M/S. Snj Synthetics Limited vs. Joint Commissioner (St)

tcr nr s ol' tlre irfitresaid judgment. ( I

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HIGH COURT DArED:.1410712022 COMMON ORDER wP.Nos.20287 & 204t.6 0f 2020 Allowing the VVPs Without costs. ,/; e) K,,* \{ ? 2 SEP ?$22 I 9'p

--l THE HON'BLE THE CHIEF JUSTICE UJJAL BHIryAN THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI WRIT PETITION Nos.7893. 955O, L6527,16853, 16896. 16903 0F 2020 494 7728 7054 9622 10046 LL4L4 11996. L277A. 15215. L5a22, 1s841, 15853. L5942. 20744. 2L542. 226s1. 22940, 2ss36,23386, 242A2, 25561, 27294, 27533, 2A797., 29743, 32L29, 32373, 32653 32697 and 34O54 OF 2O2L COMMON JUDGMENT & ORDER: (Per Hon'ble the Chiel Justice UIal llltuliin) Issue raised in all the u,rit petitions being identical, those were heard together and trre being disposed of by this common judgment and order.

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8 Joint Commissioner or Deputy Commissioner, m al/ u'ithin 30 days from the date on which the order or procecding r'r,as served on him, appeal to slrch authority in the manne.: prcscribed. As per the first proviso, the appellate authority mav admit an appeal within a further period of 3O days if he is satisfied that the appellant had sullicient cause for not preferring the appeal within the initial period of 3O days. The second proviso says that unless the appellant proCuces proof of pavment of 12 't,"1' of the disputed tax, penalty, interest or any other amount, the appeai so preferred shall not be irdm tted by the appellatc authority Sub-Sections (2) to (6) lay down the procedure: to be follo',r,ed b.y the appellate authority; the relief that may be granted ancl the finality attached to such appellate order

I may initiate proceedings to revise, modif-y or set aside such order or proceeding and may pass such order in reference thereto as he thinks fit.

1t 1 I . Section 57 rl.hich finds place in Chapter VIII dealing u,ith offences and penalties provides for penalty for unauthorized I excess collection of tax. Sub-Section (1) prohibits any dealer from collecting anv sum b,y way of tax in respect of sale or purchase of any goods which are not liable to tax under the VAT Act

t2 Act, aftt:r Articlr' 246 of the Constitution of India a nerrv Article 246-A came to be 'nserted. Article 246-A reads as under: lex (1) Nott tith.standing angthing contained in articles 246 ctncl 254, Porliarnent, and, subject to clause (2), the Legislature of euery State, huue ltotuer to make laws with respect to qoods tu'td seruic<'-s tctr imposecl bg' the Union or bg such Stote. (2) Porliament ha,s exclusiue pouer to make laus ulilh respect to c,1ood:; and seruices tax uhere the supply of .c1oods, or of .senrices. or lnth takes place in the course of inter Stale trode or conl.merce. Explano.tion. --The proui,sions of this at1.icle. in respect of goods and seruices tox rekned. to in clause (5) of the ttfticle 2794, take effect from the date recommended bg the Good s urtd Seruice-s T<t-x ('ouncil."

l3 article 246A, such amount sholl not form parl of the Consolidated Fund of India. (4) Where an amount collected as tax leuied bA a State under article 246A tns been used. for payment of the tex leuied under clause (1), such amount shall not form pert of the Con^solidated Fund of the *.ate. (5) Parliament mag, bg lau, formulate the pinciples for determining the place of supply, and uthen a supplg of goods, or ol' seruices, or both takes place in the course of inter-State trade or commerce."

l5 (8) The Goods and Seruices Tax Council shall detennine the procedure in the performonce of its functions. (9) Euery decision of the Coods and Seruices Tox Council shall be taken at a meeting, by a majoity of not less than three fourths of the ueighted uotes of the mentbers present and uottng, in accord.ance uith the follo u.t i ng p ri nci p l e s, no n te l q : - - - (a) the uote of the Centrel Gouemment shall be a uteightage of one-third of the total uotes c..]sl, end (b) the uotes of all the State Gouernntents token together shall haue a weightage of two thtrds of tlle totctl uotes cast, in that meeting. (1O) No act or proceedings of the Coods arr) Seruices Tax Council slwll be inualid merely bg reason ol---- (a) ang uacancA in, or antt deJect itt, the constitution of the Council; or (b) ang defect in the oppointment of a pcr.son as a Member of the Council; or (c) ang procedural irregttlarity of the Courtcil rtot aJfecting the meits of the case. (1 1) 'I:te Goods and Seruices l'ax (\ttrncil sholl establish a mechanism to adjudicate any rlispute-' (o) betueen the Gouernment ol' Irrdia ancl ortt: or tnore Slales, or (b) betueen the Gouernrnent ctJ lnrlut tttttT ttrttl St.tte or S,..res on one side and one or more othcr Slale-s o,l Iht' otlrcr side; or ( c ) between two or more Stetes, arising out of the reconunendation.s o.f the Council imp I e me nt ati o n the re of . " or

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t7 competent authority or until expiration of one year from such commencement \l,hichever is earlier

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19 and collection of tax on inter-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. Like the CGST Act, Central Government notified various dates as the date for coming into force of relevant provisions of the IGST Act, such as, 22.06.2017 and 01 .O7 .2017 . Further, two more Acts were enacted bv tl-rc Parliament post the Constitution (101st Amendment) Act, 2016

l0 Entry 54 of the St;lte List of the VII Schedule to thc Constitution were repealed. Sub-Section (2) clarifies that srrch repeal rvould not revive anvthing not in force or existing i1t the time of such repeal or affect the previous operation of the re petrleci Act etc

2t and audit assessment proceedings etc, which may be instituted, continued or enforced, whereafter tax, surcharge, penalty, Iine, interest, forfeiture or punishment may be levied or imposed as if those Acts had not been so amended or repealed. That apart, such repeal would not affect any proceedings, such as, appeal, revision, review or reference which shall be continued under the amended Acts or repealed Acts. It was also mentioned that it was considered necessary to strengthen certain provisions of the VAT Act to overcome any limitations to help effective revenue realization besides preventing leakages. Accordingly, it was decided to amend the relevant provisions of the VAT Act by undertaking legislation. Since it r,r,as decided to give effect to the above decision immediately and since the Legislature was not in session, and as the Governor of Telanganet \vas satisfied that circumstances exist which rendered it necessary for him to take immediate action; therefore, in exercise of the powers conferred by Clause (1) of Article 21,3 of thc Constitution of India, the Governor promulgated Telangana Orclinance No.2 of 2017 called the Telangana Value Added Ta-r (Amendment) Ordinance, 20 17, which came into force with immediate effect i.e ., 17.O6.2O17. By the said amendment, certain provisions ol the VAT Acl, such as,

22 (6) and (7) and irr ljection 57, the words 'four years'or'four years or six years' or 'thrce years'stood substituted by the words 'six yeaf s'.

21 (iu) in sub-sections(7) and (8), for the words 'Icur ycars or six years, as the case merl' be, thc u ords 'six years' shall be substituted. Li the principal Act, in section 31, in sub-section (l),- (i) the first proviso shall be omitted; (ii) after omitting the first proviso, in the existing proviso, for the words "provided further that" the words "provided that' shali bc substituted. In the principal Act, in section 32, in sub section (3), (60 and (7), for the words 'four years' the rvords 'six years' shall be substituted. In the principal Act, in Section 57, in sub-section (5) and the proviso thereunder, for the words 'threc years', the words 'six years' shall be riubstituted. 'lhe Telangana Value Added Tax (Amer.rdment' {)rdinance, 2Ol7 is hereby repeal:d. 21 . Follori'irrg the Second Amendment Act, as extracted above, relevant provisions of the VAT Act would now read as under: Ser:lrc,n .20 i4): Every cleaier sha-Il be deemed to have been assessed to t:r-r irascrl o ) thc return frled by him, if no .lssessment is nr.edc r,r,,ithin a |cri,rrl of six years from the date of lilirg of the rcturn. Scr:tion I I i3 : Wherc the authority prescribed is not satisfied u'ith a rclLlrn Irlccl Lv tl.re VAT dealer or TOT dealer or the return appcars to be incorrt-ct or incomplete, he shall assess to the best ol his Judgm('nt rr,,ithin six years of due date of the return or within six years of t irr' <ir tc of filing of the return whichever is latcr. Section f I 4): The authority prescribed may. based on any informati,rr a',rrilablc or on anv other basis, conduct a dt'ltriled scrutirrr r)f tirc lccounts of any VAT dealer or TOT dealcr and u'lrert: :lny ilssesrirnc lt as a result of such scrutiny becomes necessan/, such ;rss, ssr:r,'irt shall be made within a period of six years [:orn thc cn<l ol tirt: 1;criod for which the assessment is to br: ln:rclc. Scclr()r .l I {()l: Thc authority prescribed ma}' reass(::;s. rvherr alr assessrne nl rr, irs already made under sub-sections { 1) to (5) ancl sttch irss,'ssrnnt understates the correct ta,r liabilitl,oI the deirler, w'ithin a pcr-rrrl of six years from the date of such asscssmcnt. + 5 6

Section 2 1 (7): Where €rny assessment has been deferred by the Commissioner under sub-section (5) of Section 32 or as the casc may be, the Appellate Tribunal under the proviso to sub-section (4) of Section 33 on account of ally stay order granted by thc Appellate Tribunal or as the case may be, the High Court or the Suprerne Court respectively, or whereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or Suprcme Court involving a question of law having a direct bearing on the asscssment in question, the period during which the stay order u,as in force or such appeal or proceedings was pending shall bc excluded in computing the period of six years as the case mav be for the purpose of making the assessment. Section 2l (8): Where an assessment made has been sct asiclc by any Court or as the case may be the Appellate Tribunal, the period between the date of such assessment and the date on u,hich it has becn set aside shall be excluded in computing the period of six years as thc case may be, for making any fresh assessmcnt. Section 31 (l): Any VAT dea.ler or TOT dealer or any other dealer objecting to any order passed or proceeding recorded by any authority under the provisions of t]le VAT Act, other than the order passed or proceeding recorded by any authority under the provisions of the VAT Act, other than the order passed or proceeding recorded by an Additiona-l Commissioner or Joint Commissioner or Deputy Commissioner, may within 30 clays from the date on which the order or proceeding was servetl on him, appeal to such authority in t-he manner prescribed. Provided that an appeal so preferred shall not be adrnittcd l;y tht- erppellertc authority concerned unless the dealer produccs proof ol payment of tax, penalty, interest or any other amount .r(lmitte(l to bc due, or of such installments as have been granted, iurrl the proof of pir\.ment of twelve and half percent of the difference of the t:rx, penirltv, interest or any other amount, assessed by thc authoritv prescribed and the tax, penalty, interest or any othcr arrlount admitted by tl-re appellant, for the relevant tax period, in respect ol which the appeal is preferred. Section 32 (3): In relation to aI order of assessment passcd under thc i\ct, the powers conferred by sub-sections (I) anrl (2) shall bc excrcisable only within a period of six years from the <latt on rvhiclt thc ()rder rvas served on thc dealer. Section 32 (6): Where an order passed under this Section has bcen set-asidc bv any court or other competent authoritv ttlrrlcr the Act lirr any reason, thc periocl between thc dzrtc of suc:h oruler itncl the datc on which it has been so set-asidc shall Lre c-rcludcrl in compr.lting thc pcriod lrf six years specificd ir-r sul: scctior-r (3), for the purl)osc of mirking rr liesh revision, if any, urrder thrs Ser'lior.t. 25

26 Scction 32 (7): Where aly proceeding under this Set'tion has been deferred oll account of any stay ordcr granted b1-. thc Appellate Tribunal or the High Court or Supreme Court rn anv casc, or tty reason of the firct that an appeal or other procecding is pending beforc the Appcllate Tribunal or the High Court of the Suprenre Court involving a question of law having a dir(lct bearing on the order or proceeding in question, the period durir-rg u,hich the stay order was in force or such appeal or proceeding u,as pr:nding shall be excluded in computing the period of six years spccifie<l in sub- section (3), for the purposes of exercising thc power under this Section. Section 57 (5): No order for the forfeiturc under this scction, shall be made after Lre expiration of six years from tlre clate of r;ollection of I he amount referred to in sub-section (4).

28 four years i.e., orr ,rr before 30.03.2019, in terms of Section 32 (2) of the VAT Act. [1ou,ever, thr: revisional order was passed on 14.O9.2O2O whrch is be-yond four years but wit,hin six years. In so far the Seconcl Arr endment Act is concerned, it is contended that the said amendrne nt is not valid in the eye of larv as it was made after the GST rr:gime had come into effect. Therefore, the extended period ol limitation of six years instead of four year:s was not available to th3 Deput_v Commissioner.

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32 the revisional o:der dated 05.O3.2O2O as l;crng barred bv limitation and thereafter to quash the same as u,ell as the consequential order dated 07.03.202O.

the VAT Act except for the goods listed in Entry 54 of List II of the VII Schedule. Ordinance No.2 of 2017 was promulgated by the Governor of Telangana under Articl e 2I3 of the Constitution of India on 17.06.2017 whereby limitation was extended from four years to six years. Ol.O7 .2OI7 is the date on and from which TGST Act became enforceable. Section 174 of the TGST Act repealed the VAT Act in respect of all goods except those mentioned in the substituted Entrv 54 of the Srate List. On 29.11.2017 the Second Amendment Act received the assent of the Governor whereafter it was published in the Telangana Gazette on 02.12.2017 giving retrospective effect from 17.06.2017. 40. Mr. S.Ravi, learned senior counsel, submits that prior to the Constitution Amendment Act coming into force, States had Iegislative competence to levy Value Aclclccl Tax (VA'l) on sales of all goods except newspapers in the course ol intra StatL' trade pursuant to Article 246 of the Constitution rezrd u'ith trntrv 54 of List II of the VII Schedule. Constitutior-t Amenclmctrt Act has armended the Constitution of Inclizr to rerlistributc the legislative por\.ers to give effect to thc nes (iST rcqtnrc bltsecl on coopcrativc federalism-pooled sovereigntv. Tl-re Scconcl Atnenclment Act n'as adopted on 02.12.2077 u,ith retrospc<'tive cffect from 17.06.2O17

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l5 he submits that though the State Legislature IS competent to enact laws having retrospective operation, its competence to make a law for a certain past period depends on its present legislative power and not on what it possessed at the period of time when its enactment is to have operation. On 02.1.2.2017 State of Telangana did not have the le gislativc compctence to enact the Second Amendment Act

36 to the coming inlo force of GS'l'. Thus, Section 6 of the General Clauses Act. I8!)7 c.rnnot be pressed into sen,ice to save the pre- amended Entn, 54 ol List II.

37 tl're decision ol the Gujarat High Court in Reliance Industries Limited (2 supra). According to him, Article 246,\ requiring simultaneous Iegislation by both Parliament and Statc I-egislatures is based on the principle of pooled sovercignt_y / cooperative federalism. Further, he submits that all sttch legislations must be based on recommendations of the GST Council. Therefore, he contends that legislative competence of 38 Telangana State l,egislature for enacting the Second Amendment Act cannot florv from Article 246A.

39 competence upon the State for making amendments to the VAT Act qua goods other than alcohol for human consumption and the five petroleum products. Therefore, what Section l9 provides is that the State can continue to lery tax uncler the VAT Act for the u,indow period of one year or till the VAT Act is amended or repealed whichever is earlier. This transitional provision does not enable the States to make amendments to t1're VAT Act in contravention of the amended Entry 54 ol l,ist ll. He submrts that Section 19 of the Constitution Amendment Act r:annot be understood as a source of legislatirre po\\'er. nor as a saving provision in respect of legal competence to amend the VAT Act. To buttress this point he has pressed into service the division bench clccision of the Gujarat High Court in Reliance Industries Limited (2 supral. According to him, evt'rt the sirrgle bcnch of l(eraia High Court in Sheen Golden Jewels (India) Pvt. Limited Vs. State Tax Officer7 has takcn similar vicu' thor-rgh the szrid dccision is relied upon by the respondent

.l0 54 had not yet been amended, even then also the Second Amendment Act having been passed on 02.72.2077 was beyond the one year period in terms of Section 19 of the Constitution Amendment Act zrnd therefore invalid.

,ll of the one year window period. On the day of enacting the Second Amendment Act, the State Legislature had lost its competence for making law in respect of other goods barring the goods mentioned in the amended Entry 54 of List II. State Legislature must have the competence both on the date of enactment i.e. 02.12.2O17 and also on the day when it rvas brought into force retrospectively i.e. 17.06.2017. 50. Referring to Article 2 I 3 (3) ol tl-rc Constitution of India he submits that the Ordinance u,ould bc ultra uires for the very same reason for which the Second Amenclment Act is ultra uires. He further submits that life of the Ordinance \\1as only six weeks from date of convening of the State Lcgislerture. This period, he submits, was til1 08.12.2017. Evt'n assuming that the State Legislature was competent to enzrct and zrppl-1, the Ordinance qua the goods not mentioned in amerrrlccl Entrv 54, such operation could not have continued beyor-rd 0f3. 12.2017 as per Article 213 of the Constitution. Clarifying the 1;osition, he submits that the Ordinance was not challengecl lrt'causr the Ordinance was repealed b1' tl-re Second Amendmt'nt Act and is no longer ln existence. Besides, the Second Amerrrlmcnt Act \\,as brought into force r,',ith effcct lrom 17 .06.2017 s'hiclr u as the date of the l1 Ordinance. 'l'hus, even for the period when the Ordinance was in existence it u:as the Second Amendment Act which occupied the legislative field and r-rot the Ordinance. Therefore, any reliance placed on tht: Ctrtiinance lr,ouid be misplaced and the fact that the Ordinance u'ir.s n()t challenged r,l,ould have no legal bearing.

.13 Amendment Act can only be in respect of the VAT Act as existing on 02.12.2017, even if given retrospective effect from 17.06.2017. 52. Summing up his arguments, Mr. Ravi submits that both the Ordinance as r.r,ell as the Second Amendment Act are unconstitutional being devoid of legislative competence. He submits that division bench of the Guj arat High Court in Reliance Industries Limited (2 supra) and a later single bench decision of the I(eralzr High Court in Hindalco Industries Limited (3 supra) have struck donn VAT legislations enacted post 16.09.2016. He submits that he u,ould adopt the detailed reasonings given by the bench in thosc t$,o cases

4,1 senior counsel, submits that the State Legislature passed the Telangarra Goods, and Services Tax Bill, 2O17 <'u'r 16.O4.2017. It received the assent of the Governor on 25.Oi;.2017 u,hereaiter the Telangana Goods and Services Tax Act, 2O17 (already referred to as 'the TGST Act') was published in the Tekrng:rna Extraordinary Gazette on 27 .O5.2017. He thereafter submits that the Orctinance rr',as promulgated on 17 .06.2017 whereas tht: Se cond Amerrdmcnt Act wzrs made on 02.12.2017 giving retrospective effect from 17.06.2017. He submits that the Second Amendment Act is unconstitutional as the State Legislature had lost its competrnce to make such amendments after the Constittrtion Amendm,tnt Act canrc ir-rto lorce f.om 16.09.2016. On and fronr 16.09.2016 onlr, concurrent juri iction could be exercised srmultaneousl-v bv thc Central Governm:nt as well as bv the State Covernment insofar GST is concerned; that apart, exercise of power uncler Arti<:le 2.16 A can on11, be cr:rried out on the recommr:ndation of thc (iS'l Council.

.16 57 . Mr. K.P. Arnarnath Reddy, learned counsel for some of the petitioners, subrnits that extension of lirnitation for rnaking assessments. reassessments and revision under the VAT A':t from four years to six years by virtue of the Second Amendment Act is not valid as the parent VAT Act was repealed following the Constitutional Arnendment Act. That apar1,, amendment to the VAT Act for such extended limitation .,vas meLde bv issualce of an Ordinance under Article 2I 3 in Jrtne, 2Ol7 , u,hich u,as validated by the State Legislature t11 December, 2Ol7, only after introduction of 1.he TGST Act on O1.O7.2O17. Therefo::e, the Second Amendmr:nt Act is not sustainable in lan, after repeal of the VAT Act on 30.06.2017. In addition to the judgments in Reliance Industlies Limited (2 supra) and Hindalco Industries Limited (3 supra), he additionall-v places relLance on the decision of the Kerala High Court ir-r Baiju A.A. Vs. State Tax Officerlo. Insofar Section 1i74 of the TGST Act is concerned. he submrts that the said section only saves operation of the VAT Act with respect to the business transactior-rs merde prior to 01.O7.2017 58 Mr. B.S.Prasad, learncd Advocate (]eneral for the State of Telangana, submitted that t1-re Statc Legislature is competent to ro 2020 (1) KLT 233

17 make laws for saving the repealed Acrs under Section 19 of the Constitution Amendment Act. Accordingl-y, Section 174 was included in the TGST Act as a measure to save the repealed Acts, including the VAT Act. He submits that Section 174 saves operation of the VAT Act in respcct ol'tr:tnsactions made prior to Ol.O7 .2017 . Insofar the VAT Act is conccrned. the same was amended by the Second Amendment Act prior to the effective date of repeal by way of an Ordinance datr:d 17 06.2017. Article 13 (3) of the Constitution of India states that las' includes Ordinance as well. Section 6 (b) of the General Clauses Act, 1897 also makes it clear that repeal of an Act shall r-rot effect the previous operation of any enactment so repealcd or anvthing done thereunder. According to him, reli:rnce pl:rced b.i the petitioners on the decision of the Kerala High Court in Hindalco Industries Limited {3 supra} and on the Cujarat High Cotrrt clecision in Reliance Industries Limited (2 supral u'oultl llt o[ no assistance to the petitioners as in thosc cases thcre \\'rrs n() Orclinance or legislative enactment pertaining to the State VAT Acts prior to introduction of GST. 59 Elaborating furtl'rer Mr. B.S.Prasacl submits that the Ordinance u,as promttlgamated by tlre (iovcrnor of Telangana on .ltl 17.06.2017 \\,helebv tl-rc time limit for assessments and revisions was extended lr,rm ftrur years to six years before annulment of VAT Act. Thc Ordinance became an Act i.e. the Second Amendn-rent Act on 02.12.2017 . Prior to that, the Ordinance u,as approved by tlre legislative assembly of the State of Telangana within six monttrs frorn the date of the Orclinance. Referring to Article 213 12) of the Constitution of India, he submits that an Ordinance prorn -rlgated b,v the Governor \r.ould have the same force and elTe('t as irn Act of the legislature unless such ar-r Ordinance is not placed belore the legislative assembiy or rejected by the legislative assemblv r.r,hen placed before it within the stipuiated time. Insofar the present cas-'ls concerned, the Ordinance u as 1>lacc<l before the legislative assembly and the assemblv approvt:d the same . 'l'herefore, in the light of the above constitulional pnrvision, thc limitation to make an assessment or reassessment ol' revision is six.years and not four years. According to him. tht: ()r-rlirianr:r' issur:cl and the subsr:quent legislat. ve Act for prolonging the limitation made such extension of limitation valid. Therelbr,-', the procecdings initiated under the VAT Act in respect of tl-rc pctitioncr-s zlrc valid, being within limitation. lnsofar decision ol tht' I(eralir High Court in Baiju AA (1O supra) IS concernr-'d, thc s.rme ri'or-ricl not bc applicable to the facts of the t9 present case inasmuch as amendment to the Kerala VAT Act was made long after annulment of the Kerala VAT Act. Insofar the present case is concerned, the Ordinance was promulgated prior to 01.OT .2017 u,hen the VAT Act was still in force. 60 Mr. Prasad, learned Advocate General, asserts that Telangana State u,as competent to promulgate the Ordinance on 17.06.2017 and therealter to pass the Second Amendment Act on 02.I2.2017 in rcspect of goods not covered by amended Entry 54 of List I I. Por.t er and competence of the State in this regard is traceable to Article 246 of the Constitution read with Section 19 of the Constitlrtion Amendment Act; the savings provision in Section 174 ol the TCIST Act; Article 246A of the Constitution; and Sections 8 and 8A of the Telangana General Clauses Act, 189 I . 67 Mr. Prasad submits that State is only securing and protectir-rg the revenue due to it by enlarging the duration b-r' which the dealers can be assessed etc., but not imposing an_v nc\l' tax or lcr.,v. Legislation being a sovereign function of the Statc, thus, the Second Amendment Act cannot be questioned as being lvithout competcncc. 62 State has the porver to enforce the Second Amendment Act

50 vested rights of the assessees i.e. even whero assessments become barred by time under the pre-amended Jrrovision. State can enlarge the limit,etion even for such time barred assessments and take au-ay rested rights. Looked at from this pcrspect:ve, the Secor-td Amendrr ent Act cannot be said to be arbitrary, not to speak of being manifestly arbitrary. 63 Provisions lbr enlarging time limitation on assessments etc., are onl1. proc:edural aspects of lely and assessmerrl of tax. These are not substant ve provisions. Assessing Officers are conlpetent to adjudrcate on rimitation since it is a mixe<l question of fact and larv. (r4 Referring to Hindalco Industries Limited (3 supra), hc submits that decision of the Kerala High Court, as expressed in the said case. is ctistinguishable. In the said decisior-r, Ke ra:a Higl-r Court rlid no1 dcal with the effect of Section l9 of thc Constitution Amendment Act ,lnd the savings provision under the Stare GST Act. As a mat[er of fact, State of Kerala had enact,:d thc impugned lau, af[er the permissible windou, period of one ] e ar allor,i cd undcr St:ction 19 of the Constitution Arnendmcnt Act Likeri,isc, M r. Pr:rsrad submits that decision of thc Ciujzrr-at H igh

5l Court in Reliance Industries Limited (2 supra) u,or_rld zrlso have no persuasive value for this Court 65 Mr. Prasad, learned Advocate General, relied on a decision of of Indiall to contend that while right of appeal ma-r. be a substantive right, the procedure for filing the appeal inclr,rding the period of limitation cannot be called as substantive right. An aggrieved person cannot claim any vested right in pror:cdure; that he should be governed by the old provision relating to thc period ol limitation. Procedural law is retrospective, meaning thcrebv, that it may apply even to acts or transactions under thc repcaled Act. Time and again it has been held and clarified b.r'1he Supreme Court that every litigant has a vested right in substantivc lau' but no such right exists in procedural law. Accorcling to Mr. Prasad, larv of limitation is generally regarded as procecltrrzrl :rnd it s olrject is not to create any right but to prescribe periods u,ithin r.t'hich legal proceedings be instituted for enforcement of rights ri'hiclr exists under the substantive law. Statutes of llmitation are rctrospective insofar those apply to all legal proceedings brought irfter tht:ir <lperation for enforcing cattse of actiott :rccrrterl carlier, effect of revivir-rg the right of action nor do thev have the effect of extinguishing a right of action subsisting on :hat day. 66 Learned A<lvocate General has also llar:ed reiiance on a Ordinance. In that case, a gazette rrotificatior-r u,as issued on 22.O8.1996 which appointed 22"a day of Aug-rst. 1996 as the date on which the Acl in question would come rnto force. Ttre said gazette notification was issued in exercise of the por,r,ers conferred by Section 1 (3) cf the Arbitration and Conciliation Act, 1996. In the facts of that case, it \^,as helcl that \\'hile the Act came into force on 22.08.1996, for all practical and legal purposes, it would be deemed to hzrve been effective from 25.0.l . 1996, when the Ordinance was promulgated, particularl,r'. .,r'hen the provisrons of the Ordinance and the Act are similar thcre being nothing in the Act so as to make the Ordinance ineffectivr:. Tht: Act being a continuation of the Ordinance. u,ould bc deemed to have been 12 (2OO1) 6 SCC 356

5"1 wider latitucie is given to the larv makers, which is based ort sound principlc. Mr. Prasad asserts thart even a vested right can be the subject matlel' of retrospective lan,. No doubt, such a law must pass mitster Artrcles 14, 19, 21 and 300A ,rf the Constitution of India. Therc'fore. the issue really boils down to whether the impugned ena('trnent is manifestly arbitrar5, or not. If it is not, question of intc'rf erence by the Court would not arise. 68 Learned Aclvocate General has referred to and relied upon the decision of the l(cri-rlzr Higl'r Court in Sheen Golden Jewels (India) Pvt. Limited (7 supra) in great detail. 69 Mr. Pra.s:rd has also referred to an article trtled 'Transitional Prouisiorts lrt Contmercial Legtslations: An Analgsis' by Priyal Parikh accordirrg to u,hich the view taken by a majorit5r ol Courts is that the rcvc:rtre authorities retain the power to lery appropriate taxes under tht'r:rstu,hilc indirect tax laws for events prior to the introdrrction of GST- 7O Mr.S.Rirvi, Iearned scnior r:ounsel for ttre petitioners in reply submits thal tirc Statc has not addressed the following crucial aspects r-aisecl lry the pctitiot-reIs: i. trffct t ,)[ amcndm(]n1 ol Constituiion /rmendmcnt Act. lntry 54 by Section 17 of the 55 ii. Effcct of rcpeal of VAT Act for all other goods except the goods mentioned in the amended Entry 54 of List II as per Section I74 of the TCST Act, iii. Competence of the State as on 02.72.2017 to pass the Second Amendment Act, given the requirements of tJle present legislative competencc as on that date; iv. Requir eurcnt of simultaneous ler,y by Parliament and State Legislature lor lcgislative competence under Article 246A, v. Objectivt: zrnd effect of Section 19 of the Constitution Amendmcnt Act. vi. Statc dirl not at all make any endeavour to show any distinguishing featurc in the judgment rendered by the Gujarat High Court in Reliance Industries Limited (2 supra| and why the sarnc should not be applied to the present case. 7l Mr. Ravi contcnds that it is not the stand of the petitioners that the State has no competence \4rhatsoever to promulgate the Ordinance or to enact the Second Amendment Act. State does have the pot'er and competence in respect of the goods specificalh' mentioned in the amended Entr,y 54 but not goods in general. It is the contention of the petitioners that other than the goods mentioned in amer-rdcd Entry 54, the State does not possess legislative competence. This crucial aspect was not countered b!' the St:rtc 72 Mr. Ravi slrbmits that it is not the argument of the petitioners that the Ordinance or the Second Amendment Act are manifcstl_\' arbitrirrl or that those cannot be given retrosl)cctiv(' effect. Thcrefore, the argument advanced by the learned Advocate

56 General bersr:d cr-r the principles of manil'est arbitrariness or retrospectivitv aro not at all germane to adjudicate on thc issues raised 1:_r' tl-re peti -ioners. 73 Bcsides reit:rating reliance on Reliance Industries Limited (2 supra) and Hindalco Industries Limited (3 supra), I\4r.Ravi has also pressed into service a decision of the Allahabad High Court ir.r Jain Distillery Private Limited (4 supra). 74 lnsofar exte nsion ol time limit in tax rnatters is concenlcd, Mr.Ravi submits that time limits are a fetter on the .juri iction of the dcpartmental authorities. Enlargement of tirne uncler the Seconcl Amcndnrent Act in extending the limitation period .rmounts to conr'erring juri iction on departmentai authorities that drcl not exist earlier. Therefore, such trn amcndment- is not rnerel.r' for securing old liabilities but inrpacts the ri1;hts of asscssees, thus being a fresh legislation wl-rich is devoid ol lcgislurtive compe tence. 75 [nsofar reliance placed by learned Advocate General in Tirumalai Chemicals Limited (11 supra) it is submitted lhat tht: said decision is cf no application to the present batch of cases. He subrnits that the question for determination in that case was t'hether the limitation to file appeal against order for violation of 57 provisions of Foreign Exchange Regulation Act, 1973 (FERA) would be governed by the appellate mechanism under the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchange Management Act, 1999. The above decision has no reievance insolar the present batch of writ petitions is concerned where the challenge is primarily to the competence of the State Legislature to enact the Second Amendment Act after the Constitution Amendment Act. 76 Reg;rrding Fuerst Day Lawson (12 supra| relied upon b-r' the learncd Advocate General, Mr. Ravi submits that in the prcsent batch of cases petitioners are primarily concerned r,r,ith the validit-"- of the Second Amendment Act and not the Ordinancc. E','en if it is assumed that the State had the competence to pronrr-rlg:rtc thc Ordinance in June, 2Ol7 before onset of GST ri'itl-r eflcct from 01.07.2O I7, b.y the time the Second Amendment Act u'as passed, the Statc had lost its competence for lcgislating goocl s t oll general, exccpt for petroleum products :-rr-rcl liqr-ror lor hurnern Hou,er.er, he submits that though the Ordinance has not been specil-icall,r chzrllenged, nonetheless, it is clezrr th;rt on ancl from 16.09.201Cr w'l-ren the Constitution Amendmcnt Act c:rme into consumption as mentioned in the amendcd Entrr' 5-l of List Il.

5r,l force, the Ordinance could not have been promulgated. Thus, both the Ordinance and the Second Amenrlment Act cannot be sustained after 6.09.2016. Again in this.iudgmr:nt question of legisiative competence of the State to prorr u lgate an Ordinance followed by an Act on the same subject mat-ter $,as not in issue. He submits that an Ordinance as well as an Act are two pieces of legislation. Legislative competence of each has to be separately determined in the light of the Constitution irnd the point of time when those were enacted. Insofar Manish Kumar (13 supraf is concerned, he submits that it is not thc c:rse of the petitioners that the Second Amendment Act should be struck down on the ground of being rnanifestly arbitrary. That apart, w'hile there can be no dispute to the proposition that a u id,:r latitude should be allowed to the legislature rrvhile legislating ecc,nomic laws, it is also equaily clear that while making such 1as,, thc Legislature or the Parliament cann()t transgress the constitutional limits. In the instant case, the challenge to the Second Amendment Act is purely on the ground of legislative compel cnce; rather lack of legislative competence. Petitioners arc not questioning the legislative lui om in extendirrg thc lirlitation lor Inaking assessments, reassessments, re','isions etc., fronr four -\,ears to six years, but have questioned the Sccond Amenclment Act on tl-re

59 ground that the State did not have the legislative competence to enact the same. 77 Insofar Sheen Golden Jewels (India) Pvt. Limited (? supra) is concerned, learned senior counsel submits that a division bench of the Gujarat High Court in Reliance Industries Limited (2 supraf has distinguisl-rcd the said clccisior.r. [n Sheen Golden Jewels (India| Pvt. Limited (7 supra) petitioners had challenged validity of Section 17 4 of the l(erala Goods and Services Tax Act, 2O17 whicl-r is pari materia to Section 174 of the TGST Act, on the anvil of Section I 9 of the Constitution Amendment Act. According to Mr.Ravi, petitioners herein are not questioning validity of Section 174 ol the 'l'(]S1' Act. Rather, according to the petitioners, Sectiorr 17 4 of thc TGST Act only supports what is being contended b-v the petitiotrcrs 7B The article, 'Transitional Prout.sions irt Contrrtercial Legislation: An Analysis'follows the same logic given b-r' tht- l(crala High Court in Sheen Golden Jewels (Indiaf Pvt. Limited (7 supral. That apart, the article also relied upon the decision of the (izruhati High Court in Lakshminarayan Sahu Vs. Union of Indiara s'hicl-r dealt u,ith validity of shou, cause rtotices for scn'icc' t:i-x after Section 6() I74 of the State GST Act was brought in. Mr. Ravi submits that according to tl're aforesaid article, Section 19 of the Constitution Amendment Act has clements of both trztnsitional as well as savings clausc. Hou,ever, he contends that Section 19 of the Constitutior-r Arr endment Act only suspends invalidity of the inconsistent legr slatior-r for a period of one year or till the inconsistent lesislations are amended or repe,aled. He asserts that Section 19 is neithcr a source of power nor ri. savings provision. It is only a transitional provision 79 Mr.S.R. R.Viswanath, learned counsel for some of the petitioners zrlso made submissions replying to the arguments advanced b.y the learncd Advoc:rte General. While admitting that learned Advocate Gencral u'as only partly correct in submitting that time lirnitar-ions are procedural and not substantive, he, however, submits that in ta-r jurisprudence time limitations prescribed lor rnrrking assessmcnts, reassessments, revisions etc are juri ictional in nature and are thus l'etters on the taxing authorities. In tl-ris connectior-r. he has placed reliance on a Firstly, 16.O9.2016 ivhen t1-re Constitution Amendment Act came into force. Secondl,v, 27 .O5.2017 when the TGST Act was enacted. The Ordinance as u,ell as the Second Amendment Act were made subsequent to the enactment of the TGST Act. Therefore, learned Advocate General is not right in saying that the Ordinance was promulgated prior to coming into force of the TGST Act. Thus, he would submit that neither the Governor nor the State Legislature had legislative competence to promulgate the Ordinance or to make the Second Amendment Act after 16.O9.2016 and also after 27.05.2017. 81 Referring to Scction 19 of the Constitution Amendment Act, Mr. Visu,anath subrnits tl-rat the ,"vindow provided by Section 19 was completel-\. 6"1-,,,r.-,"r" cl or-r 27 .05.20 17 when the TGST Act u,as enacted and Sectior-r 174 thcreof partially repealed the VAT Act There is no merit in thc argument of the learned Advocate Gener:rl that Section 19 ol the Con stitutior-r Amendment Act could bc 05 ?O 1 7 anrl that thc Ordinance and thc afr or 97

62 Second Amend ment Act owe their genesis to St:ction 1 9. He further subnrits that neither the Ordinarce nor the liecond Amerrdmcnt Act can be traced to Article 246A of the Constitr,rtion. 82 Insofar decision of the Kerala High Court in Sheen Golden Jewels (India) Pvt. Limited (7 supra) is co:ecerned, he submits that in the said ca.se the challenge was made to Section 174 of the Kerala Goods and Services Tax Act, 2Ol7 whic}l is pari materia to Section 17 4 ol the TGST Act. Petitioners herein are not challengir-rg veiliditv of Section 174 of the TGS'I Act. He, therefore, submits that thert: is no merit in the arguments advanced by the learncd Advocate (ieneral. 83 Strl;missions made by learned counsel for the parties have received the <lue consideration of the Court. 84 Wt: sh:rlI llrst deal with the issue relating to legislative competence. I'{eac ing of Article 246 ol the Cor-rstitution of lndia is subjcct rnatlcr of liru,s made by Parliament ancl b1'tl're Lcgisl:rtures of St:rtcs. Clause (l) says that notwithst€rnding arnyth ir-tg tlt clauses (2) and (3), Parliament has exclusive power to make lau's s'ith rcspcct 10 irn)' of the matters enumerated in List I (tJnion t,ist) oi the Vll S<:hedule to the Constitution of llrdia. As per Clause (21, n ot\v r tllstanding anything in Clause (3), Parliament

63 and subject to Clause (l), the Legislature of any State also have pou,er to make laws with respect to any of the matters enumerated in List III (Concurrent List) in the VII Schedule. in terms of Clause (3), subject to Clauses (1) and (2) the Legislature of any State has exclusive power to make laws for such State or any part tl'rereof with respect to any of the matters enumerated in List Il (State List) in the VII Schedule. Clause (4) clarifies that Parliament has povn,er to make laws with respect to any matter for any part of the territorv of lndia not included in any State notwithstanding t]-rat such mattcr is a matter enumerated in the State List 85 Thus, the power to make laws either by the Parliament or b-v the State Legislatures is traceable to Article 246 of thc Constitution of India. The Lists in the VII Schedule defines ancl limit the respective competence of the Union ald the States. Tl'rc various cntries in the three lists of the VII Schedule .ire rlot sources of legislative power. These are legislative lreads demarcating the lield ol legislation; of course, being the ficld o[ legislation, the entries should be given the r,,,idest p<-rssible amplitr..rclc. 86 Prior to the Constitution Amendment Act i.e., prior lr-r 'I 6.Og.2O l6r. [intn' 5-1 of List II u,as as follou' S

"

66 inconsistencv belln een lau,s made by Parliarnent and laws made by Legislatr,rres ol State), Parliamcnt and subject to clause (2), the Legislature of eve ry State have pou,er to makr: laws with respect to goods and sen,ices ta-x (GST) imposed by the Union or by such State. As per clause (2) Parliament has exclusive power to make laws with respecl to GST u,here the supply of goods or of services or both takes placc in the course of inter-State trade or com lTl or,:]e 246A ir.r respe( t of GST sl.rall take efiect from the date recommended hy the GST Council in terms of Clause (5) of Article 92 Thus u,hiLt Article 246A provides is that both Parliament and the Legislattrre of every State have power to make laws with respect to GST irnposed b1' the Union or by such State except in the case of GST where the supplv of goods or of services or both takes place in ttre course of inter-State trade or commerce in which case Parli:rment has the exclusive competence. Of course, such enactlncr-rt will takc effect from the date of recommendation by the GST Clor,ncil 93 Article 366 of the Const.itr-rtion of India defines various expressions r,r1-ric l-r finds place in thc Cor-rstitution. Clause (12) The Explanation clarifies that provisions of Article 279-A.

6',1 defines "goods" to include all materials, commodities and articles Clause (12A) which was inserted by the Constitution Amendment Act with effect from 16.09.2O 16 delines "goods and services tax" (GST) to mean any tax on supply of goods or services or both except taxes on the supply of alcoholic liquor for human consumption. Clause (26A), zrlso inserted by the Constitution Amendment Act q,ith effect from 16.O9.2016, defines "services" to mean anything other than goods 94 Article 246 A of the Constitution of India came up for analysis before the Supreme Court in VKC Footsteps India Private Limited (5 supra), Suprcme Court has held as follows:

"

69 97 ln Baiju A.A. {1O supra) the challenge before a single bench of the Kera-la High Court was to the legality of the notices and assessment orders issued in connection with the assessments under the Kerala Value Added Tax Act, 2003 for the assessment years 20 10 201 I and 2Oll-2O12. The challenge was made on the ground that the concerned authorities did not have the juri iction to issue the notices and assessment orders since the amendments introduced to Section 25 (1) of the Kerala Value Added Tax Act, 2003 through the Kerala Finance Acts of 2077 and 2O18 notified on 19.O6.2O17 and 31.03.2018 respectively did not contemplate a retrospective operation of the amended provisions. Section 25 of the Kerala Value Added Tax Act, 2003 deals n'irh assessment of escaped turnover. In case of escaped turnover lor any reason the assessing authority could determine to the best ol his judgmcnt the turnover which had escaped assessment to ta-x at any time lvithin five years from the last date of the -r'ear to r,r,hich thc return relates. As per the last proviso the periocl for completior-r of assessment was extended up to 31.03.2016. B,r' the Kerala Finance Act of 2017, the period of limitation under Section 25 (1) for proceeding to determine escaped turnover nas enhanced from five vears to six years and in the last proviso thc cxtension

7| Act, 20 18, in ttre last proviso, the extensioll \\ra s made up to 3 t .03.2019 98 One of the questions framed by the Kerala High Cor-irt was wltether after thr: Constitution Amendment Act and relteal of the Kerala Value Added Tax Act on 22.06.2017, the State l-egrslature retained an1- residual power of legisiation so as to ame nd the provisions of Section 25 (1) through the Kerala Finance Act, 2O18 After due consideration Kerala High Court held as lollows l!). As already noticed above, the amendments eflecteri to Secrion 25 (l) of the KVIIT Act, through the Kerala Financc nct 2017. rvt:re be',ore the repeal of the KVAT Act with effect from 22.06.'2O17. 'l'he nr{,vision as it stood then. and in particular the third proviso ther(1o, iluthor-isc(l the re- opening of past assessments titl 31.O3.2018. Thc amcnrlrrlent cllc(ted through ttre Kerala Finance Act, 2018, $.ith c[fi't:t llorn 01.0"1.2018, enlarged the period for re-opening past assessmerlts Ironr 31.0.'1.2018 to 31.03.2019. Unrler ordinar5r circumstanccs, and base(l on rn1' lindings above as regards the effect of the amendments l).olrght ir)lo the third proviso to Section 25 (1) by the Kerala Finance Aot, 2017, thc k:gislative measures shoulcl have sufficed to justify a reopeninlg ol l)ilst assessnlents up to 3l .O3.2011), notwithstanding that the amendrnent rl scll \\'as (iffective only from 01.O4.2018. However, the intervention of t rc CAA 2O16, arld the consequenl repeal of the KVAT Act with effect fro r) 22.06.2()17, has a bearing on the legality of the 2018 amcndment. n (listrnctior (lo(:s exist betiveen the saving of rights, privileges, immunities :Ild liabililics under a repealed enact[rent, through a savings clarrsc lllser'1ed io thc new enactment traceable to the same legislative po\'<'r. an,l all anlcndment brought in to a repealed enactment after thc legir;latr,.,e prx|r'r rtselt'is taken arvay. WhiLe the legislative porver justif-\'ing tx)th aclions. l)r'ior to the CA"A 2016, could have been traced to Article 246 of otrr Clons'.rtulion, rcad with thc relevant entry in the VIIth Schedule therct(). 1hc posrtiorr r:hanged \\'hcn there was a fundamental shift in the natllrc ol thc t;t\ lerr anrl a fresh conl-erment of legislative power to legislate iD rcsl)c( I ol rlr(' nc\\' ie\l'. After thc CAA 2016, the State kgislntures stood (lcn l(le(l of tircrr l)o\\'cr-to Iegislatc in respect of taxes on sale or 1>urchasc ol goocls. tlurt uas r:ovcred under Entrv 54 of List tl of the Vllth Schedulc to rlrc Clorstilutiorr, irnd lhev r,r.ere instead conferred with lcgislativc lx)\\''rs. t() be exercised sirnultaneoush'v,ith the Parliament, in respect ol lascs orr sitpph' of goods or- sci-vices or both. While the ne\v legislati|e lxrrvcr corrlrl tuslil-\ !hc inclusiorr ol a savings clause in thc ncrr, legisl;itron ( !li1r'1e(i rr lcspccl of tlle new Ievy of tax, to save accrued rights, plivrlcr,,cs. irrrnrrrnilr,:s t tc. unrler thc erstvrhile enactment, tlre dcletion of llntrr 5l rrf List Il automaticalh' denuded the State lfgislaturcs ()i' I lic t)o\\ ( r to lirrther

7l legislate on the subject of taxes on sale or purchase of goo<1s, except to the limited extent retained under the Constrtution. 'l'he porver to arnend a statute being a facet of the legislative po\(,er itself, thc Statc Legislatrtre could not have exercised a power to amend the KVAT A(:t, s:rve to the extent permitted, when it did not retain an), residual right to furthcr Iegislate on the subject of taxes on sale or purchase of goods. 99 According to the Kerala High Court, after the Constitution Amendment Act, the State Legislatures stood denuded of their power to legislate in respect of taxes on sale or purchase of goods covered under Entry 54 of List II of the VII Schcdule; rather they were conferred with legislative powers to be exercised simultaneously with the Parliament in respect of ta-xes on supply of goods or services or both. While the new legislative power could justify the inclusion of a savings clause in the ne\\, legislation enacted in respect of the new levy of tzrx to save accrued rights etc., under the erstwhile enactment, the truncation of Entry 54 of List II automatically denuded the State Legislatures of the power to further legislate on the subject of ta-xe s on sale or purchase of goods, except to the limited extent retainecl under the Constitution. It has been held that the po\{'er to aurencl a statute being a facet of the legislative po\\/er itself, the State Lcgislature could not have exercised a povi'er to amend thc Iierala Value Added Tax Act, 2003 except to the extent permissible s hen it did not retain any residual right to further legisiate orl the subject of tax(.s o sale or ourchase of qoods-

71 100 An idr:ntical issue czrme up before another single bench of the Kerala Higi-r Court in HINDALCO INDLISTRIES LIMITED (3 supra|. Followrng the same line of reasotring a<lopted by the previous bench in BAIJU A.A. (10 supral it has been held that after the Constitution Amcndment Act, State Legislatures stood denuded of their powcr to legislate in respe,:t of taxes on sale or purchase of goods that was covt:red under Entry 54 of List II of the VII Schedule; they have instead been conferred rvith legislative powers to be e:ercisecl simull.aneouslv r.r,ith the Parliament in respect of taxes on supply of goods or services or both. It has been held as follon,s: t"gi"bt;,",,t,..ii,.,^.a"il/f iL,:iZ*.',f ,.i,!,1"?;,,'y."o}f ':f taxes on sale or purchase of gloods, that utas couered under Entry 54 of List II of the Seuenth Schedulc to the Constitution, and they were instead confere<l utith legislatiue pou.)ers, to be exercbed simultaneouslg uith the Parliament, in respect o.f taxes on supplg of goods or serui< es or l:oth. While: the tteu leqislatiue potuer could. justifu th<t inc/usion of a sauitgls clctuse in the new legislation enacted it resltect of the neu leuq of ta-x, to saue accrued igh.ts, priuileges, tmnrunities, etc., tuttler the erstulile enactment, th.e deletion of Entry 54 oJ' List ll crutontol[cctlly denuded the State Legislatures of the power to Jitrltler leltislate on the subject of taxes on sale or pur<;hase o.l'goctds, e.tcept to lhe lintited exte.nt retained under the Constitulion. 'l'he power to arnattd e :;tatute being a focet of the legisl<ttit'e pouer itself, the Stolc Lc:qislalure could not taue exercised a poLuer 1o onteru). lh<: KVA'I' Act, ue to the extent permitted, tuht,n it did rtot retoitr untl rcsidttll tight to further legislate on the subject oJ'taxes ort sule or purchase of goods".

73 101 A division bench of the Allahabad High Court in M/s. reahzation of advertisement ta-x under the U.P. Municipalities Act, 1916 on the ground that \ ,hen tl-rere is no provision to impose such tax there carl be no pon,cr to frame any by-laws in that regard. The power to le'"y advertisement tax was traceable to Entry 55 of List II. Allahabad High Court noted that the Constitution Amendment Act came into effect from 16.09.2016. U.P. Goods and Serviccs Tax Act, 2017 came into operation with effect from Ol.O7 .2017 . The b,v-larvs by which the municipalities intended to le',y and collcct tzlxcs on advertisement were framed on 12.O1.2017 but publisheci on l9.OB.2017 i.e., after 01.O7.2017 when the U.P.Goods and Services Tax Act, 2Ol7 came into effect. Allahabad High Court also noted tl-rat b1, r,irtue of the Constitution Amendment Act. Entrr' 55 ol List II u'as omitted. It r,l,as in that context that Allahabad High Colrrt l-reld that after omission of Entry 55 of List ll of the Vll Schedr-rle to tl-re Constitution of India by the Constitution Amenclment Act r,r,ith effect from 16.O9.2016, even the State Legislattrrc did not have the legislative competence to ler,y or collect tarxes on advertisement which was earlier

71 availablc under Entry 55. Further, the bench noted tlrat the powcr t() tax eerrlier vcsted with the municipalities under Section 128 (2) (VII) of the U.P. Municipalities Act, 1916. Having been omitted bv virtu,: of Section 173 of the U.P.Goods and Services Tax Act, 20 17 , the municipalities did not have the statutory competence to lely, impose or collect advertisement tax. I.urther clarifying the position Allahabad High Court held that the State Legislature t,as Lnvested with the power to make laws in respect of taxes on adr ertiscment vide Entry 55 of List II to the VII Schedule brrt tlre said entry was deleted by the Constitution Amcndnrent Act vvith effect from 16.O9.201. 6. The Constitution Amendrnent Act vide Section 17 amended the VII Schedule and omitted trntr\' 5:; of List II, thus deleting the power of the State to make lzrws in re;pect of taxes on advertisement. Therefore, when the State rt as denuded of the power to make lan,s in respect ol taxes on a<lvc'rl isement, obviously the municipalities wr:re also divesteri of thc pou.er to impose any tax on advertisement. lo2 -lhis lir-rc of reasoning has also been followed b.y a later divisi,rn lrcnt:l', of the Allahabad High Court in Jain Distillery Private Limited (4 supra). In this case, the Aliahabrrd High Cottrt exarn ined the positior-r as to thr: competcncc of the 75 Parliament and State Legislatures to enact laws to impose dutics on excise and to le',y tax on sa-le of alcoholic liquor not for human consumption post the Constitution Amendment Act. it was noted that the express intent of the constitutional change made vide the Constitution Amendment Act was to tax alcohol under the GST regimc except alcoholic liquor for human consumption. Thus, alcoholic liquor not for human consumption or industrial alcohol or non potable alcohol would be subject to GST laws onl1,. According to the Allahabad High Court this intent has been expressed through Section 174 (ll (i) of the U.P.Goods and Services Ta-x Act, 2017. Section 174 (Il (i) of the U.P.Goods and Services Tax Act, 2017 reads as follows: " 174. (1 ) Saue as othertuise prouided in this Act, on and front the date of corrunencement of this Act: {i) 'l'he Lltter Pradesh Value Added Tax Act, 2008, except it respect of goorls included in Dntry 54 of the State List of the Seuutth Scheclule to the (:onstitution, are herebg repealed." lO2.L It lr,as in that context Allahabad High Court held as follows:

"

78 Value Added Tax Act, 2003 by virtue of the Gujarat Value Added Tax (Amendrnent ) Act, 2O7B enacted on 03.04.2018 giving retrospective opelation from O I .O4 .2006. Sercl ion 84 A prcvided for exclusion of tlre period spent betr,r,ecn the datc of the dt:cision of the Appeilerte Tribunal and that of the High Court as well as the Supreme Cotrrt irL computing the period of linritation referred to in Section 75 of the said Act. Therefore, one of the questions which fell for considera tion r,r,as rvhel.her Section 84 A of the Gujarat Value Adclecl Tax Act, 20O3 was ultra uires and beyond the legislative compeience of the State under Ent,ry 54 of the List II of the VII Schedule After due analvsis Gujarat High Court held as follows: "9O. 'l'he Dntry 54 in List II in Schedule VII of thet Constitution of India was amended to extinquish the power of Sfates to leuA tLres on sale or purchase of goods except taxes on the sale' of petroleum products artd ctlcoholic tiquor for human consumption. Therefctre, lhe potLter to amend ang laut tuith respect to leuy of tax on the sctle or purchase of goods suclt as "Gu-jarat VAT Act" could lrc said to ltoue been ctbolished uith the aforesaid amendntent in lint41 54 irt List II irt Schedule VII of the Constitution of lttdkr. 91- Hauing qiuen our eclntest considerelioft to all the releuant aspects of the metler, we hrtue rettched to the conclusion that arlicle 246A of the Constituliul oJ lndia does not saue sectiort 84A of lhe VAT Act from being declctred inualid or ultro utres. As notetd aboue, arTicle 246A of the Cortstitution u.tas inserted bg the l Ol* Corlstitution Amentlment Act tuith the sole or rather the precise objcct of subsunitcl nttltiple indirec:t taxes artd lo con.fer concurrenl potDer t.o the Par[iament and State Leqi:;laturc to impose "goods and -senrice.s tax" in accordance with thr: rccontntendation s ol tha Goods and Seruices Tcx ()ourtcil statute under arli:le 279A of the Constiluttol of Inrlia. I'he ue41 object of s'lrch larr1e s<'ale refonn

7\) tDos to replace number of indirect taxes being leuted by the Union and the Slate Gouenlments und to rernoue the cascading effect of taxes artd prouid<: for u cornnt-on nationol market for goods and seruices. This is apparent from the statement of objects and reasons rekred to l:y thc Supreme Court in Mohit Mineral Put. Ltd. l2o18l s8 oS?R I lSC/ : [2019] 2 SCC 599. 92. Further section 18 to the Constitutton Amendment Act prouides for compensation to the States for the loss of reuenue aising on account oJ the implt:ntentution of the goods and seruices tax for a peiod of Jiue years. 'fhus the entire scheme of the Constitrttiort Amandment Act recoqnizes lmposition of onlg "goods and seruices lctr" urrler arlicle: 246A of the Constitution of India. The phrase the "qoods antd seruices tax" is defined under article 366 (29A) to nlean ena tex on supply of goods or seruice or both excepl toxes on llle supplll oJ' alcoholic liquor for hltman consumption. .Such "stt1:1tlt1" cannot be fragmented into different compotTents by the Stole Legislature and assume power to impose independent t{tx on lhe sale of goods uithout rekrence to the Goocls orrri Scruiccs Tctx Council. Such interpretation utould be contra4l lo the entire scheme as uell as the object and purpose of the L-onstitulion Amendment Act. In fact the prouision prouitlirtrl .lrtr cornpensation to the States for the loss of reuenue chLe to tlrc qoocls and serutces tax would also be irreleuant il the Stute Lcqislotures are independentlg empou.tered to enact salt.s lrtx/ trtlue uddecl tax legislations bg taking recourse lo afticle 216A oJ the Constitution of India-

lr0 benches of Allahalrad FIigh Court in M/s. Pankaj Advertising (16 supra), Jain Distillery Private Limited (4 supra) ancl the division bench of Gujrrr:rt High Court in Reliance Industries Limited (2 supra). Not onlv the Second Amendment Act cannot be traced to Article 246 of the Constitution read with Entry 54 of List II of the VII Schedule, the same cannot zrlso be sustained as a stancl alone legislation of the State under Article 246A of the Constitution in the absence of sinrultaneous legislation by tht: Pzrrliament. 106 Lr't us, nou, deal with Section 19 of the Constitution Amendment Acl, u'hich reads as under: 19, Notu rthstanding anything in this Act, any provision of any law rclating, to t:r\ )r1 goods or services or on both in force in any Slate immcdi:rte'lv l;efore the commencement of 1.his Act, which is inconsistcr)t u,ith thc provisions of the Constitution as amended by tlris Act slrall t'cntinue to be in force until amended or repealed by a coml)etcnL l,crlislature or other competent authority or until expiratior] ()l ,)nc year from such commencement, whicheve| is ca rli<'r. t07 Sccticn 19 starts with a non- ob:;tante clause. It savs that notr','ithstardir-rg anything in the Constitution Amendment Act, arnl provision of any law relating to tax on goods or services or on both ir-r force in any State immediately before cotnmcr)ccrlr('rrt of tl're Constitution Amendment Act. u,hich is incor-rsistcnt ri itlt the provisions of the Constitution as amended b_\' tht' Constitr-rtion Amcndment Act shall continue to be in lorce until atnetrclecl , rr repeale d by a competent Legislature or other

til competent authority or until expiration of one year from such commencement, urhichever is earlier. 108 Thus, the purpose of this provision is to provide for a window or transition by suspending invalidity of inconsistent legislations existing immediately before commencement of the Constitution Amcndment Act for a period of one year or till such legislations are amended or repealed, whichever is earlier. The objective appezrrs to bc for a transition to the GST regime brougl-rt into force b,y the Constitution Amendment Act. All that Sectior-r i9 does is to pro",idc a period so as to eliminate or remove all las's inconsistent ,'r,ith the GST regime within an outer limit of one -\re.u period. Section 19 does not and calnot be construed to eclipse the amendments carried out in Entry 54 of List II to the Vll Schedule or confer legislative competence upon the State Legislatures lor nierking rrmendments to the VAT Act in respec't ol goods other tharl the five petroleum products and alcohol for human consumption c'ovcred by the amended (substitutcd) Erttr-\' 54 ol List II. 109 arnendment of EnLrr' 5-l ol List II is denuding the State l-egislaturc As alrcadv discussed above, consequence of of the power to levY tax qll sale of oo de nth r th

n2 provided in amt:nded trntry 54; invalidation of Stat e iegislations existing irs on 16.09.2076 levying tax on sale of goods other than those finding plar:e in amended Entry 54. Section 19 does not postpones deprivation or denuding of legislative compelerlce of State Legislature for levying rax on sale of goods other than those mentioned in amended (substituted) Entr-'.54 of List II. Section 19 only allows operation and levv of tax unrler the VAT Act u,hich is inconsistent with the GST regime for a pcriod of onc vear or until the VAT Act is repealed or amenclcd, u,hrchever is earlier. This r,vould mean that the State could continue to le\,ry tax uncler the VI.T Act for the window period of one -vear or till the VAT Acl r.r'as am,:nded or repealed to align it n,ith thc GST regime, u.hichever rn'as e.arlier. This transitional provision does not errable thc State Legislature to make amendmenl s to the VAT Act in contr:rventi()n of the amended Entry 54 of List ll save or 11o At tiris stage, we may refer to Articlr '2432F of the (lonst,it ut iorr. Pert IXA dealing with municipalitics u'trs inscrted in thc' Constitution by the Constitution (Sevent-r' fbrrrtl-r Arnerdment) Act. l!t92 rvitl'r effect from 01.06.1993. Arlic'lc's .lJ3 [) trr Article 24:\ Z(\ <;ompri:ses of Part IXA, all dealing u'ith n-rr rrricipalities. Bv thc' :rlcrresaid provisions municipalities and rnunicipal

tt-1 administration were brought under the umbrella of the Constitution. Article 243 ZF provides for continuance ol existing laws and municipalities. This provision is pan ntatena to Section i9 of the Constitution Amendment Act. Article 243 ZF reads as under: 243 ZF. Continuance of exzstirrgT laps ctnd Municipalities:- Notuithstanding anythitg in lltis Pcrrt, ant4 prouision of ang lau relating to Municipalities in _force in cr State immediately before the commencemetlt of tlrc Consliltrtiorr (Seuenty-fourth Amendment) Act, 1992, uthich is inccrrsislerrt ruith the prouisions of this Part, shall continue lo be irt force until amended or repealed by a compelertt LegiskttLLre or olher competent outhoritg or until the expiration of orte year frorn such commencement, u.thicheuer is earlier: Prouided thnt all the Municipalifies existingT irLrnediately before such commencement shall continue till the expiration of their duration, unless sooner dissolued by ct resoltttion 1-rrr.s.serl to that effect bg the Legislatiue Assembly of that State or, irt the case of a State hauing a Legislatiue Courtcil, by t,ach horr-se of the l,egislature of that State. 1 11 As per this Article, notwithstanding anything in Part IXA of the Constitution, any provision of lan, relating to municipalities in force in a State im mediatelv bcfore commencement of the Constitution (Seventy-fourth Amendmc'nt) Act, 1992, which is inconsistent with Part IXA, shall continue to be in force until amended or repealed by a competent Legislatllre or other competent authority or until expiration of one ]-car from such commencement, whichever is earlier.

8J t12 considerin€l challenge to acquisition of land for formation of Arkavathi Layout on the outskirts ol Bangalore city by the Bangalore Development Authoritl, undr:r the Bangalore Development Autl-rority Act, 19-/6. It u,as in that context Supreme Court considered the question as to r.r,hether provisions of the Barrgalore Develc,pment Authority Act, 1976, moro particularly, that of Section lii dealing u,ith the pou.er of tl-re authority to draw up schemes for developmerrt of Bangalore Metropolitan area became inoperative, void or u,as impliedlv repealed by virtue of Part IXA of the Constitution. Supreme Court held tirat Article 243 ZF is a provision enabling continuancc of anl provision of law relating to municipalities IIt spite ol srrch provision being inconsistent with the provisions of Part IXA cf the Constitution for a specified period of one year or until arnended or repealed, whichever is earlier. It rn as he ld ers follou,s: "Any statut. or l)rovision thcreof u,hictr is rrconsistent with any constitutional provision rvill be struck dorvn lx ccrrrts. (lonsequently, if BDA Act or aDy provision of the Bl)A Act is found l() bc rnconsistcnt with any provision of Part IXA of tllc Constitr.llion, rt \rill ire struck dou,n by courts as violativc of the Constitution. lrr rcgitrd 1o ;1r]\ I)rovision of any la\\, relating to municipalities, Articlc 2432t strspc'rris srrr:h invalidity or postpones tht: invaliditv for a pcriod of one lcar [r,)nr l.{). lgg3 to enable the compctcnt Lcgislal ure [o r('rnovc thc inconsisterrcr 1x irmending or repealing sut'h law relzrting to nr trnicipalitics to lrrinri it in r-orrsonance with the provisions o[ l'art IXA of the Constitutiou." In Bonidu Ramaswamy (6 supra), Suprerne Court was 85 113 As has been held by the Supreme Court, Article 243 ZF suspends such invalidity or postpones the invalidity for a period of one year to enable the competent Legislature to remove the inconsistency by amending or repealing such law relating to municipalities to bring it in consonance u,ith the provisions of Part IXA of the Constitution. 114 On the above anal,ysis s,e have no hesitation in holding that Section 19 of the Constitution Amendment Act cannot be understood or cannot be construecl as a source of legislative power. It is also not a saving provision in respect of suspending legislative competence to amcnd tl're VAT Act. This aspect was gone into by the Gujarat High Cor-rrt in Reliance Industries Limited (2 supra) r,herein it h:rs becn held :rs follor'r's:

tt6 lau s to bring them in harmony r.r''ith the CA Act. Otherwise, the States must repeal thern. And the_\, u,cre given one year fol achieving this. lf the States do ncither, those inconsistent acts stand repealed. 1.12. lJcre, the Statcs actcd; they amend(:d a few inconsislent Acls. 'l'hcl, aJso rcpealerl a ferv morr:. As with the KVAT Act, the repeal, if it wcre, has not lesiulted in its abrogation or annihilation. So the operation of th<: so callccl sunset clause (as provided in Section l9) has not denuded the State s po\ver to enforce the KVAT Act in its arnended form. The Act renrzrincrl. \r,ith i:s remit reduced, though. Thus goes out of reckoning the petitioncrs' anotlrer assertion: that with the repeal of the enactments, the procedural mecl-anism has disappeared. [t has not. The prospectivitv of the amendrnerrt undisputed, what remains to be examined is the State's powcr to sr[,e wtlat had happened before the CA Ar:t came into force or, rnorc prccisel-r,, rrntil onc vcar after that Act came into force. Indeed, the CA A<-.t allo,.,,ed tllc State Acts in th(: same legislative held to coexist for one vear: thc wrndo$' period,

u7 ll7 Therefore, from the above analysis we can safely conclude that Section 19 of the Constitution Amendment Act is not a source of pou,er to enable the State l,egislature to enact the Second Amendment Act, which is clearly inconsistent with the Constitution Amendment Act. 118 We have already noted that the Constitution Amendment Act, more particularly Sections 1 to 1i and 13 to 20, came into force on and from 16.O9.2016. Thereafter Parliament enacted the CGST Act and other related enactments, most provisions of such elractments having come into force on and from O 1 .O7 .2017 . St:rte of Telangana also enacted the TGST Act While majoritv ol' tl-re sections came into force on 22.06.2017, Section 174 of the'IGST Act which provides lor repeal and savir-rg came into force on and from Ol .O7 .2017. Section 174 of the TGST Act reads as under: "174. Repeal Artd Sauittg:- (1) Saue os othenaise prouided in lhis Act, on and frorn the date of commencement of this Act, fl The Telattgarta Value Added Tax Act, 20O5 (Act 5 ol 2OO5); exruzpt in respect of goods included in tle Entry 54 of the State List of the Seuenth Schedule to the Constitution, (ii) The Telartgatte Dtltenaitunents Tax Act, 1939 (Act X of 1939); Itir) The Telarqortcr Tol ort Erttry1 of Motor Vehicles into Local

n8 (iu) The Telarryana Tax on Entry of Goods into Local Areas Act. 20O1 (Act 39 of 20O1); (t,) The Telangana Tax on Luxuries Act, 1987 (Act 24 of 1987); (t,i) Tle Telar,gana Horse Rocing and Betting Tct-tt Regulation.s, 1358F (Regulation XLX of 1358F); (uii) The Telartgana Rural Deuelopment Cess Ac| 1996 (Act 11 of 1996); (hereafter referred to as the repealed Acts) ore herebu repealed. (2) The repeal of the said Acts and the amendment of the Acts sy,tecified r section 173 (hereafter refen ed to as "such amert.dment' or "amended Act", as th.e case may be) to the exterft mertioned in sub-section (1) or section 173 shc l not- (cL) reuiu<z anltthing not in force or existing at the time of such tnn <:ndment or repeal; or (b) affec't thLz preuious operation of the amended Acts or repealed Acts and orders or angthing duly done or sttffered tlrcre,urtde'r; or (c) afJbct ang igh| priuilege, obligation, or liability ctcquired, acotted or ircurred under the amended Act:; or repealed Acts ctr rtrder< ttnrler such repealed or amended Acts: Prouided that ang tax exemption granted os an incentiue agrzinsl in uestrnent through o notiftcation shall not continue {rs priuilege if tfut said notification is rescinded on or after tite apltointed dag: or (cl) affect atLA tox, surcharge, penalty, fine, interest as are t rc or rrrrty ltt'corne due or anA forfeiture or punishment inatrretl or irtJlictetl it rt'qtect of ang offence or uiolation conunitlr:cl oryairr-st (<') a.f.'fccl any inuestigation, inquiry, ueiJicat ior t (irtcluclitg scr rrliruT ttnd audit), assessmenf p roceedings, ad.iurl ir.atiort cutcl rtntl otlrcr [<:g1al proceedings or recouery of arrears or rernedq it re,.s7,rr,r:l of tuty such tax, surchorge, penaltA, ftne, ir erest, riqli, ltritilccl<t. oliigation, liabilitg, forfeiture or pru r ri-:-l r rrrerr t, rrs rt[or<'soitl, arul any such inuestigation, iru1utny, ut:dflcctticttt (tnt'lttrlirtg scrutiny and audit| ossessme,ll pro<:eeclittgs, rrclyrt|icctlton ct'td other legal proceedin-gs or recouerly of ctn"ears or rarru'rlrl rrtaq be instituted, continued or ertforcerl. ancl anry

lJ9 such tax, surcharge, penaltA, fine, interest, forfeiture or punishment maq be leuied or imposed as if these Acts hctd not been so amended or repealed; (fl affect ang proceedings including that relatitg to an appeal, reuision, reuieu or reference, instituted before, on or after tlrc appointed day under the said amended Acts or repealed Acts and such proceedirLgs shall be continued urtder the saicl amended Acts or repealed Acts as if this Act had not corne irto force and the said Acts had not been amended or repealed. p) 'fhe mention of the particular matters rekrred to in sectiorr 173 and sub-section (1) slnll not be held to prejudice or affect the general application of section 8, 8A, 9 and 19 of tlrc Telangana General Clauses Act, 1 891 (Act 1 of 1 891 ) with regard to tLLe effect of repeal". 119 Thus, AS per Section 174 (ll (i) thc VAT Ac1 stood repealed with effect from 01.07.20 17 except in respect of goods included in Entry 54 of the State List in the Seventh Schedule. When u,e refer to Entry 54 of the State List i.e., List II it nre:rr1s the entry as it stood oo O1.O7.2017. We have alre:rcl-\, noticercl th:rt post the Constitution Amendment Act, Entry 54 ol List II has lrc'ct'r substituted whereafter the field of legislation undcr the said c'ntr r' is confined only to taxes on the sale of petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviatior-r trtrbinc luel and alcoholic liquor for human con surt ptiot-t; fttrther clarifyir-rg that this would not incluclc sitlc ol sr-tch goocls ttr thc course of inter-State trade or commerce or sitlc in the coltl'st' ol international tracle or commcrce ol sltch grtrtcls. Thercfot-c. l1)

90 repealed \\ ith e fft:t:t fi-orn ol.oi' .2017 except tn respect of the goods covered b1" the am ended (established) Bntry 54 of List II 120 As a matter of fact., \ve may observe that the very presence of Section 174 (11 (i) in the TGST Act buttresses the stand taken by the petitioners. 121 in Sheen Golden Jewels (India) Pvt. Limited (7 supral the questLon before the single bencLL of'the Kerala High Court was whettrer the State I'rad the legis.ativc competence to enact Section 77t of the Kerala Goods and Sr:rvices Tax Act,2Ol7 and save the past taxation events when Entrr' 54 List II stood omitted permanr:ntiy with efl-ect from 16.O9.2016. We may mention that Sec:tion 174 of the lterala Gocds ancl Services Tax Court was called upon to examine const-ittttion al validity of Section 174 of the Kerala Goods and Scrviccs'l'ax Act, 2017 on the anvil of Section 19 of the Cor-rstitution Anrenclnrc'r.tt Act. It was contended that State had no legislative po\\'er t() ovrsp 1l6ls Section 19. Kerala High Court took the vicu. that ul-rile Scction [9 is a transitional prov:sion; the job of saving is clonc' lrl Section 174. Though Section 174 has repealed the l(erala Valuc l\dded Tax Act, Act, 2017 is pa materia to Section 174 of thc I'GST Act. The 9l 2003, the repeal has not affected the previous operation of the repealed act. In other ra,ords, the repeal has not affected any right, privilege, obligation liability acquired, accrued or or incurred under the repealed act. In the above back drop, single bench of the Kerala High Court rejected the contention that the State lacked the competence to engraft Section 174 into the Kerala Goods and Services Tax Act, 2Ol7 and accordingly upheld constitutional validity of Scction I 74. 122 We see no conflict or contradiction betr,r.een Section 19 of the Constitution Amendment Act and Section 174 of the TGST Act. While Section 19 has deferred invalidity of inconsistent legislations till such time thosc trre amended or repealed or for a period of one year '*,hichever is earlier, Section 174 of the TGST Act has repealed amongst other enactments the VAT Act with effect from 01 .O7 .2017 except in r-cspe ct of goods covered by the substituted Entry 54 ol List II. Thus Section 174 of tL.e TGST Act is in consonance with Section l9 ol the Constitution Amendment Act. The above position onl_v sr-lpports thc casc of the petitioners that the State was denuded of its competcncc to legislate on GST after 76.O9.2016 arrcl certzrinlt :rfter 01 .O7.2O17

92 123 Re pciLl of iln enactraent u,ou1d mean that such an enactment is er;iscd lrom the statute book; it would no longer be in existence. This aspect \\,as gone into by thr: Gujarat High Court in Reliance Industries Limited (2 supra). [t has been held as follon,s '6B.EJfecl o.f repeal at common law-Repeal obliterates the statute as if it itc"s neuer been enacted:

93 MANU/SC/0O2O/ 1951 : AIR 1951 SC 128 referred to a passage frorn the Crauford's book on Statutory Construction uLhich reads as under: "It is utell-settled that if a statute giuing a special remedg is repealed utithout ct sauing clause in fauour of pending suifs all suils must stop uthere the repeal finds them. If final relief has not been granted before the repeal uent into effect, it cannot be after, if a case is oppeaLed, and pending the appeal the laut is changed, the appellate coutl must dispose of the case under the lctut in force utlerr its decision utas rendered. The effect of the repeal is to obliterate the statute repealed as completelg as if it had neuer existed, except for tlrc purposes of those actions or suits uhich uere commenced, proseanted and concluded uhile it u)es arl existing law. Pending judicial proceedings based upon a statule cctnnot proceed after its repeol. Thk ruIe holds ttue wltil the proceedings haue reached a final judgment in the court of last resoft, for that court, wLrcn it comes to announce ifs decisiorr, conforms it to the laut ttrcn exi.sting, and may therefore, reuerse a judgment uthich uas correct tuhen pronounced in the suLtordinate tribunal from uhich wLrcnce the appeal was takett, rf it appears that pending the oppeal a statute uhich tuas trccessary to support the judgment of the lower cnurT has beett uithdranun bg an absolute repeal." b.601) (emphasis supplied)

95 anv other enactment, then the repeai shal1 not effect anything done or any offence committed or any fine or penalty incurred or any proceeding taken before commencement of the repealing Act; or reviving anything not in force or existing at the time u,hen the repeal takes effect; or affect the previous operation of an.r' enactment so repealed or anything duly done or suffered under any enactment so repealed; or affect any right, prir.ilege, obligation or liability acquired, accrued or incurred under an,r' enactment so repealed; or affect any fine, penalty, forfeiture ctc, incurred in respect of any offence committed under an-\/ enactment so repealed; or affect any investigation, Iegzrl proceeding or remedy ln respect of any such right, prir.ilcgc, obligation, liability, fine, penalty, forfeiture or punish ment ancl any such investigation, legal proceeding or re mcdy mav lrc instituted, continued or enforced and anv such fine, penarltr', forleiture or punishment may be imposed as if the repctrling Act had not been passed t26 Section 8 of the Telangana General Clauses Act, 189 I is similar to Section 6 of the General Clauscs Act, 1897. t27 Section B A of the Telangana General Clauses Act, act reoeals a 189 1 savs that \\,hcrc anv lt ,:) ('l n I cr-r r lrv u.'h ich t I'r c

96 text of any previous enactment was anlended by express omission, inserticn or substitution of any matter thcn unless a different intention appears, the repeal shail not alfect continuance of any such amerrdment made by the enactnrent so repeak:d and in operation at th,: time of such repeal. the interpretation of the Constitution of India. Clarrse (l) of Article 367 is relevant. It says that unless the r:ontext otherwise requires, the Ceneral Clauses Act, 1897 , su lrject to any adaptations and modifications that may be miLde therein under Article 372, shall apply for the interpretation ol the Constitution as it applies for the interpretation of an Act oi the Lcgislature. 129 Gujarat High Court in Reliance Industries Limited (2 supraf examine<l this aspect as r.r,ell an<l ht'lrl that (ieneral Clauses Act, 1A97 applies only for interprctation of the Constitution but in respect of other mattersi, suclr as, savings in the case of repeal etc which are unrelated to intc|l)relation may not apply by virtue of Article 367. Section 6 ol the (leneral Clauses Act, 1897 or Sections B/BA of the 'l-clarrgana General Clauses Act. 1Blt1 ',l,ould apph'onh, to repeiri ol :rrr cn;rctnrcnt. A Constitution Arrendment Act is not or car-noT lrt' lerme<l as an l2B Article 367 of the Constitution ol' India speaks about

97 enactment. Therefore, beyond u,l'rat is stated in Clause (l) of Act, either the Central Act or the State Act, u,ould not apply to the Constitution, including the Constitution Amendment Act since a Constitution Amendment Act is made by the Parliament in exercise of its sovereign po\\'ers undcr Article 368 of the 71. Applicability of the General Clauses Ac--t, 1897 for the interpretation of the Constitution: 71.1Article 367(1) ofthe Constitution states that the General Clauses Act, 1897 (subject to the adaptations llrd moclillcation made under arttcle 3721 shall apply for the "interprctation of the Constitution. The relevant extract is as undcr. "367. Interpretation. -(1) Unless tht- contest otherwise requires, the General Clauses Act, 1897, shall, subjcct to any adaptations and modifications thert m:rv be made therein under article 372, apply for t]rc intcrpretation of this Constitution as it applies for thc intcrprct:rtion o[:rn Act of the Legislature of the Dominion of Incliir. '

98 7 1.4 Furthr:r, s,:ction 6 applies only to repeal of an enactmont. Enactment rs rlcllned rrnder section 3( 19) of the General Clauses Act to include relIutation or any provision contained in any Act or regulation. Hou'ever, Constitution is not :rn enactment. 'the Constitution is ;upreme and is, in fact, the foundation of all the enactment. This has l;een obscn,ed by the Lau' Commission in its 6oth Reporl on tl-rc (ienererl Clzruses Act 1897 in the context of secl-ion 8 (construclion of rcferences of rcpealed enactment). The relevant extract of the rcport is ars under: " 1-30. Effer:t of section 8 on article 367. Will section 8 of the General Clauses Act, which provides that when an enactment is repcaled :rnd re-enacted, references to the old enactment will be r:onstrucd as refcrences to that, re-enacted one, make any diffcrcncc? We do not think so. It should be noted that the words'unless thc contcxt otherwise requires' (in article 367) mean thal the Clenererl Clauses Act, section 8, is to be cxcludecl. l},en by its tcrms, section 8 of the General Clauses Act will not apph, to thc Constitution, because expression 'enactmcnt' lwhich occurs in scction 8) would not take in the Constitution. which is not an 'enactment'. The Constitution is supremc anrl is, in fact, the foundation of all enactments."

99 the repealed act in respect of those goods by virtue of the Second Amendment Act would not arise. 131 Though therc is no challenge to the Ordinance, nonetheless we may also examine the same since it is the contention of the State tl'rat the Ordinalce was promulgated during the window period and the subsequent Second Amendment Act is given eflect to from the date of promulgamation of the Ordinance, therebv making it a valid piece of legislation. 1s2 lt was strongl_v argued by learned Advocate General that when the Ordinance \\,as promulgated, State of Telangana had the legislative competcnce to so promulgate the Ordinance and the Second Amendmcnt Act which was made subsequently was nothing but a continnation of the law as promulgated by r.l,ay of Ordinance since it s'as given elfect to from the date ol promulgamation of thc Ordinirnce. 133 To zrppreciate thc arbove contention, we may note thzrt the Constitution Amendment Act came into force on and from 16.09.2016. Section 19 of the Constitution Amendment Act provided lor a u,indou' pt'riod to thc States to remove an-\r inconsistent enactments irl ii arr, of amendment or repeal or until

100 earlie r. 'lelang;rr: a Ordinance No.2 of 20 1 7 was promulgated bv the (lovernor o1' 'lelangana on 17 .06.2017 to further amer-rd the VAT Act. Thrrugh the Ordinance was promulgated after coming into force of the Constitution Amendment Act on 16.09.20 16, it WAS SO promulgtrted within the window period of' one year as provided bv Scction 19 of the Constitution Amen<iment Act. At this stagc \\,(' rnay mention that following the Constrtution Amcndmcnt Ar:t, State of Telangana enacterl the TGST Ar:t r.r,ith ellect frorn O 1.O7.2017. 134 B,-'lirrr ne deal with the Telangar a Ordinancc I'1o.2 of 20i7, r.r,e rna-\' note that power of the Governor to promulg:rte ordinan<:c is tr:rceable to Article 213 of the (lonstitution of Inclia. Arti<:lc 213 provi<les as follows: "273. Power of Goaernor to p"omulgdte Ordinances during recess of Iagisldture ( I ) 1f ot ong time, except uhen the LegisLatiue A-s-semblg orf a Sfale is irt .sc's-srrrrr. c'r tt'lrtre there is a l,egislatiue Council it a State, except tt'hen ltotlr I/<rrr-ses tr/ llk, lagisloture are in session, the Gouernor is sali.slie.l litoa cir crrrrr-sln r rcr,-s r,.ri-sf ruhich render it necessary for him to toke intntedrate actiotL he Dteq ptotiu[gelt' st.clt Ordinances as th.e circum-stances appear to lti,il to rerltire: t\ttt'nl*l tllat the GoDernor shaLl twt, tltithout instructions froil tlll' Prestdetlt.. ltntrrrt tlr lttl r' r rnr/ srrch Ordinatrce if- le) u tl:ll containing tlLe sane prouisions toould uttder tfti-s (-(,r.slit(lro,r l(t,? rt'(tltrecl lhe preuious sanction of the Presidc,tlt [(rr tlle utrodu(llotl I l t,'t e, ) l' I t t o t he legTislature; or llt) ln' tt.tottlrl haue deemed it neces ry to reserue e l]tll .otiouttLq lh( sttrrtt ]tr otttsiotls for the con sideration of the President; or lrt .ln /\ct of the lagislature of the State cotttoinittJ llrr' -sonrt, irror)isrorr.< rt,tttltl t,rtrler lLris Constitution haue been tualkl utrk,ss. lrrtlirLtl beel |r's.rlt'rl l'ar thc consideralion of the President, it ltad rett'ired rlr.,(rs-se[l oi ! 1t, 1' , ;:,lent (2) t\n Ortltrttrr ce promulgated urtder this article sholl ltat'e: tlrc, .sorrrr, /orct, rrrrc/ ef[<,(t es rttr \rt of lha legislature of the State assented to br1 lht (;ot)errot. brrl ?t)ery st t<'l L ( )n I t tt ;t t i,',

l0l (a) slrcll be laid before the Legislatiue AssemblA of tlrc Stote, or wlere tlter<' is o Legislaliue Council in the State, before both the Houses, and sll? cecse to op<.role al the expiration of six ueeks from the reassembtg of the. Legislctture. or if before lhe expiration of that peiod a resolution disapprouirtg ir is p.rsse.l lr-rl the l.egislatiue Assemblg and agreed to bg the Legislatiue Cotttrcil, if any, rtl.tott frie passi,i(/ of the resolution or, as the case maA be, on the resolutiort beitrcl aqreeti to by lhe Council; and (b) nwy be withdrawn at ang time bA the GouenTor. Explerlotion.-Where the Houses of the Legislature of a Slate lnuirtg ct Legislaliue Cowtcil are summoned to reassemble on different dates, the period ol' si-r rueek.s slrcll be reckoned from the later of those dates for the, putposes of 1/ris r'lori-se. (3) II and so far as an Ordinance under this article makes ang prouisiort rulticlt tuctulrl nol be uaLid tf ertacted in an Act of the Legisloture of the Stote esst,ttle(l lo l)tl tle Oouenlor, it shall be uoid: Prouiclecl that, for the purposes of the prouisions of this Constiluliotl relating to tlrc effect of an Act of the Legislature of a State uhich is repugnoltt to en Act .l' Porliemenl or on eisting law with respect to a malter enunlerated h lhe Concr,trrenl List, an Ordtnnce promulgated under this article in pursuance of irtstructrotrs Jiotrt tlrc President shall be deemed to be an Act of the Legtsloture of the State rulrrc/r lrrr.s been resented for the consideration of the President and assented to by hint.' 135 While clause (1) provides that if the Governor is satisfied when the Legislative Assembly of a State is not in session or where there is a Legislative Council in a State, the same is not in session, that circumstances exist which call for immediate action, he may promulgate such Ordinance. Clause (2) clarif)es that an Ordinance so promulgated under Article 2 13 of the Constitution shall have the same force and effect as an Act of thc Legislature of the State assented to by the Governor. Hor.r'ever, everJ such Ordinance shall be laid before the Legislature and shall cease to operate at the expiration of six weeks from the reassembly of the Legislature. Clause (3) savs that if an Orclinance makes any provision which \\'ou1d no1 bc valicl if 102 enacted as an Act of the Legislature assenterl to bv the Governor, it shall be void 136 As r-roticed above, the Ordinance \\/:r s promulgated by the Governor oo 17 .06.2O 17. As per pream ble to t he Ord:nance, it is stated that Government of India had enactecl the CCST Act ald Government of Telangana had enacted the TCST Act. But both the Acts had not been brought into force. Refcrring to the provisions of the VAT Act, it is stated that it empora,crs the State Government to levy tax on alcoholic licluor lor human consumption and on petroleum products According to the Constitution Amendment Act, lery of tax on those petroleum products and alr:oholic liquor for human consumption is within the competence of the State Legislature. lt furrtl'rt'r statr:d that repeal of the VAI Act except in respect of thc goods ir-rcluded in Entry 54 of List lI of the VII Schedule by the TCST A(:t, $,hlch was yet to be brought into force, '*,ould not aff,:ct arnl invcstigation, inquiry, verification (inciuding scrutinv and auclit). assessment proceedings, ad.rudication and any other lcgal proceedings or recovery of arr,:ars or remeclv in respe<'t of trnv such tax; surcharge, penalty, fine, interest, right, privilcge, obligation, liability. forfeiture or punishment and an-v such invcstig:rtion etc.,

t03 may be instituted, continued or enforced and any such tax, surcharge etc, may be levied or imposed as if those Acts had not been so amended or repealed. Such repeal \\rould not also affect any proceedings including those relating to appeal, revision, review or reference instituted before, on or after the appointed day under the said amended Acts or repealed Acts and such proceedings shall be continued under thc amended Acts or repealed Acts. Therefore, it vras considered necessary to strengthen certain provisions of the VAT Act to overcome any limitations to help effective revenue realization. Therefore, it was decided to arnend certain provisions of the VAT Act by undertaking a legislation. Since it ri'eis dccided to give effect to such decision immediately and ils thc l-cgislaturc ol Telangana was not in session, therefore, the Governor-, in exercise of powers conferred by Clause (l ) ol Articlc 2 I 3 of thc Constitution promulgated the Ordinance u'hic:l-r birsit:all-r, extended the limitation from four years to six lcars in respect ol assessments, rcassessments, revtslon etc. 137 It is not necessary for Lls to go into the aspect as to *,hether the Ordinance rvas laicl trcforc tht: Asscmblr' or not aud as to whether it had ceased to opcratc aftcr six secks from I 0.t reassembly of tl-re LegislatLlre. It may also not be necessary for us to labour on th(' iispcct that the Second Amendment Act though published i r-L the lclangana Gazette on 02.12,.2017 . was deemed to have come int() force u,ith cflect from 17 .06.2017 i.e. the date when the Orclinance was promlllgated. This is because legislative competence calrrrot flor.r, from an earlier legislation, be it an ordinance or an enactment. Legislative competence must be traceable to the Corrstitution. Therefore, no reliance can be placed on the Ordinance in support of the contention that the Second Amenclnrent Act hacl derived competence from the Ordinance since it was a continuation of th.e law and had come into force from the datt-- of promulgamation of the Ordinance. Such a lir-re of'r-casoning, in our considered view, has no legal substance. Then:fore. it is immaterial that the Ordinance was not challenged in (lo urt. 138 1'h:rt ap:rrt. the ostensible objective of the Ordinance as could be cliscerncd lrom the preamble is to save any investigation, ilssessrnenl, recoverv of dues, legal proceedings etc., pending on the date of corning into force of the Constitution Amendme nt. Act ri l-ricl-r is pr:rfectlv understandable and valid. But that doc:s not mean that limitation across the board could be t05 extended by way of amendment to initiate fresh proceedings, such as, fresh revision proceedings, u'hich otherwise had become time barred. i39 With effect frorn 16.09.2016 the Constitution was amended by virtue of the Con stit lttion Amendment Act. While Article 2464 was inserted immediately after Article 246, the earlier Entry 54 of List Il nas substituted by the new Entry 54, in the process denuding the Statcs lrom making any iaw except on the sale of petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption. Thus the States did not have the competence to make lau, to lci,]' VAT or such tax on any goods other than the above goods. Scction 19 of the Constitution Amendment Act, $,hich can be construed to be a sunset clause, provided for a $ indou, of ont' -\'('iir t() rcmove the laws inconsistent with the Constitution Amenclmcnt Act either by way of amendment or b1, u,ay of repeal. The u,indow period was given to remove the inconsistencies; not to prolong the inconsistencies But what the State of Tclangana did by promulgating the Ordinancc \\'as not lo removc tl-tc ilt consistencies in the VAT Act. As mentioned above, the Orclittancc, I t-l lacl , introduced certain

106 provisions extcnCing limitation to enable initiation of fresh proceedings, sLrr:h as, revisional proceedings 'which are completell, inconsislcnt n,ith the scheme of the Constitu:ion Anrendment Act. On this ground i'self, the Ordinance can be said to have no legal consequence 140 H os c ,,cr, bv the Second Amr:ndment Act, rTl orc part.icularlv, bl S'ection 7 thereof, the Ordinance n,as repealed. As alreadv stzrtr:rl above, the Second Amendmernt Act cannot derive iegislative competence from the Ordinanr:e. It must derive legislativc cc)n p( tence from the Constitution. Unfortunateiy, after substitution of Entry 54 of List II, State rvas denuded of sucl., compctencc tr:rceable to Article 246. As a stand alone legislation, it <:annot rierive legitimacy traceable to Article 2464 of thr: Conslitutiorr zrs s,ell. Therefore, the Second Amendment Act madr: on 02.12.2()1', 'hough given retrospective e:ffect from 17 .t)6.2O17 cannot I)c sul;tained as the sarne is devoid of legislative com pc te l lc( 141 Nt'c<liess to say, way back in 1964, Supremc Court itr A.Hajee Abdul Shukoor (1 supraf was categorical in holrling that u'hilc thc St:rtc l-egislature is free to enact laxs s'hich co.rkl l-ravc retrospe<:tive operation, its competence to make a larn'lbr a certain

past period \l,ould, hou,ever, depend on its present legislative power and not on what it possessed at the period of time when the enactment nould be in operation. 142 Insofar the decisions relied upon by the learned Advocate General are concerned, we have already discussed u,h-v those q'ould not be applicable to the facts and grounds ol challenge made in this bunch of writ petitions. )43 Finally we may also look into the intention of the Parliament in enacting the Constitution Amendment Act. This is because it would give us a clear idea as to why the Constitution Amenclmcnt Act was brought about and why the Second Amendment Act cannot be sustained being completelv inconsiste nt u,ith the scheme of the Constitution Amenclmcnt Act and being denuded of its legislative competence. tn Baiju A.A. (1O supra), Iierala High Court held as follows:

country through the introduction of a (ioods and Sen icc Tax, and the phasing out of the multitude of indirect t:x lcr.ir:s, including value added talies, that were levied and collecteri bv the Centrc and the States. Section 19 of the CAA 2O16, which is the sunsct clause in the saicl enactment, cnvisaged the continuatir)n of thc erstu,hile system of t.rxa.tion for a period of onc year from thc datc of enactment of the CAA or till such time as thc Statc Legislatures amended or repealed their respective VAT legislations, whichever was ea-rlier. When the State Legislature repc;rled tlic KVAT Act, while simultaneously bringing into force the new Statc GST Act, with a savings clause of limited operation. it effcctively acknowledged the absence of any power to legislatc lherezrfter on the subject of tax on sale or purchase of goods, cxccpt in respeci of the limited commodities for which the said poiver \r.as rctained under tJle Constitution. In respect of all other commo<iities, the legislative pow:r of the State was only in respcct of ta-xes on the supply of goods; or services or both, a powcr th:rl had to be cxercised simultaneousl) with the Parliament ald r.rot unilatcrally or exclusively. Thus, at the time of repeal of :he I{VAT Act, and simultaneous ()nactment of the State GST Act u.ith a savings clause thercin, the savings clause operated only to save rigl.rts, prir,,ileges, immunities, ar:tion taken etc under the erstwllile cnactmcnt irs it stood at t1-e time of its repeal, which included tl.re irmenrlmcnts brought in through the Kerala Finance Act, 2017. Thcrc could not have been any further legislative exercise by the State legislaturc in relation to the repealed KVAT Act. 144 We itre in respectful agreement \\,ith t hc views expressed by the Kerala High Court in Baiju A.A (1O supral. Intention of Parliament in ushering in the GST regirne through the Constitution Amendment Act and enactment of thc C(}ST Act and simultaneolrs erlactment of various State (iST Acts Lrl the State: Legislatures is to avoid multiplicity of taxes bv strbsurnirlg those indirect taxes irL a single tax called GST. It is in tlris corttext r.vc have analyzed Section 19 of the Cor-r stitu t ior-r Amenclmcnt Act. Viewed thus ':he amendments brought in b,r' thc Second Amendment Acl , as discussed above, are u,hollv rn('olrsistent \\,ith t08

I09 the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act. r45 Thus, upon thorough consideration of all aspects of the matter, we have no hesitation in holding that the Second Amendment Act is unconstitutional being devoicl of legislative competence. It is accordingly declared as sucl'r. Cor-rsequently, the notices issued and orders passed under Section 32 (3) ol the VAT Act which have been impugned in the prcsent batch of writ petitions are hereby set aside and quasl-rcd. 146 A11 the writ petitions nre accordingl.r' allou'ed. Hoivever, there shail be no order as to costs. 147 Miscellaneous petitions, if :ttl', pcnding in all the writ petitions, shall stand closed. UJJAL BHUYAN, CJ l)ate:05- 07-2022. Kusn1llrks/Pln Note: LR copy be marked (By order) pln SMT. JUSTICE P.MADHAVI DEVI