; to sr-x ycars b_y virtue of the Second Amendment Act is not valid as the parent VAT Act !\:as repealed following the Constitutr onal Amendment Act. That apart, amendment to the VAT Act frr such extended limitation nas made by issuarrce of an Ordinanc,: under Article 2l3 in June. 2017, which was vdidated by the St.rte l,egisizrt rrre in December, 2017 , only after introductjon of the TGST Act ot'r Ol.O7.2Ol7. Therefore, the Second Anrendmc r.rt Act is not sust:rinable in law after repeal of Insofar Sr:ction 1l'-{ of thc TGST Act is concerned, he submits that the said :;ectiorr ()t11.\ s.tvcsi opcration of the VAT Act with respect to the bur;ir-tcss triulsactrons mlrcit. prior to Ol.O7 .2017 , 5B Mr. B. S. Prasaci. lcarncd i\dr-ocirte General for the State of Telangan r. suitrnittcd tlttrt thc Starc Legisiature 1s competent to ro 2020 (r I Kl-',t' 233
1'7 make lar:s for saving thc rcpcalecl Acts under Section 19 of the Constitution Amendment Act. Accordingly, Section 174 was included in the TGST t\ct :rs .1 mcaslrre to save the repealed Acts, including the VAT Act. He submits that Section 174 saves operation of the VAT Act rn rcspect of transactions made prior to Ol.O7.2Ol7. Insofar the VAT Act is concerned, the same uras amended b_y thc Sccor-rd Ar'l're ncimer-rt Act prior to the effective date of repeal b1. rval. of an C)rclinance dated 17.06.2017. Article 13 (3) of the Constitution oI lnciilr statcs that I a'"r, includes Ordinance as well. Section 6 (b) of thc Lleneral Clauses Act, 1897 also makes it any enactment so repetrlcd or- anvthing done thereunder. According to hinr, rt'li:rncc piaced by the petitioners on the decision of the Ker-irla High (lor-rrt in Hindalco Industries Limited (3 siipiFa, and on thc ()ujerat High Court decision in Reliance Industries Limited (2 supra) rvould be of no assistance to the petitioners as in those cliscs thcrc'\\:as no Ordinance or legislative enactment pertainirrg 1o tlr.r St.itc VAT Acts prior to introduction of GST 59 Elaborating further \'tr. Ll.S.Prasad submits that the Ordinancc s'as pr-r.rrn u iganratcd bv the Governor of Telangana on clear that repeal of a1r Act shall not cffect the previous operation of .18 17.06.2017 \\,hereb,\' the time limit for assessments and revisions u'as exter decl iiom four years to six years before annulment of VAT Act. T1-re Ordinalce became an Act i.e. the Seconcl corrccrnecl. thc: samc q'ould not be applicable to thc facts of the Amendmcr-rt Act on 02.12.2017. Prior to that, t.l.e Ordinance was approved bv tl-re legislative assembly of the State of Telangana rvithin six months from the date of the Ordina_nce. Referring to Article 21 3 (:2) of the Constitution of India, he sr"rbmits that an Orclinarrct prornulgated by the Goverrror would have the sarne forcc an cl eflec t as an Act of the legislature unless such an Orclinalrcr, is not placed before the legislative assembly or rejected bl the leqisli.rtir,e :rssembly when placed before it ri'ithir-r the stiplll.lted tirn( lnsofar the present case is r:oncerned, the L)rdinanci ri.rs piaced before the legislative assemblv atr.irl the asscmbl.r -rpprove<l the same. Therefore, in the light of rhe above constit utir nal provision, the limitation to make an asscssmerlt or reassess )ent ol rcvision is six years and not four lrears. According to him, tlrc C)r-ciinance issued and the subsequent legislative Act for prolorr,qinq ,.he limitation made such extension of limitirt.ior-r va1id. Tir''r-clor.-. the proceedings initiated under the VAT Act in rcspiict rrf Llrt, 1;ctitioners are valid, being within limitation. Insofar clccision ' l t;re licrala High Court in Baiju AA (1O supra| ]S
1g present c.rse inasmuch as amendment to the I(erala VAT Act u'as made long after annulment of the Kerala VAT Act. [nsofar thc prcscnt case is concerned, the Ordinance was promr-rlgated prior to 0l .07.2O I 7 s'hen the VAT Act was still in force 60 Mr. Prasad, learned Advocate General, asserts that Telang:rna Stalc u'as competent to promulgate the Ordinancc orI 17.0(r.f017lrnd thr:reafter to pass the Second Amcntlnrent Act olt 02.11.1017 irr respect of goods not covered by amendccl Entn 5-] of l-ist l[. [)ou er and competence of the State in tl-ris reg:rrcl is lrzrc('.rl)lc to Article '246 of the Constitution read r.r'ith Scction 19 of thc Constitr,rtion Arncndment Act; the savings provision in St'ctiorr 17-l of thc TCST Act; Article 246A of the Constitr-ttion. irnd Sections B anri BA ol the Telangana General Clauses Act, 1BC) I 61 lvIr. I'rasad s ubrnit-s th,at.-SlaJe- -is onil' scculrng urcl protecrtirlg (lrc revcnue due to it by enlarging the dltratiott br s,hiclr thc dt:rlrrs can be assessed etc., but not imposirrg iirr\ rle\\ tax or len-. I-cgrsl:rtion being a sovereign function o[ tht' Slate, thus, the Sr'(',rr(.1 ;\rnendment Act cannot be questiorrccl as lrr'itrg \\rithoLlt conr r)('1 (rrce 62 Statc hirs the p<x|er to enforce the Second Anrt'tttltnettl .'\ct u'ith retrosyrcr't j', e cl'li'ct. State has the pos,er to t'r't'tt t.Lltt ,t\\ir\
5{} vested rigllts of the assessees i.e. even u'here asses:imcnts become barred bv time under the pre-amended provision. State can e nlarge the limitation even for such time barred assessments and Lake anva.z vested rights. Looked at from this perspective, the Second Amendment Act cannot be said to be arbitrau-r.,. not to speak of t,eing manifestly arbitran, 63 Prorisions for enlarging time limitation on asJcssrnents etc., are onlv tr,rocedura-l aspects of ler,1' and assessmcnt ol-t.rx. These are not strbstantive provisions. Assessing Officers irre competent to adjudic'ate on limitation since it is a mixecl question of fact and Iau,- 6+ Refe rring to Hindalco Industries Limited (3 supra), he submits that decision of the I(erala High Cor-rrt. :rs cxprcssed in the said case, is distinguishablc. In tl-rc said decisi.rr-r, Kerala High Cor-rrt did not cleal with the effect of Se'ction M of thc Constitution Arnendmt:nt Act and the savings provisron trncier Llrc State GST Act. As a matter of fact, State of Kerala had enilcted the irnpugnecl law after the permissible ri'rr-rdou pcriod of' olre year allorved trnder Section 19 of the Constitr.rtitrn Amencllnent Act. Lrkt:ri ise. Mr.Prasad submits that <lrc'rsr'on ol- th.: Gujnrat High
5l substantive right, the procedure lor filir-rg the appcal ir-rcluding the period of iimitation cannot be called as sut)st antive right. An aggrieved person cannot claim any \reste(l rigl-rt irt proceclttre; that he should be governed by the old provision relating to the period ol limitation. Procedural lar.r, is retrosl)ectivc, ttte:Ltring thereby, that it may apply even to acts or transac tions tttl<[r-r thc re pealed Act. Time and again it has been held and clariliecl br thc Supreme Court that every litigant has a vestcd right in sttl>stantivc larv but no such right exists in procedural 1ar'. Accorclirlg to lr4r. Prasad, law of limitation is generally regarded as procedural and its object is not to create any right but to prescribe periocls s itl-rin w'hich legal proceedings be instituted for etrforcetnerlt of riqlrts s'hich exists under the substantive larv. St.llutes of linritation are retrospective insofar those appl,r' to all legal proc'ecrlirigs llrought alter their operation for enforcing causc of actioll itccrLtecl earlier, ,, 12o11) 6 SCC 739
5l but they ;x-e prospectivc in the sensc that they neither have the effect of r,:viving the right of action nor do they have the effect of extinguistring a right of'action srrbsisting on that day. 66 Learned Advocate Ceneral has also placed reliance on a there is a n Ordinance r.r'l-ricir is foliou,'ed by an Act on the sarne subject matter. thc Act u'iii comc into force in continuation of the Ordinanc,:. In that case. a gaT,ettc notification was issued on 22.O8.L9<-t6'"r'hich appointcd 22.,r da1- of August, 1996 as the date on which the Act in question u ould come into force. The said gazette notification u,as jsstred in t-rercise of the powers conferred by Sectiorr 1 (3) oi thc Arbitration ;rncl Conciliation Act, 1996. In the facts <.rf rhat c:asc. il s as ht'lcl thi.rr u'hile the Act came into force on !|2.08.199o, for all pr-actical and legal purposes, it would be deemcd to h:rve bce n elfcctivc fr-orn 25.01.1996, when the Ordina-nc: rvas prornulgatecl, particularly,, u'hen the provisions of the Ordiranr:e ancl thc Ac1 are sirrrilar thcrc being nothing in the Act so a:; to rnake tl-re Ordinance incffective. The Act being a continual ion oi thc (-trciinancr'. s orrl,:i irc cieemeci to have been 12 (2OO1) 6 SCC 3s6
5-l effective from 25.01 .,]996 u hcn thc first Ordinance came into force 67 Mr. Prasad has also pl:rced heavy reliance on Manish challenged. He submits that \\'hen a legislation is challenged, more particularl,r', a constitLrtional amendment on the ground of being manifestlv arbitrzrr--r', it uould be incumbent upon the petitioners to shos' or clemonstrate th:rt something was done by the legislature capriciorrslr', rrurtionall-r and / or without adequate determining principle'. Hc sr-rbntits that wide latitude is allowed to the legislature in enni l irrg a lirs . 'l'ire free dom to experiment must be conceded to the legislertur ('. I)articularly in economic laws. If problems emcrgc in tlre rior-l<ittg of laws and which require legislative intcrvcntion. t Irr C()url cilnnot be oblivious of the power of the legislerturc 1o rcsponcl b-r' stepping in with necessary amendments. Sinc't' tlr,.: lilr. in this r:asc', the Second Amendment Act has been er-ractecl to aLlqnrent the revenue of the State, the constitutional (loLrri r" rll lr',rn lrcrl'ilv in favour of such a 1aw. The law under scrUtin\ is rrn t'i,rrrrrlnl(' rncas(lre. In economic matters, rt 12oztl s scc 1
51 \\'ider latitLrd(' is; givcrl to the lavu makers, rvhich is based on sound principle. Mr. Prasad asserts that even a vested right can be the subjcct matt(,r of rctrospective lau,. No doubt, such a 1au, mr-rst pass nras er Article s 14, 19,2l and 3004, of the Constitutior-r of Indi:r. Thcrciirc, the issue really boils down to whethcr the implrgnecl en.1( tment is manifestly arbitrary or not. If it is not, qllcstion r,f ir rlt rfcrcncc b1, the Court would not arise 68 [,car ne <l :\rilocale General has referred to and relied upon the clecision ol rhc lierala High Court in Sheen Golden Jewels (India) Pvt. Limited {7 supra) in great detail. b9 I\,1r-. l'r',rsr:rl ]-rlrs also relerred to an article titled 'Ircrnsitional Proli.si,rr.: it, (-ornrnercial Legislations: An Analysis' br. Pri-r-al P;rrilih ar: :,rr',iilg to ri hich the view taken by a majorit,r, of Clourts is that th( r(.\'(-nLtL- ar.rthorities retain the power to lerry- appropriatc t:rsrs undt r tlt,.' erstuhile indirect tax laws for events prior to thc. introcl uc:ticut rrf CiST. I i :,,1 ,l ;un( n(llrclll i, ..ir,, ,1 11|]1,.D.]incnt r\('1. o[ Entrv 54 by Section t7 oi tlr,' 7{) NIr Si lt:rvi . it:arncd scnior counsel for the petitioners in repl-r subnrits rlr.r1 tltrr Stertc has not addressed the follon'ing crtrr:ial
ii. Ellcct ol repeal o[ VAT Act for a-11 other goods except the goods lncntionecl in thc amended Entry 54 of List II as per Scctiorr I7-1 of the TGST Act. iii. Conrpete nce of the State as on O2.12.2017 to pass tlrc Sccond Amenclment Act, given the requirements o[ the prcser]t legisl:rtn'e competencc as on that date; ir'. Reqrrircment of simultaneous levy by Parliament and Stitte LcgisllltLlrc lor lcgislative competence under Article 2464, \'. Ollectivc and effect of Section 19 of the Constituti,.rrr Amerrrlnrt-r'rl Act- \ r. Stalc drcl not aL all make any endeavour to shos' iiuv rlistrngrr ish in g li'ature in the judgment rendered by the Guj:rrat I {igli CoLrr-t irr Reliance Industries Limited (2 supra) allcl rvhr' the sirrrrt shoLrlcl not be applied to the present case. 71 Mr. I?avi contcnds that it is not the stand of the petitione rs thal the Stalc hirs no competence whatsoever to promulgate thtr ()rciirancr or to ('nact the Second Amendment Act. Stilte does have tl.rc po\\'er .rnd competence in respect of the goods specrific.rll-\ mentionerl in the :rmended trntry 54 but not goods in general. It is the r:ontcntion of the petitioners that other than tl-re goods mentioned iu amended Entry 54, the State does not possess legislativc conr l)c1encc. This crucia-l aspect was not collntcre(l b\ th c St.lte. 72 Mr. Ravr submits that it is not the argument of the petitionc-rs tlrat tlrt C)rciinance or the Second Amendmetlt A(ll :rre manilestl-r' :rrlritr-ar., or that those cannot be given retrosp.ctivt- eflbct. Thcrefirrc, thr' .rrgllment advanced by the learned Advoc:arc
1 56 General t,ased on the principies of m anifest arbitrariness or retrospect.vitv ar-e not at all germane to adjudicate on the issues raise d by t.he petitioners. 73 Besirles reiterating reliance on Reliance Industries Limited (2 supra| and Hindalco Industries Limited {3 supra}, Mr'.Ravi has also 'rressed into service a decision of the Allahabad High Court in Jain Distillery Private Limited (4 supra). hrsoiar extension of time limit in titx tr.rtrer,. is concerned, NIr-.Ravr strbmits that time limits are a fettcr on the juri iction of the departmental authorities. Enlargement of tirne under the Sccond Amendment Act in extending thc lirnitation period i:rmoLints o conferring juri iction ciilpartmcnt.rl eruthorities 71 I hat did not exist eerrlier. Therefore, such an :rmernc]rncnt is not rnerelv fo - securing old liabilities but impacts the rights of assessees, thus being a fresh legislatiort s'Lich is der.oid of 1i'gi slirtive competence. o1t 75 [nso{ar reliance placed by learnecl Advoca,.e (}eneral in s:Li,l c'lecision is of no application to the prcs.-'n1. b.r1{rh r-.f c;tses. He srrbmils t'rat the question for determirralion irt hat case $'as Tirumalai Chemicals Limited {11 supra) it rs sr_rirrnrr,ted that thc rt ht:l her tlrc: limitation to file appezrl agalnst or-der for r..iolzrtion of 57 provisions of Foreign Exchange Regulation Act, 1973 (FERA) u,ould be governed by the appellate mechatrism uncle r the Foreign Exchange Regulation Act, 1973 or under the Fort:ign Exchange Management Act, 1999. The above decision has tto relevance insofar the present batch of writ petitions is concerned rvhere the challenge is primarily to the competence of the State Legislature to enact the Second Amendment Act :rfter the Constitution Amendment Act. 76 Regarding Fuerst Day Lawson (12 supra) t't:lit'rl r-tpon Lr-r'the lcarned Advocate General, Mr. Ravi submits thrrt irl rhe present batch of cases petitioners are primaril-1' cot-tccrrlt:cl ri tt h lhc vailidit-v of tl-re Second Amendment Act and not thc Orclirtart< t . Er en if it is assumed that the State had the compcterrce to pt'ottlttleate the Ordinance in June, 2017 before ortse't of CIST s itlr t'fllct lrom O\ .O7 .2017, by the time the Second Amett(lmcrtt A('t \\ as passed, the State had lost its competence for !egisltrtirrg, good s I lt ()n gcneral, except for petroleum prodLI(r1s :rnd lirlttot- Iirr httnlan consumption as mentioned in the atnclltlccl Etrtn .--t o1' l-ist Il. I{ou,ever, he submits that though tltt' ()r'dinar-rct' lt;ts Itoi ltt't'tl spccificallv challenged, nonetheless. it is clcarr tilat ()rr .tntl l-r-om 16.09.2016 u,hen the Constitution Att-ttttdmertt .'\ct c:1rll(r rllt()
58 force, the Ordinance could not have been promulgated. Thus, both t]le Jrdinance and tl-ie Second Amendment Act cannot be sustained a-fter 16.09.201b. Again in this judgment question of legislative competence of the State to promulgate an Ordinance followed by an Act on the samc subject matter was not in issue. He submit.s that an Ordinance as rvell as an Act are two pieces of legislation. Legislative competence of each has to be separately determineC in the ligl-rt of the Constitution and the point ef tirae when thor;e u,ere enacted. Insotar Manish Kumar: ( 13 supraf is concerned, he submits that it is not the case of the petitioners that the liecond Amcnclmr:nt Ar:r should be strucl< down on the ground of being manifestl,r, arbitran . That apart, rvhile there can be no dislrute to the p;-oposition that a n ider latitude should be allowed to the legislature u hile legislating cconomic laws, it is also equaliy cl,:ar that u'hile makir-rg such ii-ni', t he Legislature or the Parliament cannot transgress thc constitutional iimits. In the instant cirse. the challenge to tl-rc Seconcl Amendment Act is purely on the ground ol lcgislativc conrpctence; rather lack of legislative compe[ence . Petitioncrs arc llot questioning the legislative u,isclorn in extendir-rg tl'rc lir-nrtation for making assessments, rcasscrssrncrrts. revisions ('tr-.. from for-rr years to six years, bu, havc rllrt:stionccl the Scconcl Amendment Act on the 59 ground that the State did rrot havc tl.re le'gislative competence to enact the same. 77 Insofar Sheen Golden Jewels (India) Pvt. Limited (7 supra) IS concerned, lcarnecl senior counsel submits that a division bench of the (iLrj:rrat Hiqlr Cr)rrrt in Reliance Industries Limited (2 supra) hars rlrstinrltrishccl tlrc said decision. in Sheen Golden Jewels (India) Pvt. Limited (7 supra) petitioners had TGST Act, on thc :rrrvil ot Sr'r'tion i 9 ol' the Constitution Services Ta-x Act, ')0 l 7 u'l'rich rs Trrr-i n'LcttL'ria to Section 174 of the Amendment Act. Accorrlinq l() Nlr.li:rvi. petitioners herein are not questioning valiclin' ol Sct'lion I 7-1 ol' the TGST Act. Rather, challenged validit-r' ol Section 'l 7-l of the l(erala Goods and according to the pctitioncrs. Sc<:t ion I 7-1 ol the TGST Act only apart, the article also rt'lit'rl r.ryron tlrc clc-cision of the Gauhati High supports what is being t onl<'r.rtlcd l;r' tl-rc petitioners. 7B The article, "l'rcLnsittctr:rtl /)r-ol,i.sion.s irt Contmercial Legislation: An Analysis'fo11os s tlrt' sirrn,' loqic rlrven lrv tl're Kerala High Court with validitv of shori (:rLrsl r)(ltrc(:s tbr service ta-x after Section 14 2Ol8 SCC Online Gau I457
60 174 of the State CST Act was brought in. Mr. Ravi submits that according 1o the aforesaid article, Section 19 of the Constitution Amendrnc nt Act has clements of both transitional as w,eli as savings c ztuse. Holvcver, he contends that Section 19 of the Constitr-rtion Anrcndmcnt Act only suspends invalidity of the inconsistent Iegislation for a period of one yea-r or till the itrconsistc'nt. lesislations are amended or repealed. He asserts that Sectior-r 1(l is neitlrer a source of power nor a savings provision. It is onl.v a transilion: provision 79 NIr.li.ll.R.Vrsuanath, learned counsel for somc of thc petitroneri irlsrr rtadr: submissions replying to the argLtments adviur, t:rl l>r tl-r: lrarnecl Advocate General. While admitting that learrnt'rl .lrlr, oc:rtt' (icncrarl rvas only partly correct in submitting that trnrr lirnitrLtior-rs are procedural and not substantive, he, hos'er cr , srrbr:r jt:.; that in tax jurisprudence time limitatior-rs prest:r'i1.rt, l l()r rri,liing assessments, reassessments, revisions etc are juristlrctiorral in nature and are thus fetters on the taxing ar-rthoritit s. In tltis c'onnection, he has placed reliance on a cir:ctsi,rlr r)l i lc Sul)l'entt' Cotrrt in S.S.Gadgil Vs. ITOts. Retbrring to Tirumalar Che micals Limited (l t supra) relied upon l;.r the ts 53 ITR 2:l i
6l learned Advocatc General, he submits that in the said case Supreme Court u'as dealing u,ith the limitation prescribed for liiing appeals, rvhici-r is ol entirely diflerent nature. B0 Mr. Visrranath submits that two dates are extremelv crucierl Firstl_y, 16-09.20 i 6 u'hen the Constitution Amendment Act came into forcr'. Se,'concllr', 27.O5.2O\7 when the TGST Act $,as enacrecl. The Orclinarnce as s eil as the Second Amendment Act u,ere made subseqLrent to thc cn.lctment of the TGST Act. Therefore, leanted Advocate Ciencral is not right in saying that the Ordinancc ii'as prornulgatccl pr-ior to coming into force of the TGST Act. Thus. lrc u'oulcl srrbrnrt ti'i.rt ncither the Governor nor the State Legislatr.rre hacl 1e gislartiYe c ontpClet-lce to promulgate the Ordinance or to m:rke the Sccorrri Anrctrdment Act after 76.O9.2O16 and also aft.rr 27.O5.2017 . Bl Rcfcrrin.q tl St:ction 19 of the Constitution Amendmcnt ..\t.r, Mr. \1jst'anatlr sr rlrrrtrts titat the window provided by Section 19 ri zrs r-onrplclelv eslliuslt,rl ort 27.O5.2017 when the TGST Act .,\ lrs cn:rcted and Se,.'rii.,n ll'-1 thereof partially repealed thc \rA'l' .\r'r. Tl-rcre is no rncrrt lr tiie :rr-glLment of the learned Advoczrtc Ct,nrlirl th:rt Section 1(l o: rirr, Constitulion Amendment A<:t r.oLrlrl l,t rnr.,oked even allet- .l ,'.()5.2017 and that the Ordinancc rrirri Llrc
i 62 Second Amendment Act owe their genesis to Scctior-r 19. He further s -rbroits that neither the Ordinance n()r the Second Amendment Act can be traced to Article 246A of tl-rc Constitution. 82 insolarr decision of ttre Kerala High Court in Sheen Golden Jewels (I:rdial Pvt. Linited (7 supra) is conccrnr:cl, lre sr-ibmits that in thr: said case the challenge rvas made to ticction 17.1 of the Iierala Goods and Services Tax Act, 20 17 q,hich is pari rrruteria to chzJler.rgirg validity of Section 174 of the TGST Act. IIe, therefore, submits t rat there is no merit in the arguments arlvancr€cl b,v the leerrned Arlvocate General. 83 Sub -nissions made by learned counsel lirr tlrt' pitr-trcs have rcceived tl-rc clue consideration of the Court. $'l We shall first deal with the issue rr-latinri to leuislatir.e cornpetcnrc'. Heading of Article 246 of the Cor-rstirr.rtiorr oI India is st-tb-icct nr:ltt('r of laws made by Parliamei-rt arrcl l;r' rltc I-cqislittures ()f Stzitcs Clause (I) says that notrvithsr:,ut <lin g iurvthing Sect ion 7 4 of the TGST Act. Petitioners h,rrcin irrc not 1n lillr r-c-sp:ct tc. any of the matters enurnerari,rl i:t l-rst I (Union I-is1r of tlre VII Schedule to the Constitution oi I:tr] ia. As per clatr,scs (, ) zlI-rcl (3], Parliament has exclusir-e l)()\'\'('r I(r :ntrke larrs (liztise l2l. not$,ithstanding anything in Cllar.rsr: {3). i)arliament
6-1 and subject to Clause (l), the Legislature of an.r' St:rtc rrlso I'rave [)o\\rer to make laws with respect to anv of thc merttcrs enlrmerated in List [[ (Concurrent List) in the VII Schedule. In terms ol Clause (3), sub.iect to Clauses (1) arrd (2) the Legislature of an,r' St:rte hzrs cxclusive power to make laws for such State or lurv pil rt thercol rvith respect to any of the matters enumerated in List II (State List) in the VII Schedule. Clause (4) clarifies that Parlianrent hrrs pou er to make laws with respect to any matter for an-r' p:,rr-t of thc lcrritor,y of India not included in any Statc notri ithstrurrling that such matter is a matter enumerated in the State' List. Tl-rus, the power to make lar.r,s citl-rer l;_r'the Parlieirrt'nt or b;' tl're State Legislatures is traceable to Articlt' 2-ltr of the Constitution of India. The Lists in the VII Schecltrle dc1-ines :rnd limit the respective competence of the Union :rncl the Stzrtts. The variours entries in the three lists of the Vll Scht'clr,rlt ztrr' not soLrrces of legislative power. These iire leqislalir',' ht'acis clemarczrting the field of legislation; ol cotu se. irt'ing Llr, lrr:lrl of legislation, the entries should be given the s'iclest possil-rle amplitude. 86 Prior to the Constitution Arnendmcrlt Acl i.e.. 1;rioI tcr 16.O9.2O 16, Entry 54 of List II s'as as loilous
6,1 "54: Toxes on the sale or purchase of goods olher thatt netaspapers, srLbject to the prouisiotls of entry 92 A of List 1".
1 It nas on the strcngth of Entrt'54 of List II as it then existed, tt.at the VAT Act u'as enacted 87 Aftel the Co n stitr-rtior-r Amendment Act came into force with effect fronr 16.09.2016. Entrv 54 of List II nou'reads as follows:
"
Trl,t-es on the salt: <tl' pelroleunt t'r-ude, ltitth speed dtesel, motor spiit (contmonlg krrorrrr crs petrol). neturel gas, auiation turbiru,- fuel aruI alcoholic liquor for hunturt <:ortsuntptiort, but not irtclud"ng sale it the course Dl inter-Slele tro.le or contmerce or sale in the :ourse of intentatictnal tntdc or (\)n1.rlt,nr of stt<:lt ctoods". 88 Thus, on and from 16.09.2O1(r. thc r:r>rnpetence of the State Legislature got trrrncated, it I'rad competencc to enact law only on the fields mentioned in Entn 5.1 as srrbsLituted i.e., regarding taxes on salc of petrolcum crurcle , high slreed rliesel, motor spirit (petrol), n atural gas, aviation turbint- hrel and alcoholic liquor for human consumption. Hou'evcr. thcrc is :r fiirthcr restriction in as much as the ta-xe s sl-rould not be on salt' of such goods in the course of inter-State t rirde or conlmercc rrr s:lle irr the course of internatic,nal trade or commerce of such qoods 89 The Second Amt:nclrnent Act, as :rlrt:irrh' rroticed, enhances the limitzrtion |ef iod fr-oln four- r-ears t(t si\ \ ('jrT's rr-ith respect to assessm€nt, reassessnlclrt. rcvisi()n et('. ll cor ers all general goods arcl is not confinccl to the {lve I)r'troh'rlrl products and 6a a-lcoholic liquor for human consr-tmption as mentioned in the substituted Entn' 54 ol' List ll. Thcrc{brc, State Legislature of Telangana did not have tlrc cornpetence post 16.09.2O16 to legislate the Second Amcndmr:nt Act \\'hich could be traceable to Article 246 read with Entn' .54 of List II ol thc VII Schedule to the Constitution. 90 The Constitution Arncn<lrnelrt Act illso inserted a new article immediately alter Articlc' )-1tr u'ith t'l-lect I'rom 16.O9.2016. As per the new Article 246 A, it provides lbr special provision with respect to goods and scrvic't's t:tx. Article 246 A is extracted hereunder: "246A. Special prouision ttith respect to goods and seruices tax: (1) Nottuithstondrnrl Lrtr4tlLutrl cottlttited h Arlicles 246 and 254, Parliament, antl. srrl,tt'r'l t.) ( 1(rrrs€r ()), th<: Legislature of euery State, haue pouer to D?(rkd 1rltr s t|irlt rt,'.s1.,rccl lo qoods and seruices tax imposed by the I;nr n rrr /ll srrt lt .Slrr[r'. (2) Parlirtrnt:lt l' ;.; r,il,:1",' t).)itt r tt) tttoke lcuus tuith respect to goocls r ,ti r ",i ,', ',r'r ,r'ri,-'r.,' iitt' :1il)Pl!l cl'g1oods, or of seraices, or ltollt lttl..t:; rrl,r,, t,i l/r,' t'otttsr' itl irtter Stclte trQde or commercc. Exltlartctl iort. l). :,' ':.\,,,,r'r/ llris rtrltr'1r:, slt,lll. in respect of goods and sr,rt tri \ jt ','rl'?-'i'(/ :,, tri llritts-t' (51 rtl t\tticle: 279A, take effe<:t -frorti I/tL' (1(rl,' t, tt)D.t1t'Itied l)r/ llia'(;ooals rlnrl Sert/ice.s Tax Council.'' 91 Clause (l) of Articli' l']{r A strrrts u'ith a rlon'obstot"Lte ciause. It says that notrvitl-rstrnrlrnq .l11\ 1lr11rg c-ot-ttirinecl in Article 246 25-+ (distribution of legislatit t prir,i.ersl artd r\rticle (dealing rvith
66 inconsistcncl between larrvs made by Parliament and larvs made by Legislatr:res of State), Parliament and subject to clause (2), the Legislature oi evcrv State have power to make laws with respect to goods ar.rrl sen,ices ta-x (CST) imposed by the Union or by such State. As per r'lause (2) Parliament has exclusive power to make laws nith resp('ct to GST rvhere the supply of goods or of services or both takcs place in the course of inter-State tracle or commerc(. Tlrr Dxplanation clarilies that provisions of Article 246A in respecrr ol GST shall take effect from the date recomme ricled 1r.r' tl-re GST Council in terms of Clause (5) of Articie 279-A. 92 Thrrs s h.rt Article 2;t6A provides is that both Parliament and tl-re [."('qlslirt urc of every State have power to make la'*,s u,ith resl)ect 1(, (;ST inrposed bv the Union or by such State except in the case rf (iS-l' rvircrc the supply of goods or of services or both takc's pli: c t' in L1)e (:oursc of inter-State trade or commerce in which car;e l)arliament has the exclusive competence. Of course, such cr)a.'rnrr'rri $ill tarkc eflect from the date of recommendation bv the (l:;'l' ('oLrrtr:il. 93 Ar-tr,-lr. .3tro of the Constitution of India defines various expr'('ssror s ri lric'h l'incls 1>lace in the Constitution. Clause {12)
67 defincs "goods" to inclucle al1 materials, commodities and articles Clause (124) uhicir las inserted b,v the Constitution Amendment Act rl'ith efft'r't fronr l6-09.2016 defines "goods and services tax" (GST) to m.':lr) :ln-\' t.ix olt supply of goods or services or both brouqht about seueral changes i1 the except til\rs on tlre surpplv of alcoholic liquor for human consumptior-r. Clar-rse (26A), also inserted by the Constitutiotr Amendment Aot \\'ith cflt'ct from 16.O9.2016, defines "services" tcr mean an.\'thrn{ ot}-tcr tiran goods 94 Article 24(r A r-, f thc Constitution of India came up for analv sis l)t l,rr-r' riri :.Lii)r-rrnc Court in VKC Footsteps India Private Limited (5 supra), Supreme Court has held as follou s: ''-l-l .\tlrL l' )7r'r' i,'1's ctort slilti lrr rrlr r I .r'i,, " r' (i) Frrstllt. .-\rtult: 216A defines tLe source of power as ruell trs tlt? Ji<'hl ol' i.'(ttsintit)n lluith respect to good.s and seruices t&{) obuiatintl tlt( n<'t'd it] lteLel to the Seuenth Schedule; /iil .sr'<r,ncl/rl. tlrt' proui.sions of Article 246A are auailable botlt to l\rliorn crrt ,rricJ tl1(: Stale Legislatures, saue and except for lhe r:-rc/u-sruc pt)rr.'t t ol Porliurnent to enact on inter-State trade or coit me:rt'e: utrcl Ititl 'l'lrir,l ,,. l.ti;t lL: 2,16A embodies the cottstittttiort al Ttttrtctitk' r,,r ';irr"r ,'." r.1 i, t'tl rt.s distinct from the pirtciltle rt-l' ( ( )r ( 'r ,-ri ,r ( 1, ( ,,r .,,.',,,'. rllrir'/r operated u,tithin the foltl tt.1' th.,:' (-ortrrrrr, nl l-r.rl, ir r- rr'.;rrlrlr'r/ ity Article 254". q5 TIrus, ir< co:'clirril ',r, tlrt' Sr-tprcme Court, Article 246A clcfirtes the sor-rr-ce ol- pos t r rrs rltll rrs the field of legislation u ith respccl to CIST. olrvizrtinq tlrt-' iiL't'tl to tr-eivcl to the VII scl-rcclult'. Tltis
68 power is avaiiabie both to Parliament as ',veil as to the State Lcgislatur:s except in the course of suppl), of goods oi' sen.ices oi' both ir-r the course of inter-State trade or commerce. What Article 2.16A crnl:odie s is the principle of simultaneous lev_r. b1, both the Parlitrment zu'rd by the concerned State Legislature, distinct from the principle ol concurrence. 96 'fht' nature of Article 246A of the Constitutio,r of Inclia u,'as examinr'<i b.r' the division bench of the Gujarat High Cor-rrt in Reliance Industries Limited (2 supra) r,hcreafitr it ras l;een helcl as loliou,s: ''u). 'l'he issue cc.n olso be looked into Jiont u Lh.l.ti.re,tll enqlc. .'\tlit !, -'46A oJ the Constitution of India has bt:en rns,,,rtrt? irr lh.' t r,,t.s;rl:rlirrrt of lndia to prouid.e for integrated potuer i(-) tlre i )irirrr o/- jntlto rt,rtl the States to make a common Iaut to leuy lrlr .l: llit, "r/r.,rtls (.|, r,.i \1'ruices'. Article 246A is not okin to the 'con<-urr.nI 1-rsl ' t'rlut:t uled h List II in Schedule VII of the (-'on-sl ilri tr o/t ol hrrlttt tt.'itiL lt trtpouers, either thLe Llnion or the State, to nrtkc klt,.s rr,,illr 11r.:^/)('(l lo leuq of tax on either the goods or seruices. 'l'h., Porlitrtnc,rtt ill rls u i,-^./om did not incorporate pouer to makc /olr,.s r|irh r?s/)('(.f lo lila (/(/,)cl.s Qnd seruices tAx" in the "Conatrrettt list' t,rr;rnie,rirlr'r/ irr !.tst ll! n Schedule VII of the Cor*titution of India ltut irts:rted u rtt tt, LLrlick: 2.16A in the Constitution of India to cort.fer or itte,qrutcrl rx)i{r'r'. ro lnth the Union and the State, ruhich i-s Io l.c ,,r,.r-r'rscrJ .:-r,f i/11,i/r(1)lr.srU by both, to make a common latu to l€ltl, lc.r orr lhc '.grotlt .u1d seruices". The putpose of this Cottstitutiortal arucrtrlrrrcrtl rutts tt :rhaps to hnue a uniform "goods and sen,,ict,s [a-*' letr.t 'it,r titql tnrt tlrc country.
It pitna facie appears tltcLt the potuer cotrlerrt,d bt1 urliclc -'-it,.1 11t 1;,. Constitution of India is to be exercisecl Iry l;otit tht: t'rtiort ,trt<l tlt,'Stut<.s concurrentlg to ensure uniform "gyootls on<1 sL.rr)i(.(,\^ '. t . !, ; r' rt![ t-'uer the country. The Un-ion oJ' lnrlic: ()r .si.]tr,i-. ( .l/rt()l \r 1),1r ll ( lt1 cxercise pou.ter giUen bg article 24ttA ol lirL (: r,,rstilirii()ri (, ttl,l:tt I t,lrl).,tldent of each other unlike llte lxttL'r r !liLttr, 7,r, ,r',r' '( ('t'( 1t 1t nt l,ist" enumerated in List 11I irr Scht',lrrlt \ill r,l tht, ( ,,f;slii i/i(,r ,tl'Irtdia".
69 97 In Baiju A.A. (10 supraf the challenge before a sinqic bcncl.r of the Kerala High Court was to the legalit_r, of the notice s and under the Kerala Value Added Tax Act, 2003 lor the asscssmct-tt vears 2010-2011 and 2Oll-2O12. The challenge nas madc on the assessment orders issued in connectior-r u,ith thc alsscssrnents gror-Lnd that the concerned authorities did n(rt l'iavc tl-re arnendments introduced to Section 25 (1 ) o1' tl-rc' Iiclalir Valltt: al :tnY time u,ithin five years from the last clate of the veiLi" t cr juri iction to issue the notices and assessment orclers sincc the Adcled Ta,x Act, 2O03 through the Kerala Financc Acts of 101 7 anrl 2O18 notified on 19.06.2017 and 31.03.2018 resp€rctivch' clicl not contemplate a retrospective operation ol tl-re amenderl pror,rsions Section 25 of the Kerala Value Added Ta-x Act. 2003 dcais u itl-t assessment of escaped turnover. In case of escaped tr.lrnovci tbr .lnl reason the assessing authority could cleterminc to thc brst of hi s jurlgm ent- th e. turrrover-whi.ch-had escaped- asse ssm en t to tax rvhich the return relates. As per the last pror,,iso the periocl for c:rrmpletion of assessment was extended up to 3l .03.2016. Rr rlre Kcr:rlar Finance Act of 2017, the period of limit:ition under Scctron 25 (1 ) lor proceeding to determine escapecl tLirnover u'as cnh:rrtcccl Iiom five vears to six years and in the last proviso the extensiorr u'as madc up to 31.03.2018. Thereaftr:r. b.r' the Kerala Finiincc
70 Act, 20 18, in the iast proviso, the extension \\ias macle up to 31.03.201l 98 One of the questions framed b1' the I{erala Figh Court was rvhether alter the Constitution Amcnd.menl- Act and repeal of t1.e Kerala Value Added Tax Act on 22.06.2O17, the State legislature retained ary residual power of legislation so as to amend the provisions of Section 25 (1) through t1-r c l(crala Finance Act, 2018. After due <:onsideration Kerala Hrgh court ircld as follows:
As already noticed above. the ilrrellduents effected to Section 25 (1) cfthe KVAT Act, through tire Kerala Finance Ar'r 20ll', u'ere before the rep{.-al of the KVAT Act with effect fron 22.06.201-7. The provision as it stood then, and in particular the third proviso therero. authorised the re- opening of past assessrnents till 31.03.2O18. The ,urendrnent effected througt. the Kerzrla Financc Act, 2O18, \\'itlt c1Lct irorl O1.04.2018, enlargerl the period for re'opening past assess!rcnts konr 31.O3.2018 to 31.O3.2019. Under ordinarl. circumstances. an<i based on my findings above aLs regards thc effect of the amendnrents lrr-oLrght i:rto the third proviso to Section 25 (1) b| the Kcrala Frnance Act. 2017. rhe legislative measurSs should have sufficed to justifl- a reopening ,)f past assessments up to 31.O3.2O19, noh,i-ithstanding that the amendrnent rtsell was effective only from 01.04.2018. Ho$ever, thc irltcnention of tlrr: CAA 1016, and the conseqrtent repeal of the KVAT Act with cffcct lr-om 22.0(>.2017, has a bearing on the 'legality of thc 2018 amcndmcnt. i\ distinction does exist betweerr the saving of rights, prl ilcges, i rmunitirs irnd li.rbilitrcs under a repealerl enactment, through a savings r:Jirtrse irisr:rtcrl in the new enactm'rnt traceable to the sa re legisltfti\ e 1:ou cr, arrcl an amendment broughl in to a repealed cnactnrent .tIter thc iegisl:rtire poq,er itself is taken away. White tl.re legislativc porrer -jtrstil\ ing botir actious, prior to the CAA 2016, could have beerr traced to Articlc 2-1b ol ortr C()rrstitLltion, read wltfi thr: ralevant entry in the Vlltlr Schedule thereto. the position changed lvhen there rvas a fuldarnental shift in the natrrrc f tlrc ta-r levv and a fresh ct nferment of legislative porl cr to le€iisl.r1c irr r.slt,ct o[ the nerv levy. After the CAA 201 6, the State l,egisl.rtr-lres stoori rlcrrirrltri ol thcir power to legislatt: in respect of tatxcs oll sale crr purch;rst: ot llt,orl:;. fllait \\'as covered under llntr v- 54 of List It of the VIItil Schedulc to thc Constitution, and they w:re instead coriferred rr,ith legislative i)o\\(rs, to be exercised simultaneouslv with the Parliarncnt. in respect of t;u,:s c,n sr.ppl-r, of goocls or services or both. While tlre nclr. legisiative lxru ei coLrlrl -iustity thc inclusicn of a savings clause in thc nc1\- legislation enil( lc(l irl rcspcct of the ner., lery of to<, to save ircc.lle(l rights, pririietcs. irnmrtrritir:s etc. under the erst\tile enacllDcrlt, the deletioir oi ll:rtrr .;.+ of I-ist II automaticallv dcnrrded thc Stal(' Legislaturcs o[ the 1).J',r -'r to furtl]cr
il legislate on the subject ol-tax('s on sale or purchase ol qoods. except to the limited extent retained Llnd(:r' the Constilulion. 'l he por|er to amend a statute being a facet of thc' lesrsl;rti\1' lxrut'r rtsel[, tl']c State Legislature could not have exerciscri a po\\1'r to amen(l tlte KVAT Act, save to the extent permitted, !\'hen it rlirl rrot retain anr resiclual right to further legislate on the subject of ltrxes on sale or I)urcltase of goods. 99 According to the Kerala High Court, after the Constitution Amendment Act, the State Legislaturcs stood denuded of their power to legislate in respect of ta-res on sale or purchase of goods covered under Entry 54 ol List II ol the VII Schedule; rather they were conferred u,ith legislative po\\'ers to be exercised simultaneously with the Parliament irl respect of taxes on supply of goods or services or both. While the ncri' legislative power could justify the inclusion of a savings clartse in the ne'*' legislation enacted in respect of the ne\\' le '"r' o[ t?1.\ to save accrued rights etc., under the erstwhile enilctmcnt, thc trtlncation of Bntry 54 of List II automatically denucled tl-rc State Lcgislatures of the power to further legislate on thc srtl>ject o[ til\es orr sa]e or purchase of goods, except to thc lirnitr'cl estr'nt retained under the Constitution. It has becn ltt'ltl tltrrt tht' I)o\\'cI- to amend a statute being a facet of the legislatrvc l)o\\'i r itst'll-. the State Legislature could not have exercisc<i it port cr tt, iuttt'n<l the Kerala Value Added Tax Act, 20O3 exct'1>t t,r thr' txtclrt pt'rrnissible u'hen it did not retain any residuzrl rirlirt to titltlrt'r lcgisl:rtc on the subject of taxes on sale or purchzrst'oi qtto<is 72 100 An identical issue came up before another single bench of the Kerrla High Court in HINDALCO ilIDUSTRIES LIMI?ED (3 supraf . Frllou ing the same line of reasoning adopted by the previous lrcnr:h in BAIJU A.A. (fO supral it has been held that after the Consl itutior-r Amendment Act, State Legislatures stood denuded of their pourer to legislate in respect of taxes on sa-le or purchase rl qoocls that r\,as covered under Entry 54 of List II of the VII Sched rilt.. t irr,.v have instead been conferred with legislative powers 1o l>t' t,xercisecl simultaneousiy with the Parliament in respect of l erxes on supply of goods or serrrices or both. It has been held as lbl,o\\ s. .. . . . ........Afier the CAA 2016, the State Leqislotrrr,.: ::tor,cl darrucled ol'thetr poluer to legislate in respect of tan-e-s , ,r -\a/( ,), 1)i{rcrr(r-se oJ'goocls, tllet was couered un<Ler Entry 54 of Lisr II .)/ 1/r(, s(,r,tlrlh Scherlule to the Constitution, and they uere irrstr:rrc. r'. trr_i rr,:cl u'tth le:qlslatiue powers, to be exerctsed sinrultr. rrco,isir/ tt'ith the Parlioment, in resped. of taxes on supplg of gloods tr .j{'r i,r..'. ot I )olla. ll.4tilc tht: netu legislatiue potuer could justi-t-il ti,, ;r, /risir,rr o/- .r sauings clause in the neut legislatiot-t errcu:l(tl r,i r( -:,)r ( 1 pl lht, ncut leuy of tox, to soue accrued ights, priuileqt.. rrr rrrurirtir.s. .ttc., Ltn(Ler the erstuhile enactment, the delelit)r ,tl l:t;!r'tt :t1 of l-ist II o.utomattcally denuded the State Legisltt trt, t',: il1r [)t)tt)t:t lct further legislate on the subject of taxes on solt i't /rrrrcira-s,, of goods, except to the limited exte.nt retained under the ( i),t:rrlrulion. 'l'he pouer to amend a statute being a facet of Lhe e tli: ltt'r't' l)t.rrl:t r itself, tlrc State Legislature could not haue excr-cis, ,l t t ; ,L tu r't tt t urrr,-:rul lhc: KVAT Act, saue to the ertent penntl: (i. irr/rL,,r rt titd rutL retein attg residual ight to further ler\islot . o'r tlr,' .lbti,r'l ol-lo-r<,s ott sale or purchase of goods".
1 101 A clivision bo'rch of the Aliahabad High Court in M/s. realization ol tr d vcrtisc'rnen t tzlx r:nder the U.P. Municipalities Act, 1916 on the grolrrrd th:rt rvhen there is no provision to impose such ta-x therc can be no pou'er to frame any by-laws in that regard. The pou cr to levv advertisement tax was traceable to Entn' 5.5 o1' I-ist ii. .,\llah:rbad High Court noted that the U.P. Goocls ur.rd Sc'n iccs Trr,r Act, 2Ol7 canne into operation v'ith effcct frorn O I .07.201 ; 'f Irt' l;.r' lau.s by which the municipalitie s intendecl to lcr,,r, ancl c'ollecl rir.\cs on advertisement were framccl on 12.01.2017 br-rt irtr[-tlis]rt'cl on 19.08.2017 i.e., alter 07.O7.2017 ',r,hen thc U.P.Goocis anrl Scrvices Tax Act, 2Ol7 came into effect Allahabacl High Corrrt also noted that by virlue -of-the Constitution contcxt tlr:.rt Allarhalr:rrl Iiielr Court held that after omission of Entn' 55 ol List II ol tht' \'ll Schedule to the Constitution of India bv thc Constitr-rtion Anr.rr(1rn('nt Act \\'ith effect from 16.09.2016. e\/en the State Legrsl:rturtr rlicl nr>t have the legislative competence Amendment A<'1, [in1n 55 ol [.ist r,l'as omitted. It was in that to levv or collcct talscs .n lrrlvcrtisement which u,as earlirr tlLrlL,) -r r,S lli : li (.\ll) Constitution i\mclrdrrcnt Acl came into effect from 16.09.20 16. 74 available rncter Entry 55. Further, the bench rroted that the po\\rer io ia-\ earlier vested with the municipalities uirder Section 128 (2) (VII) of the U.P. Municipalities Act, 1916. Har.rng been omitted b'.' r'irtue of Section 173 of the U.P.Good:; and Services Tax Acr, 20I 7, the municipalities did not havc the stertlltorv competen( e to lev\,, impose or collect advertisemenl ta-\. Further clarrif-rir-rg ihe position Allahabad High Court hcld ti-rat tl-rc State krgislatur,r u,as invested with the p6wer to make [l.rw,s rn respect of lrxes r'n advertisement vide Entry 55 of List II to the Vll Scheclrrlt: brit the said entry was deleted by thr. Llorlstltution ,,\rnenclrnc..rL r\ct u'ith effect from 16.O9.2O16. TItc Llrrrrstir r-rti<.rrr Amctrclnri':rt Act r"'ide Section 17 amended the VII St l'rerlrrlt' and ortrittccl Irr)tr\, 55 of List II, thus deleting the powcr- {)[ th{] St,rte to Ini,rkc lan -. rn respect of taxes on advertisement. 'lhe r-clor-c, s'her-r 1he Statt ,r as clenuded of the power to make lau s, rt r csl)rct of t.,r-\e s ()n rdvertisement, obviously the municipalir rt,s rr e:-e also divt'stt:rl ()1 thc pou'er to impose any tax on advertist.rt rr n r to'2 'lhis line of reasoning has also been follou t-rl lrr' :: laler division ir,:nr:h of the Allahabad High Court ir.r Jain Distillery Private L mited (4 supraf . In this case, the .\ll, ih;rrr,r11 Higl'r Cot,u I cr, rnrnerl the position as to the comp(,ti'ltc(' oi the 75 Parliame nt and State Legislatures to enact 1au's to impose duties on excise and to lew tax on sale of alcoholic liquor not for human consumption post the Constitution Amendment Act . It rvas notcrl that the express intent of the constitutional change madc vicle tl-tc Constitution Amendment Act was to tax alcohol under tl-rc GS'[ regimc except alcoholic liquor for human consurtption. Thus. alcol-rolic liquor not for human consumption or industrial :rlcohol potable alcohol would be subject to CST las s onlr or non r\ccording to the Allahabad High Court this uttcrtt h:rs l-ree'tr cxpresscd through Section 174 (ll (i) of the U.P.(ioods :rncl Services Ta-x Act, 2O 17. Section 174 (11 (i) ol thc U. P.Good s :,ind Sen'ices Ta-r Act, 2O 17 reads as foilou.s: " 174. (1) Soue as othenuise prouided in this Act, r.trt urtd lrctnt tLrc dule oJ' cornmencement of this Act lrl 'lhe Uttar Pradesh Value Added ?.Lr Acl. J0oli. t',rc r1rl ur respect of goods included in-Ertrg S-4- of the State l-ist ot th( se('en!h S clt t: <l t t lt: to t h e Constitution, ttre lrcrehry repealed."
1 It u,as in that context Allahabarcl Hilih Cor-rrt lrt:lcl lrs lollori's:
"
Since the Stote Legislature did not cttlentltl lo -sot,c' Ih(' { iVA'l'Act' to tax alcoholic liquor not for hurnrtn tun stt tttptiotl. tLt'(' direcl conseqltences arise. First, a consequence orisc's ol ra<-<;qrtrtiort of the clnrtqe in tlte Constitutional scherne , notetl r toLtt'. .Secottr/. llel tnore tlirectht, the State Legislaturc': did rtot sttt.,r' { !!'\',0',' O", ,,,, rrrrl;rrst, lrr-r (n1 etTLl commoditg ex<x:1:t "a[cctltolk: li]ttot .l()r ltLtnlon
76 conslunption". Hence, itt onA case, after the enac:lrncttt of the UPGfiT Act, 2017 and in absence of cutg amendment to Section 174 (l) (i) of tl1-clt Act, there neither suruiues nor e.rists cuiy delegoted power u.titlt the Slate Couenutrcnt, to issuc tltt' inpugned Notifi.aation, to impas€ UPIrAT on ENA.
We cannot help ouer emphasLse the .la1ct that the impugned NotiJication seeks to ouerreach thc Cottstitutionol scherte, as amended bA the 101"1 Constitution Anterrintertt- Bg thctt Const'itution Amendment, the only suruiuinq le.qislcttiue fietd to impo:;e taxes (saued exclusiuely uith the Stote l,egisleurres), frlds menhon in Dntry 54 (a,s substituted). Releuant to our cliscussion, it is onlg with resryCt to "alcoholic liquor for human c<,nsumption". Since ENA is not that, the State Legislature cannot cirtrnutent the Cotts, itutional schente l:q introducitg .l trt-1. o,? rt-s -sale, bg describing it a,s 'non-GST ctlcottol'.
2 In the ultimate analvsis, Alla'rralr;rd High Court while allorving the Writ Petitions declared thilt tl-rt: State had lost its legislat ive competence to enact lar,r,s to impose tax on sale of extra neu tral alcohol (trNA) upon coming rrrto c l'fect of the Constituti,;n Amendment Act. Thcrefore, thr at 1t nrpt to 1ev1,' tax on ENA post Constitution Amerrdment Act n:as ircirl to be ultra uires and irccordingly interfered n'ith. 103 The division ber-rcl'r of the Guj:u'at IIrqh Court in Reliance Industries Limited (2 supra) u,*r , rrin-lilring the challenge to the constitutional validity of Section B4A of the Gujarat Vrilue Added Ta-:l Act. 2003. The ch:.rllcrrrqr s as made on the ground that Section B-1 A n-as ultra uiri's ;r r tl Lrevond the legislative competence of the State under Entrr, 5-1 ,i{ List-ll of the VII Schedrrle to the Constit r-rt jorr. Tl-re challenge u rn rnaric also on 7'7 the ground that Section 84 A u:rs manifestl-v arbitrary and un- reasonable and, therefore, violative of Article 14 of the Constitution of India. In the present proceeding, learned counsel for the petitioners had made it ven' c:lcar that their challenge to the Second Amendment Act is not on the ground of arbitrariness or manifest arbitrariness; it is on the gror-rnd of lack of legislative competence. Section 84 A of the Citqarat Value Added Tax Act, 2003 is extracted as under: "84A. Exclusiort of pentx1 irr s,,rrr. r'rt.ses /J./ NottulllstQttding anAthing contained in thrs Act, ori i.ssttt' ittt rt']ttclt t|rc Al)p{'llQte Aulhoitli or tlw APpellate Tibunal or the Hlqlt (i.'itrl /ttrs .Jrr''('rt rrs cler''isiort ttthich is prejudicial to the interesl of re:Lrtrrrt. Irr .\r)//r.) oller ytroct:edirtgls QtLd an appeal to the Appetlcte Tibututl ot ilLt lltrli' i.'t1t1 ot tlte SuPr(lnle Court ogoinst sttch decision ofthe altltellatr' (li[!lr)iitl it llte ApP.'ll(l|e Tiburtal or the High Court is pendhg, lltt' pertt).i r.,')/'riI lr('lrr'{'r'rr tlt..lat.'of tlP decision of the appellate authoity otld lllQt oi ilit l!)pcl!Qt" 'l'riburtul or tlte date of decision of the AppelLate Tiburtnl turd lltttl ttl tlLt' tlicllt ('otlrt or tlrc dote of the decision of the HiglL Co'1t1 .ttttl l]1.1t t)l Ilt( StiTrrcrtrt: (burt slTotL be excluded in computing the Tteriod tu f et tu'tl tt) if l .s('( llr),? .J4 or section .r'.5. (2) Nott ith,stattding (tttllllitq rrtrttQirtt'cl ttt tltis Act, if anA decision or order under secltort 7.1 rrr -st'r'ltori /5 trttrolt'es an i.s.stte ott tuhich the Reuision AuthoitA or Qppellote Qiltot-.tlt or llt lligll Courl has been uen its dectsion utlLich is 7.trt:jrrrlicrrri tr; llr{' rrla.a.sl oJ reLletnte itl soile other P List II, ngs a on QPp.t(1 tl.., iln)i, CLrt,1 or tlLc.Sirj.,rirrre ftagQtn such decision of the Appeltote 't'ribtttrttl or tlLe ]liqlt (oltrl is Pending, the peiod spent betueen the clote of Iit,' r/r'r rsto'r ttf tlp ,\l4tellote 'filturtal ond the date of the decisiort of t11.. lhtt'tt t't)11t1 ot tlta dolc of tlrc d"cisiotl of the High Court and the d\te of llv' r1i', t.srorr rri lht' SrtPrerrte Courl shaLl be excluded in computing the pcriod t)t htttilttilott rc ferrecl ttt rtt sectron 73 or Section 75". 104 Guj arat High Cor,rrr iitrah'zed the provisions of Article 216-A of the Constitution of lnrlrrr arnd t ht citilnqe in Iir-rtry 54 of post the Cot-rstitutiorr Amcrldmetrt Act' lt may be mentioned that Section 8-1 i\ c:rrn e ro be adde d to tl-rc Gujarat
78 Va-lue Adc cd Tiur Act. 2003 b-v virtue of the Gujarat Value Added Tax (Amr'r.rdmenti Ac:t, 2018 enacted on 03.04.2018 glving retrospective o1;eration lrom 01.04.2O06. Section 84 A provided for exclus orr of tl-rc periorl spent between the date of the decision of the Appellate Tribunzil and that of the High Court as well as the Supreme (lourt in comptrting the period of limitation referred to in Section 7ii ol the saricl Act. Therefore, one of the questions which fell for consrrlc-ratiorl s as u'hether Section 84 A sf the Gujarat Value Acl, jecl j-ax ,-\ct. 2003 r.r,as ultra uires and beyond the iegislativc competc'nce of thc State under Entry 54 of the List II of the VII ScheC trlr:. Aftcr rlrrc analysis Gujarat High Court held as follori's: "t)1) 7'h, Ltttttl :i.l in list II in Schedule W of the Clorr;lilrrir(,rr rtt irrclitt u'rts ttntertdeal to extingutsh the power of Sl.rt is l() l,:r,ir ta-r|s^ orr salt: or purchase of goods except taxes orr lrt, srrlr. ,t,[ l.r't r,,l<,r r rtt products and alcoholic liqtor for humun <tn;sumpliort 'l'herefore, the power to amend ang law u;illi res'nr,,rl to li,t'u (,J tl.y otl tlle sale or purcha-se of goods such as '-irrTiirt.l i..17,lr't 1,.-,ulcl bc saitl to haue been abolbtred u.tith llrr: ,{i-rr,'srrrd irrrrorrirrrt,nl it Entry 54 in List Il in Schedule VII of ll;t (\'r::1rlt,ti:tI ttt lttdit. 91 llttuutrl t1tLttrr our eentest consideration to all the reletant ,sp{'ct-5'. el lhe ntatter, ute haue reached to the corrr/rr.:i,.,r !11 t ertt(1,. ).1(A of tle Con.stitution of Indio does not s(r,( s{ ('lr. rr .!4,1 r,/ !li, \tA'l'Act from being declared" inualid or ttllrr lir,,s i-s lolr.c/ ttboua, afticle 246A of the Constitution rr(1s ins, r.i,r.1 it -tt iii..: l0 )" Con stitution Amend.ment Act utith the solc t,r-rurir''r iir.r pri:ci.se object of subsurttirtg multiple indirect [o-y(] i cu,/ i(] r.,,1/r , i\rt('Lur()tt pou)er lo the Porlia ntent and Sl(li,' l-.',r,::lG:i1r.(, :,) rrlu)o.se "goods arrcl seruices tax" itt ttct',;r,lt,ti,, tt illt iltL t,Cornrtrc:ndationS Of tlrc GOOdS and S('rl r( ('.i ',,r', ( oirrrr.'r/ .:^tcrlrrle uncjer aflicle 279A of the ()rtn:;liltttt,':t tti lnrlrtt. TltL, rery etbject of sttch large scale refornt
ln9 luas to replece numl)L'r o.f trLdirect taxes being leuled bg the Llnion and the Stcte (.)ot:crnnrc: rtt s and to remoue the cascading effect of ta,yes und J:roL,iclt' li;r ct cc.trnrnon ncLtional market for goods cLnd .t^eruice-s. 'l'his ts ctpparent from the statement of objects ctrrd rea.sor-s reft:retl lo by the Supreme Court in Mohit Minerctl Put. Ltd. [20 ] 81 58 (ls7R I lSC/ : l2O191 2 SCC 599. 92. Further sr:clion 1.3 to the Constitution Amendment Act prouides Jbr compensuliotl lt) the States for the loss of reuenue arising ort accotlnl ol tlLe irytlementation of the goods and serzice-s ttt for a pcrkxl of .fiue yr:ars. Thus the entire scheme of the Constitution Ante'rtr.lrntltt Act recogntzes imposition of onlg "goods und -senrict:.s tux" Lurcler afiicle 246A of the Constitution of hdia. The plrcLst' t lt(: 'qoods and seruices tax" is delined under article 3(ttt Qa-\ tu) tit'en ang tax on supplg of goods or seruic:e r.tr botlt excepl l(L{.r-s on l.lrc supplll of alcoholic liquor for huntart corrstLnrt'ltiort. .!ric h sLtpply" cannot be fragmented into dilferertt c()itj:)oncnt:; l)tl ll)t' Stete Legisloture and assume poLuer to intpost utdt'1tt'r1rit'nl t(LY on the sale of goods toithout refere:nu; to ll'tt: (itxtLl:'; itrrl Seruices Tax Council. Such Interprt:ttttiorr tuoukl be cottire4l to the entire scheme as u.tell as the object errd purpo::r' ol thx Constitutton Amendment Act. In Ject the prttr.,tsutt pro..:t,:litlit iitr cornpensation to the States for lhe loss o.l'ret,e.tttc dLl(' ta il!., cLoods and seruices tax utould ctlsct bc. ire:lettant il ih,' Slrrtc Leqislatures are independentlg enlporuerecl to etlocl sttlt's tr.t-t/ ualue odded tctx legislations bg takin -cJ recourse to etliclc )l ttA of the Constitution of India- 93. ln J'rrcl il l/?(' .si.rle Legislature has the power to enoct tL(: ucLlue addt'ri lrr r latrs under anlicle 246A of the Con.stirulion of' htdto us rL,rlrrt:d on behalf of the State' then Dntry 51 of l.ist ll o.l IitL Sct't nrh Schedule to the Constitution tulti<:h u,tts rrrrtin<:d lr llt(' (:,{let7t of six products uhich are outside tlle GST r,egurLa u;rLi be rewler-ed.-redaadqpi*-fue. lrcru fact that Entnl 51 q l)si ll ttJ tLLe Seuenth Schedule utas re:lainecl in -so lar rts- ilr( .sr-\ rrotlttcts are concerned indicates lhat the 5als5 151,v/ rrltrL rtLitlttl tttx enactment is not permissible under ttrticle 21(tA ol' :ltc' r i)r).slillrtion of India. The uociferous or(f1nrcti of lhe Stete ii)tr i)rlicle 246A of the Constitution can sttppotT the en{lcutlcni !)t i)tt)ttisiorl urtder the VAT Act falls Jlat in the J'al:e of the erisr,'rir,, oi Erttnl 5'1 of List II of the Seuenth Schedule to thc (lorr.srrlrrrt'ttt ol htclia uhich sun-tiued the lOls Corrslrluli,,r,.4tr,, irJrt, ' .r "' 105 expressed b.r' the single 1-,t'ni'ltcs of the Kerala High Court in Baiju Wc iu-e in ri-s1;cctfttl agreement with the views AA (1O supra). Hindalco Industries Limited (3 supra), divisiorr
8i) benches ol Allanabad High Court in M/s. Pankaj Advertising (16 supra|, Jain .Distillery Private Limited 14 supral and thc division bench of tlr,rjar:rt I{igh Court in Reliance Industri,es Limited (2 supra). Not onll the Second Amendment Act cannot be traced to Articlc 24t't of tl're Constitution read with Entry 54 .:f List 1l ol the VII Schedrrle, the sarne cannot also be sustained as; a stand alone legislatrorr of thr: State under Articl e 246A of the (lonstitution in thc abser,:c ,rf sirn ultaneous legislation by the Parliamer-rt 106 Lit rs now deal with Section 19 ol tht Constitution Amcndmt 'rt hcr. ri hich reads as under:
I o trt,i 1h star-rding anything in this Act, any provision of alv lan rclatinri to 1a\ or1 goods or services or on both in force in anr. Statc irrrrnccl rirerr- trcfore t]re cofilmencement of this Acl. rvhich is jllc()r)s st('nt rrith the provisions of the Constitution as amentk:cl Ix this..l.L t shrLil rlntjnue to be in force until amended or rc1;calcd b., a compe ( r.it I cgrslature or other competent authori:1. or untrl cripir-irlion o1 one year from such commencement, .",".hichcvr,-r is e.rt Iit r 107 St ct ion l 9 starts with a non-obstante <;lau sc . [t st s that not..i rtlrs;tarnding anything in the Constitutioi-r Arncndrnent Act, anv ir!'.)\-isrorl of ar-ry law relating to tax on goods or scn'iccs or 0Ir rlt force in arry State immecliziterir- bclbrc incortsisti rt ,r ii ir lite pr-ovisions Of the Constitutir:n ;,_-* .,.rnended lorh commen(;- rrrtnt ol- the Constitution Amendment Acr. s,hich is b1' the Corstilittion Amendment Act shall continue to l.lc in forcc. until arnr rrlr:.{i !r repealed by a competent Legislirtlire or other
8l competent authoritv or until expiration of one \.ear lrom sucl] com nlencement, s hichever is earlier. 108 Thus, the purpose of this provision is to proviclc for a s inrlos, or transition b-y suspending invaliditl' of inconsistctrt legislations existing immediately before commencement of the Constitr-rtion Amendment Act for a period of one -r'e:rr or till srtch legislations are amended or repealed, whichever is eerrlier. Tltc objcctive appears to be for a transition to the CST regime l>roltg]rt into lorce bv the Constitution Amendment Act. All thert Sectiorr l!l cloes is to provide a period so as to eliminate or removc :rll lau s irrcorrsistcnt *-ith the GST regime within an outcr lrrrlit ol- ollc -\ e irr- pcriocl. Section 19 does not and cannot be construc(l to t'clipst: the amendrnents carried out in Entry 54 of List II to tlle Vll Scht'rlr-rlc' or confer legislative competencc Lll)ol1 tlrt Stirtt' LeE{islatLlres for making amendments to the VAT Act in resl)ect ()f goo<ls other than the five petroleum products :rtrd alcohrll lor lrLrman consumption covered by the amended (substitr,rted) Entrr 5-1 o[ Li st II . 10!) As erlready discussed above, corlsc(lllence ol- amendment of Entn, 54 of List II is denuding the S1.itt l,egislaturt- c.rf tl're 1;o$ er to le\-\' tax on sale of goocls other thtltt those :rs
u2 provided jn amended Entry 54; inva-lidation of State legislations existing a; on 16.09.2016 leq.ing tax on sale of goods other thal those finc ing place in amended Entry. 5. 1. Sectiorr I 9 does not save or postpones deprivation or denuding of Icgislative competen le of State Legislature for ler,ying tax or r sale of goods other thal those mentioned in arnended (substitut,:d) Entrv 54 of List II. Sr:ction 19 only allows operation and lerl c,f ta-x r,rnder the VAT Act vrhich is inconsistent u,ith the GST regimt for a period of one year cr until the VAT Act is repealed or amended, rvhichever is earlier. This would mean that the State coulcl t ontinue to levy tax under the VAT Act for thc rvirrdori' period of on( \'cill-or till the VAT Act r,,as amended or repealcd to aligr-r it s'ith rirc C-; ST regime, u,hicheve' was earlier. This tratrsitional provision ,loris not e nable the State Legislature to make amendments to r ht: VAT Act in contraverrtion of the amended Entn- 5-1 of Lrst ll I 1Cr At this stage, we mal reler to Arlir:li' )+3ZF of the Constitution. Part IXA deaiing with municipa-lities u as rnserted in t}-re Constitution by the Constitution (Sevcntt lour tlr Anicndment) Act, i9911 rvith effect from 01.06. i993. Articles .l.i.l P to Article 243 ZG romprises of Part lXA, all dcaling u'ith nrrr:ric'iprtlities. Bv the afr,resaid provisions rn r-rnicipalitics ;rrrrl nrr,rnicipal
li.1 administration were brought uncler tl-rc um brella of the Constitution. Article 243 ZF provides for corrtinuar-rcc of existing laws and municipalities. This provision is porz rnateria to Section 19 of the Constitution Amendmcnt Ac:t. Arti< le 2+3 ZF reads as under: 243 ZF. Continuartce of' r'.ri.slirrg larus ctrtd Municipalities:- Notwithstartdiry artrltlrirtcl ttr tltis Part, anu prouision of any latu relatiru to Mttrticiprrlrt ies irt force it a State immediatelg before the cottntencenrett I oI tlte Conslituliort (Seuenty-fourth Amendment) Act. 1(){)). rllriclr is i/rconsislent with the prouisions of this Ptltl. sltctll t'ortttrtrte t() be tL force until,amended or repealed by a conrpt:lt,r Lt L<'clislctture or cttler competent authoity or untiL tltt: e.rlxrrtliLtn t ).1 on.' yettr frorn such commencement, whicheu<:r i,s <'ru licr: Prouided that all the Murririlrtlitilr; er islirrrT irrtrrtt'diately before such commencemen f .shcll u)ntolu( till lhe c.rprration of their duration, unless sooner di.>^.-.^o/r.,r'r1 ltrl a rc'soltttion passed to that effect by the Legislatiue Assernlthl ol tltat State ctr, itt the case of o State hauing a Leglislat.iut' Oorortil. lttl ertch lnuse of the Legislahtre of that State. 111 As per this Article. notuillrslrrrrrlirrrl arr-r'thing in Part IXA of the Constitutionr an_\' provision of liuv rclating. to municipalities in force in a St;rtt irrtmerliatelr. before commencement of the Constitr,rtion {Se\'('n1\ fourth Amendment} AcL, 1992, which is inconsistent rvitlr l)irrt lXA. sharll continue to be in force until amended or rel)('.rlecl b-r' ,r conrpctent Legislature or other competent authorit\. or until t'xpiratrotr of one vear from such commencement, rvhiclrr:r'er- i-s erir-litr
8-l L12 ln Bondu Ramaswamy (6 supra|, Supreme Court was considerirrg challenge to acquisition of land for formation of Arkavathi La-yotrt on the outskirts of Bangalore city by the Bangalore Development Authority under the Bangalore Development Authorit,r, Act, 1976. It vvas in that context Supreme Court considered the question as to whether provisions of the Bangalore Development Ar-rthoritv Act, 1976, more particularly, that of Section 15 dealing with the power of the authorit5r to draw up scherles fol deveiopn-rent o[ Bangalore Metropolitan area became i,roperative, r,oid or rvas impliedly repealed by virtue of Part IXA of the ConstitLrtion. Supreme Court held that Article 243 ZF is a provision en:rblirrg ctrntinuance of any provision of law relating to rnun icip:rlitics in spite of such provision being inconsistr:nt with tllc provisions of Part IXA of the Constitution for a specifir:d pcriorl ol olrc -\'c:tr or until amended or repealed, whichevcr is e:rrlicr. Ir u':is helcl as follor,r,s: 'A'rv rjtiilutc or pro|isir.rrr rhereol which is inconsistent with any consti utionai provrsloD rvill be struck do$"n by courts. Consequently, if BDA f,ct or anv r)rovision of the IIDA Act is found to b€ inconsistent with ar.r] ir o\'isrorr ol l'art l,\f (,1 th(. (]oltstitution, it $'ill be struck down by courts;1s vloiiltt\(,,)l tht'lli)ltslrtutlolt_ ln regard to any provision of any larr, rtlatirr$ to r uni.ipalirrt,s. Alticle 2432F suspends such invalidity or postp(,ncs tl)r- rr't\.riirirt, l,:rr' .r pt.r iorl oI onc year lrom 1.6.1993 to enable the crrmp.lcDt l,r'gislrr'rur. t,) rcllo\.c the inconsistenc5 by amending or rcpealrne slr( lr I..\..'rcl.rlinq to nt rr rt rciltirlities to bring it in consonance \^tth the pr^'isrol]s oi I',irt l\/\ ()i 1hl' L-rrn<llllrtion."
ti5 113 As has been held b1' the Supreme Court, Article 243 ZF suspends such invaliditv or postpones the invalidity for a period of one vear to enable the cornpetent Legislature to remove the inconsistenc_r" bv amending or repealing such law relating to municipalities to bring it in consonance with the provisions of Part IXA of the Constrl ut iun. L14 On the abovc an:rh sis s'e have no hesitation in holding that Sectior-r 19 of the Constitutiot-t Amendment Act cannot be understood or canrlot bc construcd as a source of legislative power. lt is also not a savurq pror-isiotr in respect of suspending legislative compctence to amtt-rcl thc VAT Act. This aspect was gone into br' the G r-r jrrrat H igh Court in Reliance Industries Limited (2 supra) ',r'herein it l.tas been held as follows:
Scction L() ol iht Constitution (One Hundred ---* and-Eirst) Amendrnent AcL. 2O16 cal also-nolbe-a-source-of powcr to amend thc Statc VA1' lau,s. First, the power to amcnd ttnrlcr Scctiort I (l is otrh' lirr a period of one year from the commcttccrncnt of tht ,,\tn('tr(inlr.-nt Act. 115 Evt'n in Sheen Golden Jewels (India| Rrt. Limited (7 supra) relied trpon b-r tlre S1:rtr'. lctilrrecl single judge of the Kerala High Cor-rrt irelrl as foilou s l]1 \,rrr I(,r Lrs (,\:ln)r'( i,,,1lr s( ( tlorr l() of the cA Act anri Sec:trrrn l; i ,,t llr(' hSCSI :\r' :1, ,.,r, : , Itr.rttdillcs that anv inconsistent liru r-t'i:rrinq 1,) liL\ ,)rr rir;oris .rr i ','r'r ,'s r!1 ,i)rce in anl' State bclor(l l6.orl.-l{,1r) lrlrc.o;urDeDc(,r:r('rri ,rti , ( i i, llsh.tll contilluetobe in forc. ''rrlltil iifir,'r,l, rl ',r' r'r:l)r:alt-rl lrr .r ,,rrr,,:, r,r I.,'gisl.lture or other comp(ltent ;illtjlijal]\". :i,) tlrr. Sril1.'s \\r'r,'. in:ir r,-,t1rjri,l 1,) atrlcn(l tlte inconsistenl
86 lau,s t(, brir)g rhern in harmonJ' with the CA Act. Otheruise, the States must rsllcal titel]:. And the] were given one year for achieving this. If the States lr) rrr.itlr.r, tlrosc inconsistent acts stand repealed- 1.1 2. I lcre. thc States acted; they amended a fer.,, ilconsistent Acts, 'l her also repealed a few more. As with the I(VAT Act, the rcpeai, if it \\erc. I as rt()t |csulted in its abrogation or annihilation. So the operation of the so c;rlllcl srinsct clause (as provided in Section 19) has not denudcd the Srirle s p(,\ er to enforce the KVAT Act in its amended form- The Act remaired, ,.r'illr its remit reduced, though. Thus goes out oI reckoning the p.'titiorrers ilrlothcr asscrtion: that wi[h the repeal of the enactments. thc procedural mcchanisn.r has disappeared. It has not, The prospectivrn ol the anrr.ndmcnr undisputed, what remains to 6e examined is the State,s Ix)\\,er to savt u,trat had happened belore the CA Act came into force or. r.nore precisell . until one ycar alter that Act came into force. tndeed, the CA Ar r ,ril|rr cd lhc Stare Acts in the same legislative field to coexist for one -\ citf. t trj ,,r |)trli,$ ltt.riotl. l1.i So ltlrust trold that Section 19 of theCAAct is- trausitioDal as r'L r r.,\ ir.r',. i.,ecrr-.ir repcaling clause simpliciter, not a saving cla{rse 'Nothir ! rL!rr. l'lrat .iob of saving is done by Section 174 of rne KS()ST Act Well anrl rrlrl\'. So the repeal las i1-bt, -qs-Sectl-on 174 elaborates, allccted -th. pr .\ i.r r s r)])erarion of the amended Acts oi iepeatea Acts and orders or arr_\1hinq cirri.. tlorre or suffered thereunder." In other words, the rcpeal has not al ecte,i -arrr right, privilege, obligation, or liability acquired, accrrrctl or jucrrr rt'rl r-rrrrlt'r the amended Acts or repealg{. Acts or orders undcr sltch rr'1re.,l .ri ,,r .r:rrlrIrIr:,cl Acts." Nor has it affected "anJ' tir-\, sur-r:h,rlqc_ pcrralt,,. 1r;r,r. rrrt.rcst as are due or may become due or anv lbrfeiturc or lltrrisirni,;rr rllrrlrr('(l oI inflicted in respiect of an1, offcn,:e or vroi:rtrr:tr ( ()nrirt 1','il ,,r, ,rrr.it lltc yrrovisions ofthe amended Acts or rcliealed A(.ts'. L 16 Tl-rus. according to the Kerala High Court, Section 19 of the Constittrtion Amendment Act is a transitional provision. It is not .i s.r\ ing clause. States were required to amerrd tltc inconsistent 1.1\\s to bring them in harmony with the Constitutiorl Amenclment Acr. If that was not done, then the States ri.erc required lo r1.irc.1l sllch inconsistent laws. For this a s.indor,r pel'iod o on(' -\ ( ar \vas given. If the States dicl neitlter. thosc inconsisl cnl l.tu s n ould then automatically stanci repealecl.
87 tt7 'l'herelore, lrom the above analysis u'e can safelr conclucic thzrt Section l9 of the Constitution Amendment Act is not a s()urcc of pou,er to enabie the State Legislature to cnact thc Second Amendment Act, which is clearly inconsistcnt u'itl-r tl-rc Con stitr rtic-rn Amendment Act. 118 Wc have already noted that the Consriturion Anrcnrlrncnt Act, more particularly Sections 1 to 1 1 and l3 to 20, t:irrnt- irrlo lorcc on and from 16.O9.2076. Therealter I'arlianrent t'rrirt:te rl tlre CCST Act and other related enactment s, most pnrr isions of strch enactments having come into lirrcc on an<l 1l-orrr O I ()7.1017. State ol Telangana also enactcd the T(iSl' Act \\Ihilr nrirloritv of the sections came into force on 22.06.2017, Scctior-r 1 7-1 ol the TGST Act which provides lor repeal and savir-rg c?1orc into krrce on and from Ol.O7.2Ol7. Section 17.1 of thc T(}ST -\r't r-t::rris :r s unrier: '' 17.1. llepeal Attd Sauing:- (1) Saue as othentise prctuided it llrr.s,Ar't. orr artd from the date of commencemeri of this Ar.:t. (i) The Tektngana Value Added Tax Act, 2O05 (Act 5 of 2O05): except in respect of goods included irt the Etttttl 54 of lhe State List of the Seuenth Sclecluk: to tlte (i]rr stilu lion, {ii) T-he Telangana Entertainments Tax Act, 1939 (Act X o_f 1e39); ItLr t The 'felangcuta Tat ort Entry of Motor Vehi<'les irttct Local ,'1n-a.s ,4cl. 1996 (Act 26 of 1996);
8li (iu) 'I'he Telangana Tax on Entry of Goods into l.ocal Areas t ct, 2OO1 (Act 39 of 20O1); (u) 'l'he Telangana Tax on Luxuries Ac4 1987 (Act 24 of 1987); (ui) 1'he Telangana Horse Racing and Betting Ttt-r Regulations. i358F (Regulation XLD{ of 1358F); (uii) 1'he Telangana Rural Deuelopmertt Cess Act, 1996 (Act 11 c'f 1996N fiereafter referred to as the repeale:d Acts) are lLerebu repealed. (2) The repeal of the said Acfs artd tlrc antendnteru o.f the Acts specilied in section 173 (hereafter refened tr. as ".suc/r amenCment" or "amended Act", as the case meu be) to the extenl menlioned in sub-section (1) or secliorr I 73 slnll not- (a) reuiue anythittg not in fon:e or existittg ut tfu: :.irrc ol such amrmdment or repr:al; or (b) tffect t\e previous operatiort of the amended Acts or repec.led Acts and orders or anythitgl rl ulg done or su ff<'red there tnder; or (c) affect ong right, piuilege, obligcttion, or liabiltttl ttcrytired, accrued or inanned under the amerrcled Acts or rcpealed Acts or onlers under such repealed or atnertd.ed Acts: Prouided that ang tax exemption grantted as qn irtct:rttiue ogaitst inuestment through a notificatiort shall nol cottlittttc rt.s piuilege if the said notificatiott is rescinded on or after the appointed dag; or (d) ,tffect anA tax, surcharge, penaltly. fitte. ir ere:;t a:; ttre due or tn,aA become due or any forfeiture or ptLrtislurrcr I i t'r lrt'tl or itJTicted in respect of ang offence or uiolcttiort comntittecl ogrrirrsl the p, iouisiois of the aiiended Acts or repealed Acts. or (e) c{fect ang inuestigation, itquiry, ueriJicotion (trtrluclitg sctut irty and audit), assessrr.erl, proceedings, adjudictttiort tutd any cther legal proceedings or recouery of offears or rentedq it resp?ct of any such tax, surcharge, penctlty, J rc, interest. irlltt, priuitege, obligation, liability, forfeiture: or puri.sltntt:nl. a-s aforcsaid, and ang sttch iwestigatiort, itquiry. t', nllt utiott (hrclrtding scnttiny antd audit). ass(,.ssril€nI prctc<'t rlin qs. adjdication and other legal proceeditTgs or recouery tf- rtrr c'rrrs or rernedg may be itstituted , corttirtuerl or enfor<:ed., cu ttl r uty
lt9 such tax, surcharge, pendltA, rttrc. inlerc-st. for.feiture or purtishment maA be leuied or inrposed rrs if llie.>^e Acts ltnd not been so amended or repealed; (fl alfect any proceedings itclttdirtgl tLtctt relatitg to cut appeaL reuision, reuieu.t or reference, instirrrred bt _fort,. ott or after the appointed day under the said amerrclecl AcIs or repealed Acts and such proceedings shall be corrtittrterl uruler tlte said amended Acts or repealed Acts .rs if tltis Act lrcrl rrot r.ome into force and the said Acts had not been arnetvlerl or rt pealed. (3) The mention of the partianlar tnatters reft'rrer1 to itl sectiotl 173 and sub-section (1) shall not lte ltetk.l to ltre.jttrlice or affe-ct the general applicatiotl of section S. 8.4, 1r rtrtrl 19 of the Telangana General Clauses Act, l89l (Act I ol- 1891) tuith regard to the effect of repeal". 119 Thus, as per Section I7.+ (I) (r) thr, \'r\T Act stood repealed with effect from 0l .O7 .2017 ('\c( l)l t'(.sPect of goods included in Entry 54 of the State l-rst in tlrt' Suventlr Schedule. When we refer to Entry 54 of the Statt I-ist i.L'., List ll it means the entry as it stood on 01.07.2017. \\'r' hrrie :rlicLclv noticed that post the Constitution Amendment Act. [']ntrr'5.] ol List [[ has been substituted whereafttr the field of lcgislrLtion r.rnclt'r the said entry is confined only to taxes on thc sale ol' 1;etr-o)clrm crude, high speed diesel, motor spirit (petrol), natLrr:rl qrrs. :Lvi:rtion turbine fr-rel and alcoholic liquor lor hLlnr;rrr constrrnption; further claril-ving that this would not int:ltrrlt sirlr' ol srrch goocis in the course ol inter-State trade or comnrcr('c ()r s:rl(- irr tl-rc course of l ir)ternational trade or commerct' o1' sr[:]r qr)ods. 'l'hcrefore, In tcrnrs ol Section 174 (1) (ii ol the l'(is l A('1. thc VA'l' Act stoocl
9t, repea-led \1'1th effect from o1.o7 .20t7 except ir. respect of tire goods covered by the amended (establish,:d) trntry 54 ol List II 120 A-s a matter o[ fa.ct, we may observe that the very presence of Section 174 (ll (i) in the TGST Act buttresses the stand taken by the petitioncrs 141 ln Sheen Golden Jewels (India) hrt. Limited (7 sqp'ra) tl:e rlur:stion };r'iort' tlrl single bcnch of the Kerala High Court was '"i,hether- tirc Sttrtc hacl the legislative competence to enact Se(rtiort 171 of thc Kcrala Goods and Services Tax Act,2Ol7 and save the past tir-\i-LLi()n events u'hen Entry 54 List II stood omitted perrnancntl-\ u rllr r.lfcr:t from 16.O9.2O1. 6. We may mention that Section 17-1 of tlre lr.er:rla Goods and Services Tax Act, 2Ol7 is pori rnLttt,tia t() SL-clion 174 of the TGST Act. The Court was called r-rpr.rn ro cxarnine constitutional validity of Section l7-+ ol thc lierirlir ( ioocls illrd Services T:x Act, 2Ol7 oo the anvil of Section l.l of tl'rt: Clr-rrrstitr-ttion Amendment Act. It was contend<'d that Stal r' hi tri no lcgislative po\{'er to over ride Section 19. Kerala Hiqlr C,rrrrt 1oo]< thc vrcu, that while Section 19 is a transitio nal provisiorr: thc jolr of saving is clone bv Section 174. Though Seclion l 7-1 )rrrs rept zrJecl the Kerala Valur: Added Tax Act,
()l 2003, the repeal has r-rot aflected the previous operation of the repealed act. In other u'ords, tl-rc repeal has not affected any right, privilege, t>blieation liirbili$' acquired, accrued or incurred under thc repe:rled act. [r-r the above back drop, single trench of the Ke ralzL I I is]r (lourt rr' jectcd the contention that the State lacked the competcnce 1o cr-rgraft Section 174 into the Kerala Goods and Serviccs 'l'rt-r ,\ct, 201 7 and accordingly upheld constitutional virlicl itv of Sc'ct iort I 7 i t22 We see no conf'lict or contradiction between Section 19 of the Constitutiorr Amenrlmt'nt .'\( l and Section 174 of the TGST Act. While Section 19 lras clt'lerri'cl invalidity of inconsistent legislations till sucl'r tirnc those .u ( ilrlrended or repealed or for a period of one vear rvhichevcr is eat-lier. Seclion 174 of the TGST Act has repealcd ?tmonsst otht't- t'l'titctmcnts the VAT Act with effect from 0 t .O7.2O 1 7 cxceJ;t in t-r'spt'ct of goods covered by the substituted Entrr 5-l of List II. 'l'h rrs Se'ction 174 of the TGST Act is in consonancc u ith Se't:tion I() oI tlrc' Constitution Amendment Act. The above position onl-r sul)l)i)r ts the case of the petitioners that the State sas dcnucled of ils ,'onrpr:tcnce to legislate on GST OI- after 16.09.2016 arrd ct:rtainlv rlttr- () 1 .O7 .'2O17 .
92 Rcpezrl ol arr er-ractment would mean that such an enactrnent is e'i:rsed frori the statute book; it would rro lr.rnger be in existence. This aspect uras gone into by the Gul arat High Court in Reliance Industries Limited (2 supra). It has; been held zrs follou's: ''63.r' ffet1 of re1rcal at common lana-Repeal obliterates tlte slotl (, a.s ir it has neuer been enacted: 68., (lrt,'lt:r tlu' corntton lau.t, a statute afier its repeal is conll.lleteltl oltliteratecl as if it has neuer been enacted, except a-s l.r I/le lr-,i,1.sfl( Iior?.s past and closed.
11 Clolt:s otl Statue Law, Vn Edttian, at poges 411-412 sl(rle j rhd Tntrciple as urtder: "Wl,crt ctn ,\ct o.f Parliament is repealed, said Lord Tenterdcn Itt Sl,trer:.s r,. 1-1lisorr 1829 9 (B&C) 75O,752;7 L.J,K.B. 335 it rrrrrsl l.re cr., r r-s ir,k:ri,r/ (except as to transactions post and closecl) as if [t lruri rrt t't'r cristed. That is the general rule'. T tdal C. ,/. ,st.?te.s ;/ri, r,rcr,plion more toidelg. He sags (in Ka11 u. {}ooautin lrlANltt INO'|/ O0O1/ 183O : 183O 6 uing 576 ; I Ll CP 21)), TlLc el'1,:ct of repealing a stahtte i-s to obliterate it crs cotttl-'letel!! .tt'otn tlr: records of tLe Parliament as if it had rteuer becrr ;:rrss,,c/; utrl it rnust be considered as a lanu that netter e-\:i.st.rd ,?\ccpt .lor tlrc purpose of tlwse action which tl'ere corrrr'tenc:crl . ltrosecuted and concluded whilst it uns art existittg kut,..' 63.) llertttio:t on Saturday lnterpretation, 6th Editton, at page 276 :.r;tlctrns tlLe t,[fect of repeal as under: " L.l.ft'tl oI r,:lx al: 4l rrlui:,r:r ioii 1l.,.,1 n,1,tcctl of an Act makes it as if it l'trtcl ttcittt f211,, 1:1s', t)i t). | ) /7)(, er.s post ond closed,.... i i , t -. , . i , : : i ' ; . r , , .r .r',' l1lt,r tlrc repeal in purytortt,tl r,\€,f ! r../,:,' jr is1,,1 ,il ,i 1 : . t-,,1 tij{iiitLl." t,( .r .1 -,, , i,,,, lir,irr./t of the Supreme Court itt iltt't-u;,,rt; 6r'.,1 11,1;,, .: ' ; .r ;.. , ll.rrort u. Stete ,:,.1 l:;t)|1 . t:t.
9:l MANU/SC:/0020/1951 : AIR 1951 SC 128 referred to a passage fronL the Crauford's book on Statutory Construcliort uthich reads as under: ''11 i.s rr,<,i 1 settled thot if a statute giuing a special rernedy is repealerl ttitlnul. a sauing clause in fauour of pending srzits all suil.s rnr{sl stop uhere the repeal finds them. If final relief hcts not beert qrartted. before the repeal Luent into effect, it cartnot be after. tf a crr.se is appealed, and pending the appeal the lau., is clmnqerl, the appellate court must dispose of the case under lhe luu., irt .force tuhen its decision was rendered. The effect o.f the reltetrl is to obliterate the statute repealed as completely cts if it lrctcl rtct,er existed, except for the purposes of those .r.rion-s or .srr it-s tt,lriclt utere commenced, prosecuted and cortcluclecl rlhile it u,rr.\^ .rr1 existing law. Pending judicial prc:<:t'r:dirt91s Itaserl ul.torr e statute cannot proceed after its repeal. l'hi.s nrk: lrtlrls trrtc ttrrtil the proceedings haue reached a finctl jutlgrru:rtt in lltr: t'ortr1 of last resort, for that court, when it cornes to .uurour('(' ir.s clecision, conforms it to the laut then existirtg, ctrtrl rrtay tltt:re.ft:re. reuerse a judgment uthich wos con'ect u,hert prortortrtcrtl irr tlrc sttbordinate tribunal from u.thich tuhence tlrc a14x'rtl tt'trs takery if it appears that pending the rtppea! ct -strf tul{, rllrrclr rr.ras necessary to support the judgrrtent ctf tlrc Iouter cotrrl lr.:.s been withdrawn by on absolute repeol.' Q:6OI) (emphcLsis st L 1 4tl ie cl ) 65.5 .,/rr.sti<'r, G.P.Singh in his Pinciples of StatutonJ h Lte4trt,l crl i<tt t. 12n, Editiort, 201O, while exarnirtirtcl tlrc (.on-sequ (,n (.(,.s o.f repeal has stated as follolus (at page 695): ''Llrtd<,r llrc cornrnon laut ntle the consequences of relx:al of a -sr.rttll(, erc u(.ryJ clraslic. Except as to transactiorts lr(.st or.7 c/rl.ser/. rr .statlrle after its repeal is as completely obliteratecl cts i.l' it lurd rtcuer been enacted. The effect is to destroq alL irt'lu.trtte iglts arrl cr1l cnuses of action that mag lvrue rtriscrL urttl<'r tlte rept,aled stcttltte. Therefore, leauing asir/e llte crr-sr:-s rL'ltere 1trocecd L-t1s were cotnmenced, proseatted cutd brotLc1ltt to tr.lrrtalitrt before the repeal no proceeding under tlu: rept'rtlecl -srarlrt(, can lx' tontrnenced or continued after the rept,ttl.' 63.6 l'lttt (4)ex coutl in Mohan Raj u. Dimbesu;ari .Snikia, M.\NL|/ S(:/ ti64 I / 2006 : AIR 2OO7 SC 232, has quoterl the abttut, ltrtssttcy:, utith approuctl in paragraph 23 uhiclt is cytoted belor L':
91 "
It i.s tl-otD uell settled that such Repeelitlg Act sl:.ctll be constr ted to haue not taken anaay the accnted ight of tt persor.. In G.P.Singh's Pinciples of Statutory hTtetpretation, (1Ottr Edn.) 2006 at page 631, it is stated: "Under the common laut rule the conseqtterzce-s o,f repeal of a stcttute ate uery drastic. Except as to transactiorts past artd closed, a statute afrer its repeal is as completely obl,iterated as if it had neuer been enacted. The effect is to destrog ail inchoa te ights and all causes of actiort that ntay lrctue iserr under the repealed statute. Tlerefore, leauing aside the cases uhere proceedings were ammenced, prosecuted and brought to a firnlitg before the repeal, no proceeding urtder ti'Le repealed statute cant be commenced or continued ctfter tlrc repeal'.''
7 The aforesaid principle is reiteratecl irr tlre (lonsliluliori Berrch decision of the Supreme Court in lhe crzsc Ltf Kolhapur Canesugar Works Ltd. u. Union of htdia MANLI/ SC / C060i )OOo : [200r)] 1 19 ELT (Sc).
8 Thus, at common low, a stafitte become r?on-exisferul o,l its repeal, unless saved by some sauing prouisktn." 121 Question which therefore follo\l's ts s,her-her ri rcpcaled act can bc amended? Or to put it a little difft:rentl\. ciut a repealeri act be saved by the General Clause s Act, lB97 or b.r'the Telangana General Clauses Act, 189 1? 125 Much reliance has been placed b1 the le:rrned Advocate rieneral on Sections 8 and 8A of tl-re Telangal:i (lttreral Clattses A:t, 1891 in support of his contentior-r that desplrc r.c.pearl ol the VAT Act, the State had the competcncc, firstl-r', ro prcmulgale the Ordinance and seconCl-r', to ellercrt tht' St'c rtnd Amendment Act. According to Section 8. u'here anr- Act rt pcals
95 an,y other enactment, then the repeal shall not clTcct anvthing done or any offence committed or anv fine or pcnarltl incurrcd or trnl' proceeding taken before commencement of tl-re rcpealing Act; or reviving anything not in force or existins :rt the time u hen the repeal takes effect; or affect the previous operation ol any ('nactment so repealed or an-\rthing dlrl-r' rlonc or srri'ltrcrl under .rny enactment so repealed; or affect itn\- r-reht, privilege, o bligation or liability acquired, accrucrl or- irrcL rrrc<l unrler any cnactment so repealed; or affect any fir-re , pcr-ral1-r. forieitr-rre etc, incurred in respect of any oflence cornmittccl i-rncle r any tnactrnent so repealed; or aflect p rocccding or remedy ln alrI \ irricsiiqirtiorr. legal respect of anr such riglrt. privilcge, obligation, liability, fine, penaltv, forfeitr-rrt' or' prrnishnrt'nt and an,1' such investigation, legai proceecling or rt'rncrl_r' ma_v be instittrted;'-corrtirrue*-or ' enforced ancl anv srrch lirre. penalfi'; ftrrfeiture or punishment may be imposecl irs r[ 1lr,' r't p<,aling Act lrrrcl not been passed. I 2tr Section 8 of the Telalglrna (iencr:rl Cll:rrrst's Act, 189 I is similar to Section 6 of the General ClaLisrs Ar:t. l8()7 )'27 Section 8 A of the Telang:rrr:r ()cnt'r'al ('lar-rses Act, 189 1 sa1-s that where any act repeals anl cn.rctment lrr rrfiich the 96 text of a ny previous enactment was amende d by express omission, insertion or substitution of any matter then unless a different intention appeers, thc repeal shall not a-ffect continuarrce of aly sur:h zrmendment made bl the enactment so repealed and in operatior-r at the time of such repeal. 128 Article 367 of the Constitution of India speaks about the interpretation of the Constitution of India. Clause (I) of Article 367 is rr:ler,arrt. lt savs th.lt unless the context otherwise requires, the General Clauses Act, 1897, sttbject to any adaptatio:rs ancl modification s that mav be made therein under Article 372, shzrll applr. for the interpretation of the Constitution as it apples for the 'interprctalion of an Act of the Legislature. t29 Guj:rrat llieh (lour-t in Reliance Industries Limited (2 supra) e;<amine:cl this ;rspect as s"ell ancl held that General Clauses Act, 1897 a1;1>lies onl-1' lor interpretation of the Constitution br.rt in rcspccl o[ othcr matters, such as, savings in the case of repeal etc s'hrch arc unrelated to int€:rpretation may not appllz b,y virtr-re of Article 367. Section 6 of the General Clauses Act, 1tt!i7 or Sc.crior.rs B/BA of the Telangana General Ciauses r\ct, 18t) I u'orrld ;rppl-r' onll to repeal of an enactment. A Constitulion Aln<,'nclnrenr r\r:t is rrot or cainnot ltr: tcrmed as an 97 enactment. Therefore. bt-r'ond u'l'rat is stated in Clause (l) of Article 367 of the Constittttion, provisions of the General Clauses Act, either the Ct-'r-rtrirl Act or thc Stzltc Act, u'ould not apply to the Constitution, includir-rg the Constitlttion Amendment Act since a Constitution Amentlnrcnl Ac:t is mirck' bv the Parliament in exercise of its sor,ereign po\\'ers trndcr Article 368 of the Constitution. lt has bet:n hclrl as Ibllou's
Applicability of thr' (icucral Clauscs Act. 1897 lor the interpretation of the Constituti<>n: 7l.l Article 367(1) of tlre ('onstitrrtiorr stirlcs th:rt the General Clauses Act, 1897 (subjcct to lhc ilditl)taliotts atrd mrtclification made under article 372) shall apph for tirt' itrtcrlrt ('tiit iorl of I he Constitution. The relevant exlract ts:rs utrrlet "367. Interpretarion. {l) Llnless tlr(' ('rrIIte\t othcrwise requires, the Generarl Clnrrscs -'\t't, l8()7, slritll, sultject to any adaptations and rrocli[<'atiorr s I h:rl mar- be made therein under articlc 37J. irppiv lbr tht' uItcrpret.ltion of this Constitution as it a1;plics lirr thc intt'r Prelation of an Act of the kgislature of tlte Domitriotr oI ltrcltit
2 Thus, the (icrrcral Clirust'Act rtpplit's onlv for the interpretation 6f -Cons-titiltion. The Ceneral Clalrses .{ct deflnes various-tefms-in- section 3. Thesc rlcfinitions u'ill irpPh lirr thc interpretation when these words are t'mplovcd itr thc ('ottsritution. Apart from the defrnition, section l6 (lx)\\'cr 1o a1;point to ittclttdc l)o1ver to suspend or dismiss), section 2I {l)owcr to rsstlc to itrclude power to add to, amend, vary or rescintl notilttlttiort. ,rrtl,. r's. ltttlcs or byeJaws), etc., which are general rules ()l c()nstrtr(li()u irtrrl rr,hich are otherwise in accord with ltre cornrnon lau ttt:rv also .r1rph' for the interpretatioo of the Constitutiorl.
3 Thercfore, Perlr:rPs, tlrc olhcr Inirlt( r's sttclt as the savings in the case of repcal (scction lr), rtriviti oi tt irt'.rl urrilctnlcnts (section 7), construction of rt'lerctrtcs to tll(: r('l)cill.{l el)ltclmcnts (section 8), continuatior.t o[ trrrltr issttcd ttnclcr I l]e r ( p('al('(l altactment and re- enacted (section l-ll. t'tc.. \\'hit'h rtre rtot t,lr1r'<l l() illterpretation may not applv bv virLLtt- of rrrticlc 3(r7. 98 7 1.4 F"rrthcr, section 6 applies only to repeal of an enactment. En:rctn t:rrt is delined under section 3(19) of the General Clauses Act to incl udc regulation or zrny provision contained in arry Act or regulat ()n. Horr.ever, Constitution is not an enactment. 'fhe Constjtution is su1:rerne :rnd is, in fact, the foundatjon of ali the enactnr c.nt. 'lhis has l:een observed by the Law Com:nission in its 60th Rrport on the Gencral Clauses Act 1897 in the context of scction 8 {ccin ;tru ctior-r of refcrences of repealed enactment). The relevant extract of tbc reporl. is as under: " l . ilo tilfect of section 8 on article 367.-Will section 8 of the (ierrr:ral ()lauscs Act, which provides that \ihen an enactment is -t'pealed and rc-enacted, references to the old enactment rvil irc constrlrt'd as rcferences to that, re-enacted one, makc irir. cljlli rrncc.) \\''c rlo rrot think so. it should be not,:d that the urrris rLrrlcss tllc colttcxt otherwise requires' (in article 367) rr,..r1r tll.rt thr' (ir.rreral Clauses Act, section 8, is to be trr Irrrl,'rl Lr c-r lrl its tcrms, section 8 of the General Clatrses .\r ' rr ill r)()t al)l)l\ to thc Constitution, because expressron '('r'!actm( nt rrvhrch ocr:urs in section 8) would not take in the ( o rslilulion. i.hiclr rs not arl 'enactment. ftE Constitution is su ).(,n( anrl is, in lact, t.l.e foundation of all,enactments. " 7l.J il.rrrs. s,.:cti,.rn (r of the General Clauses Act 1897 qill not applv to tlre (lr rst jtrtriorr i( ortrirn r.'ieu, taken by the Allahabad High Court in thc , . sr: ri F:uz;urrl r,. I,loh:rn Singh, MANU/UP/OO18/ 1968 : AIR l(t(r8 \ll b7 i7 l). llorve\cr. no reasoninB has treen given to ailph' se('ti()r) t) of the tierrcrirl Clauses Act, 1897 to the Constitution). 71 .0 "h, aLor r' prinr:iplc about the non-applicability of the Gencrai (llaus,rs Act. ltl()7 is relevant and applicable even to thc Consi trrtiontJ Arnt:ndnrent Acts as they afe made by the Parliamenr in err rirse rf its trrrrstitucrlt powers under article 368 and not in c'reriis. of rrorrn;rl Icgislative powers undet article 245 of the Consl lt Ll t roll
7 "hc qrr(.sIion irs to lvhether section 6 applies to the Constitution is rcllr iirrt 1o rlett'r minc u hether after the repeal of the entry in thc lcgislltilc L1st. tlrc lrrrvs m:rde in pursuance of such legislativc porvers c;ur bc save d. That provision has pre-seRtff been maale under section 19 ol thc (lonstirutiolr {One Hundred and First) Arnendmellt Act, 20l1). 'l'ltlls c{)n-tc..luiJlv also section 6 will not appl1, 16 the l>rescnt CitS(, 130 Orrct' it is hckl that the VAT Act stood repealed u.itl'r el-fur:t tl-,>in 0 r .07.2() 17 cr.cept for the limited categories of goocls specifie(l in s,.rbstitrrreri Enrn' 54 of List II, question of amenclins
q9 the repealecl act ir) resl)ect of those goods by virtue of the Seconcl Amendment Ac1 u'otrlcl not arise r31 of (Jrrlinanc e since it was Thor-rgh there is no challenge to the Orclinancc, nonethelcss \\'c rna\: also examine the same since it is thc contention of the State that the Ordinarce was promulgatecl during the rr indolt' period ald the subsequent Seconcl Amenclmcnt .Act is given eflect to from the date of promulg:irnation of thc Orrlin;in( ('. thercl)\' making it a valid piece of legislation 132 il siis stronglv argued by learned Advocate (leneral that s ht'rr llrc ()rriinarnce rvas promulgated, State of Telnnganrr had thc leqislat ivc competence to SO promulgate the Orclin:rncc ancl tlrt' Sccorrcl Anrendment Act which was made subseqr:entlv uzis nothirrq lrrrt :,r r'ontinuation of the law as promulgatcd b-r rrav ven effect to from the date ol promr-rlgamat ion of thc Ordinance. 'l'o appreciate the above contention, we ma-\'note thelt thc CrrnstitLrtion Anrendment Act came into force on ancl l'ront 1t:).O{.1. .)0 ii,. St'ctior-r 19 of the Constitution Amenclme nt Act proviclccl lor a u-irtdorr' period to the States to remove .in\ in(:()nsist(,,1 cpir(.t1tents lt-r, q,ay of amendment or rctpeill rtr rrntil ('xl)lr:itiorr of orrt' -\'(rar from snch commencement s hichcver ri.ars
earlier. Telangana Ordinance No.2 of 2O l7 rvas promulgated by the Governor ol Telangana on 17.06.2017 to further arnend the VAT Act. Though the Ordinance was promulgaterl after coming ir-rto forcr: of the Constitution Amendment Act on 16.09.20I6, it pronrulgated within the windor,v period of one vear as \\'AS SO provided by Section 19 of the Constitutior-r Amendment Act. At tl'ris stage we may mention that follow'ing t he Cor-rstitution Ame ndmr:r-rt Act, State of Telangana enacted t l-tt: TGST Act u'itl-r eflect frorn 01.O7 .20L7. l.)_r Before we deal with the Telangana ()rciinalrce No.2 o[ 20 l 7. u't' mav note that power of the Co",erlr()r to protnulgate orclinirnc: is traceable to Article 213 of the Constitution ol' lndia Ar-ticlc 2 3 provides as follows: n273. Power o,f GorJgn@r to promulgqte Ordinances during recess of Ieglsldture. (1) If at ang time, except uhen tle L"gislatit<1 A-s-s.nrbir/ of o Slnte i.s rr sc.s-s,orl, or tuhere there is o Legislatiue Councrl in o Slnte, t'{.('l)l 1t'11.'tt bollt ltoLtst.s of the Legislature are in sessiort, tlut ortuerttot rs satr-\ladi tllrtl (:ircrlrrs lelrces eist uthich render it necessary Jbr hi',l to lek. tntmedrctte a( arrrl. it{' rrntl prt,trtulrlate such Ordinances as the circumslonc?s olrp('tu 1o lti,,L l|t rt'rytirc Drovicled that the Gouemor shall nol, witltottl u].Strtrcttori-s /rorf r ril(' l)rcsti/.',ir. prornulgote ang such Ordinance if- (a) a Bill containing the same prouision.s utorttd und<:r th..s C()nstutrttron lwua required the preuious soncrlon of tlrc Presrcltr,t for llr: ittlro(lttchott thereof into the legislature; or (b) he would haue deetnecl it trccess,.j.tll to ,1's.r14' Q Rtll (ottitlutitttt tl'! sunLe prouisiorts for the consideratiotl of tlrc'. Prcstdettl: )r (c) an ,qd of the Legislature of l.lrc Strlle c<ttLt<rirtirtg tltr' -srtnte /'rllt.siorrs t,'ortkl tutder this Conslituriolt ltttt'e |rc.<'rt int,alitJ rrrtle-s-s. httrturl ltt'trt raservetl frtr the consideration of th<, Presidt'nt. tl ltatl rect'irttl lir{ (1-ss.,rl ()/ I/re I)r'r -sirlrnt. lll Atr ()rtlutcutce promulgated utuler tlis Qni(lt ':lLrtll ltLtte l]rc stttt.. la.(\' i1lt.l .'/i.ct r -s ar: Act of tlrc legislature ofthe Slale.i-ss.,rl(1/ lo lty llrt' (;ottl n1ot lntt t't','t tt sirc/r Orrirn,rnr:e r00
I0t (a) shall be laid before the Legisltttiue As,scDri.rl-r7 o/'4,,r€, .Sr(le. or trlrera tlere i.s tr l,egi.slolire Counctl in the State, be.fore both t,lre //orrsc,s, ctrrd shall cease lo operote ot the exptration of six ueeks frorn the rt nsserrrblrl of tlte Lcqrslature, or r[ beJore the expirotion of that peiocl a r?solul[o\ rfusrq\tnttrrvl rt r,.^ p(-sse(i b]/ llrc l,egislatiue Assemblg and agreed to by tle Le,llslutrt,e Cortrtt'rl. if turg, rtpon tlte pe-ssing of the resolution or, as llrc cese it(tll lt<'. cnt tlu, resolututn lrcitq eqreed to by the Council; and (b) mag be withdranun at anA time bg llte Gouernor ExplanuliotL-Where the Houses of tlle Leqisknrtrc of o Slete l(tuurg o Legislatiue Council are summoned to reassentble on dtlf"ft'nf clrrle-s, t/tt' ltcnod of sLr ri,ecls shall be reckoned from the later of those dotes Jitr tlv: ptLrposes of r,it i-s clrrrrse. (3) ( and so far as an Ordinance under this orTit:le rnttkes cnrrl proulsiort rohiclr u'ortld ttot be ualid if enacted in an Act of the Lelttslettte ol tlt(, Slete essenfe(l to bq tlte (;ouernor, it shatl be void: Prourded that, for the purposes of the proulsiorts of llrs ( (,I.slrlr],t(,t |t'!.ttotq lo tl*' effect of an Act of the Legi"slature oJ'o Stote tt,/rtc/t rs rc!)u(lrenl 1., dn Act of Potliatrcnt or on existing lau-t u-tith respect to e nrctttet arutrtterrdctl tt tlu" ('oncurrent List, art Ordinance promulgated under this afticle ut 1)t1r.sr/11,1(!' ol tttsln,cliurs liotrt tlrc Pre.sident shall be deemed. to be an Act of tle l-eryslctlrtrt' o/ Ilr' .St.rl.' tr,/iic/t ,lta.s lte'ttL reserued for the considerqtion oJ the Presrtlerrl arr r,l rr.ss.'rr irrl io 1tt1 lntr r. '
5 While clause (l) provides that il- tlre Ciovernor rs satisfied u,hen the Legislative Assembl-r' of a St.ilr rs Ir, rt irt scssion or \\'here there is a Legislative Council in a Stiile . tht' sarne is I-tot in se'ssion. that circumstances exist ri l-ric'h ( all for irnme diate 11( tion, he may promulgate such Ordinancc. Clirttst' {2) clarifies thet an Ordinance so promulgated undt'r- Articlc 213 ol the Constitution shal1 have the same lorce ancl r'fl'r'r:t ;ts iur Act of the l-cr,.is1irt i: re of the State assented to b.r. tlrt' (lovelrror'. I{orvever, r\'('r\ sLlch Ordinance shall be lzrid bcfor,' tlrc I-cgis1:rtr-rrc and shilll ccase to operate at the expiration of sis it ec'ks lrom the r('irss('mbh of the Legislature. Clatrse 1.1) s;r!s tltat if an ()r rlj;ran<:e makes any provision \\'lticlr \\ ()Lrl(l rtol ltt' r'alicl if 1{)l enacted a:i ar-l Act of the Legislaturc .rssented to by the Governor, it shall be void. 136 As noticed above, the Ordinance was promulgated by the Governor on 77.06.2O17, As per preamble to the Ordinance, it is stated that Government of lndia had enacted the CGST Act and Government of Telangala had enacted the TGST Act. But both the Acts had not beer.r brought into force. Referring to the provisionr; of the VAT Act, it is stated that it empowers the State Govbrnm,rEt to levy tax on alcolrolic liquor for human consumption and on petrolcunr products. According to the Constitution Amendment Act. ler.w of tax on those petroleum products and alcoholic liquor for h lrman consumption is within the coml>etence of the Stzrte Lcgislature. It further stated that repeal of the VAT Act excel)t in respect of the goods included in Entry 54 of List il of the VII Schedulc bl the TCST Act, which was yet to br: brought into lorce. u'oLrld nol affect any investigation, inqurry, verification (including scrutiny and auclit), assessment proceedirgs, adjudication alci irn.r' otl-rcr legal proceedings or recovery of arrears or remt dv in respect ol any such tax; surchargle, penalt.\', flnr'. nrrrrcst, righr. privilege, obligation, liability, forfeiture or plrrIisIrrrrt,rrI ancl artv such irrrrestigation etc.,
I 1)-l may be instituted, continucd or enforcccl and an-v such tax, surcharge etc, ma,v be lcviecl or imposccl irs if those Acts had not been so amended or repealecl. Such rt'pcal n'ould not also affect any proceedings inclucling th()sc rclating to appeal, revision, review or reference institLlted bcfon'. orr or after the appointed day under the said amcndcd Acts or repr-:rlc'd Acts and such proceedings shall be continucd unclt'r the amended Acts or repealed Acts. Therefbre, it uas considered necessary to strengthen certain provisions ol tlre VAT Act to overcome any limitations to help effcctivc rc\'cnLi(' rt':rliz;tLion. Therefore, it was undertaking a legislation. Sincc it ,.r rrs rlcciclecl to give effect to such decision immecliatcir. :rn<l .rs th(' Ltgislature of Telangana was not in session, tltcrr'lbrt'. tlre (ior. t'r'not-. in exercise of powers conferred- by Clause (l ) of .{rt'icle I1.3 of the eorrstihrtiorr' promulgated the C)rdinance rvlrich b:rsicallv extended the limitation from fotrr -\'e.frs t() sir t t'lrr s in rtspect of assessments, reassessments, re\'rsr()i1 ('l c decided to amend certain 1>rovisions of Lhe VAT Act by It is r-rot r)ec(,ssar-\' fi>t' Lts t,r go into the aspect as to 1 4.7 u,hether the OrdirrerncL. \\'as larcl br'fr,rr rlt, .'\ssemblv or not and as to u,hether it ]-l.r d cc'asccl to op( r iit( .rlt cr six seeks from I0{ reassembly ol the Lcgislature. It may also not be necessarl' for us to labour on thc aspect that the Second Amendment Act though published in the 'lelangana Gazette on 02.12.2017, was deemed to have corne into lorce r.r,ith effect from 17.06.2017 i.e. the date when tl-re ()rrlinance rvas promulgated. This is because lcgislative competence cannot flor,r.' from an earlier legislation, be it an ordinancr ()r ,1ll enactment. Legislative competence must be traceable to lhrr Corrstitution. Therefore, no reliance can be pla<:ed or r l lrc ()r <linzrnct' rn support of the contention that the Second \nrendment Act had derived cornpetence from the Ordinancc sin, r' il t lrs lr continuation of the law ald had comc into for-c,: lrorrr thc rlzrtc of promulgamation of the Ordinancc. Such a linc oi rcasorrinq. . r sscssn l ('1l l lrl our considered vierv, has no legal substalce. l-he rcforc. rt is immaterial that the Ordinance \,\ras not challcngt d in (l;tr rI 138 l'h;rt .il)alrl . tlrt' ostensible objective of the Ordinancc as coul(l be disccrned from the preamble is to save any lnvestteir t1o I l rcco\:ery of dues, legal proceedings ctc.. pending on tfrc <lat<' oi conring into force of the Constitution Amenclrr elrt Act u irrcir ts perfectly understandable and valici. Rut tl-ritt docs not nte iut rlrat lintitation across the board coulc.l bc
I05 cxtended bv s.av ol amendment to initiate fresh proceedings, such as, fresh revision procecdings, u,hich otherwise had become time barrecl. 139 Witl-r cffect from 16.O9.2016 the Constitution r,tas amenclecl bv lirtuc of thc Constitution Amendment Act. While Article 2.16A s'as inscrtcd immediately after Article 246, tl'rc carlier Entn 5-l oi List ll u,as substituted by the ne,,r, Entry 5'1, in the process dcr-rucling tl-re States from making any law except on the salc' of pt:troiertnr crude, high speed diesei, motor spirit (petrol), naltrral o.irs, :rriation turbine fuel and alcoholic liquor lirr' human corr srr rn 1;tion. Thus the States did not har.e tl-re conlpetencc t<.r mzrkt' lerrr' to levy VAT or such tax o1 2n1r goods othcr th.r1 the irbove goods. Section 19 of the Constitution Amenclnrc'nt Ac t. u hicir can be construed to be a sunset clause. proviclecl lor a u inclou' of one ],ear to remove the laws inconsiste nt u itl-r the Constrtr,rtior-r Amendment Act either by wav of' amenclrncnt or bv s'irv of repeal. The windoll' period w'as given to rcmo\'(' thc ir-r <'o r-r sis tencies; not to prolong the inconsistencies Brrt u hirt tl-ie State of Tclangana did by promulgating the As rnt'ntiorrrcl a1.rr.r','c, tire Ordin:rnce, 111 lact, introduced ce r',.r rin Orclinance \\':1s nol to remove the inconsistencies in thc VA]'Act.
106 provisioDs extending iimitation to enable initiation of lresh proccedinlls, such as, revisional proceedings rvhich a].e compietel-v inconsistent rvith the scheme of the Constitution Amendmer-rt Act. On this gr ound itself, the Ordinance carr be said to havc no legal corlse(luc r rce. r40 Hollever, by the Second Amendment Act. more particularlv, by Section 7 thereof, the Ordinar-rce s':rs rep<ralc.d. As alrcacl.l' st ated above, the Second Amendment Act clrnnot dcrivc Iegislativr: competence from the Ordinance. It mrrst derive legislzrtive coml)etence from the Constitution. Unlortunatell'. after substitutron of Entry 54 of List II, State u'as denuclcci of suc--h comp('tence traceable to Article 246. As a stancl aronc lcsislation, it r:anno deril.e legitimacy traceable to Artick: ')46A ol' tlre Constitution as u,e11. Therefore, the Second Amencrrent Act ntacle <rrr 02.12.2(J17 though given retrospective eflect from 17.0(r.2017 *.mnot le sustained as the sa-rne is der'<licl of legisl:rtir.e compete r lce. l4l Neediess to say, ivay back in 1964, Supremc Court in A.Hajee Abdul Shukoor (1 supraf vras categorica-l in holding that shile tl-rt'State Legislature is free to enact iar,vs which coulrl harc retrospcr:tive operation, its competence to make :r l;lv for a cerl:ritr
107 period wou1d, however' dePend on its ancl not on what it possessed at the period present l egisiattve past po\\'er of time nheu the enactment would be in operation' 142 Insofar the decisions relied upon b"' the learned Advocate General are concerned' we have alreaclv discussed shY those u,ould not be applicable to the facts and gror-tnds of chalienge made in this bunch of writ petitions' 143 FinaIIy we may also look into the intentior-r of the Pariiament in enacting the Constitution Amenclmerlt Acl' This is bccause it would give us a clear idea as to u'hv the t'onstrttttion Amendment Act was brought about and u'h1 1l're Sccond Amenclment Act cannot be sustained beirlg complctelv inconsisten+, with the scheme of the Constitution Amendment Act and being demrded*of.its-legislative competence. ln Baiju A.A. {1O supraf , Kerala High Court held as fol1ou's:
There is yet alother aspect of the ma cr. it is tr ile that ,.r hen a Court judges the constitutionality ol a lcgislati\ c en.i( llnullI rt should try to sustain the validity of thc en:rctrnt)nt tl) tltc r,\tcnt possiblc ald it should strike dox,rr the lau. oniv t,hcrr it is irlpossible to sustain it, State of Bihar r.. llihar Distrllt,rv INIANU/ sc/0354 / 1997 : JT (1996) 10 sc 8s.+1. Ar rh. samc ri.r.. Llre'.. courr must proceed to deterrninc trrc i.rcnti.. .i trrt, P:rrliamcnt, not only from the languagc usccl in rhr. :iLi:rltrte but also irorn surrounding circumstarces and an trncler-sr trrr < ii,s .I tht: rnischief that was sought to be remediccl bv tlr(] stalutc_ \\,hrn on. .ipl,lr,'s lhc said test to the evenls thrr ror,k l,l.r,, ,,rtr J rl,, r .t \ ,lC 16. it czrnnot but be noticed that the ,..,,-r- p,,r1rur" o j ihc CA.\ t.as r() i)rirrq itbout a change in the s1,s16p ui in.ii.",.i ,"r,,iirr',,, ,,,,,
\g r08 :ountry thrr.rugh the inr rne plrasing our of r he '11.Y::": of a Goods and sen-icc Tax, ar.rd HT,i[{;i*ii,#i;i*,tli**f :ji,::,,Jfr J",="*;"ri.a?.*, rn the said enactmerr ._,.h." coo zo ro. *r,i.r,.il uy rhe cenfe ard systerr. of taxation r,r. - l"t"u*"d. tr," .l",i""",i.ffi :i:"::":ff;: enactrrent of the CAA .,-u .ffto', of one year lrom thc date of amended .;-.;;;; d:.tlll such time as the State Legislarures was ee rlier. when the .-1." . ttsPectit " VAT lcgislat ions. rvhichever m. i,,_:l.tiy[ ::$[ :iff ?]i: ff::i":: jij..jti f :i: actnowrealla ;i; #"".. rf ^.limited operation rt elfeclivety trre suu;ecToi t;;";"":i,fl il,::'#;i:.,""."""J::;,,1"::$::, T the limited commoditics ro. ,ur,;.t "it-" :;";J; r.vas retained under the Constitution. ht rcspecl of ail othcr commoclities, the Iegislati.ze pou.er of thc State. rvas only in respect of taxes on the supply of goods or senices or both. o pi,o:". i;;Ijr;.l"* be exercised simultatreously with the parli;unent ,_J ..,*"rriltrterally or exclusiv,:ly. Thus, at rhe - rirnc of ..,p.,J-or- ii* XVaf Act, and 'simultanreous,enactmen r of rhc srare i.si a"i Jti ,'"..nrrg" "t.o". jlT.l::.* saylnSs ciausc operare<t onty ro sar,,c rights, pnviieges, rmmurutles, action taken etc under the erstuhile elnactment as it stood at the time of its repeal, rvhich included the arnendments brought in through the Kerala Finarce Act. 2017. There could not have- been any further lcgislati\.c e_\iercisc bv tllc Sitatc legislature in relation to tle repcaled Ii\ AT ,\cr. 144 !y'e are in respcctfui agreement 's.ith the views expressed by the Kerala High Court in Baiju A.A {1O supraf. Intention of Parliament in ushering in the GST regime through the constitution Amendment Act and cnactment of the GGST Act and simultaneous enactment oi various Slate CST Acts by the State Legislatures is to avoid multiplicit-r' of taxes by subsuming thoS€ indirecttaxt,sinasinglera-rc;r]ledGST.Itisir-rthiscontextwe have analyz ed Section 19 of the Constttutron Amendment Act. b5.' the Second Viewed thus the ameudtnetlts llrought 1n Amendmenl Act, as disclrssed zrbotc , are r'r-hollf inconsistent with 109 the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act. 145 Thus, upon thorough consideration of all aspects of the matter, u,e have no hesitation in holding that the Second Amendment Act is unconstitutional being devoid of legislative competence. It is accordingly declared as such. Consequently, the notices issued and orders passed under Section 32 (3) of the VAT Act which have been impugned in the present batch of writ petitions are hereby set aside and quashed. 146 Al1 the writ petitions are accordingly allowed. However, there shall be no order as to costs. 147 Miscellaneous petitions, if any, pending in all the writ petitions, shall stand closed. UJJAL BHIryAN, CJ SMT. JUSTICE P.MADHAVI DEVI Date:05- 07-2022. Kusn$rks/Pln Note: LR copy be marked (By order) pln
Reproduced from the public record of the Telangana High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.