Sri Laxmi Enterprises vs. The Deputy Commercial Tax Officer-Ii And 4 Others

impugned order.

lA NO: 1 OF 2022 Petition under Section .'15.1 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant stay of all further proceedings in pursuance of the impugned Assessment Order in AAO 33831 daled 211O3/2020 of which Certified copy was served on the Petitioner on 0410612022 for the year 2013 - 14 while rejecting input tax of Rs.40.81.3821 pendinq disposal of this writ Petitio. Counsel for the Petitioner:SRl. T S MURTHY Between: Sri Laxmi Enterprises, Rep by its Proprietor Sri Dilip Kumar Prajapathi, D.No.2l7l117 11008, Beareris Line, Sikh Village, Secunderabad-500009 ...PETITIONER AND '

lA NO: 1 OF 2022 Petition under Section 151 CPC praying that in the cirt:umstancet; stated in the affidavit filed in support of the petition, the High Court ma1,be pleased to grant stay of all further proceedings in pursuance of impugned Assessment Order in AAO 8691 dated 2O-02-2O2'l of which Certified copy was served on the Petitioner 04-06-2022 for the year 2014-15 while rejecting input ta:( of Rs.3'1,23,762l- pending disposal of this writ Petition- Counsel for the Petitioner:SRl. T S MURTHY Counsel for the Respondents: SRl. K. RAJI REDDY, SENIOR STANDING COUNSEL FOR COMMERCIAL TAXES The Court made the tbllowing: I

THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE MRS JUSTICE SUREPALLI NANDA WRIT PETITION Nos.26888 26920 26950 26951 e 27L22 of 2022 COMMON ORDER: (Per tlle Iloi'ble the Chtef Juslu:e Uljal Rhuyan) \ Heard Mr. T.S.Murthy, learned counsel lor the petitioners and Mr. K.Raji Reddy, learned Senior Standing Counsel, Commercial Tax for the respondents. 2. [t is submitted that issue raised in these writ petitions has been answered by this Court in W.P.No.7893 of 2020 and batch (M/s. Sri Sri Engineering Works v. Deputy Commissioner (CT)) clcr:icled on 05.O7.2022

< a 3 t he Deputy Commissioner (CT), Begumpet Division. (ith Floor, R S Brothers Building Ameerpet, Hyderabad-50001 6

( HIGH COURT D ATED:11 lO7 12022 COMMON ORDER WP.Nos.26888, 26920, 26950, 25951 & 27122 of:2022 Allowing thr: WP Without cos;ts. rfH\,. //: <)"\ i. 'r' ,l ,' Z[ SEP ?IIII i;11 \5 T','l tt\oN- ( *

.l THE HON'BLE THE CHIEF JUSTICE UJJAL BHTryAN AND WRIT PETITION Nos.7893 9550 t6527 16853 16896 16903 0F 2020, 494, 7L24, 70s4, 9622, 10046, t14L4. 17095. L7LO2. L73L4. L7984, 18258,20079,207LO, 207 88, 2 L542, 2265 L, 229 40, 23336, 233a6, 242a2.. 25561 27294 27s33 28797 29743 32129 32373 32693,32697 ard,34054 OF 2O2L COMMON JUDGMENT & ORDER: (Per Hon'ble the Chief Justice Ujjal Bhuyan) Issue raised in all the r,vrit petitions being identical, those were heard together and are being disposed of by this common judgment and order.

5 Act to provide for and consolidate the 1aw relating to levy of Value Added Ta-x (VAT) on the sale or purchase of goods in the State of Telangana and for matters connected therewith and incidental thereto.

6 8,1. As per Sub-Section (2), it a VAT dealel' or TOT dealer submits a retllrn along with evidence for full payment of tax, subsequent to the prescribed time the assessm ent made under Sub-Section (1) shall be withdrawn without prejudice to any interest or penzrlty leviable.

lt Joint Commissioner or Deputy Commissioner, m€.y within 30 days from the date on which the order or proceedin;3 u'as served on him, appeal to such authority in the manner prt:scribed. As per the first proviso, the appellate authority may admit an appeal within a further period of 30 days if he is szrtisfied that the appellant had suflicient cause for not preferring tee appeal within the initial period of 3O days. The second proviso savs that unless the appellant produces proof of payment of 72 /,"1, ol the disputed tax, penalty, interest or any other amount, the ap1;eal so preferred shall not be admitted by the appellate authority. tiub-Sections (2) to (6) lay down the procedure to be followed by the appellate authoritv; the relief that may be granted and the tinality al.tached to such appellatr: order.

9 or proceeding and may pass such order in reference thereto as he thinks fit.

l0 Supreme Court involving a question of law havin5l a direct bearing on the order or proceeding in question.

l5 (8) The Goods and Seruices Tox Council shall detennine the procedure in the performance of its functions. (9) Duery decision of the Good-s and Seruices Tax Council shall be taken at a meeting, bg a majoity of not less than three-fourths of the ueighted uotes of the members present and uoting, in accordance uith the follouting pinciples, namelg:--- (a) the uote of the Central Gouernment shall be o ueightage of one-third of the total uotes cast, and (b) the uotes of all the State Gouemments token togetlrcr shall haue a weightage of tuuo-thirds of the total uotes cast, in that meeting. (10) No act or proceedings of the Goods and Seruices Tox Council shall be inualid merelg bg reason of - (a) ang uacancA in, or ang defed in, the constitution of the Council; or (b) ang defect in the appointment of a person os a Member of the Council; or (c) ang procedural inegalarita of the Council not affecting the meits of the case. (11) The Coods and Seruices Tax Council shall establish a mechanism to adjudicate any dispute-- (a) between the Gouernment of India and one or more Stotes; or (b) betueen the Oouemment of lndia and any State or States on one side and one or more other States on the other side; or ( c ) betuteen tLUo or more States, aising out of the recommendations of the Council or implement ation ther eof. "

16

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I8

l9 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 lor coming into force of relevant provisions of the IGST Act, such as, 22.06.2017 and O1.O7.2O17. Further, two more Acts were enacted by the Parliament post the Constitution (101st Amendment) Act, 2O16. 16. Legislature of the State of Telangana enacted the Telangana Goods and Services Tax Act, 2017 ("|GST Act' hereinafter) to make provision for levy and collection of tax on intra-State supply of goods or services or both by the State of Telangana. TGST Act received the assent of the Governor on 25.05.2077 and was first published in the Telangana Gazette on 27.O5.2O17. Various provisions of the TGST Act came into force on various dates. While Sections I and 2 (definition clause) came into force on 22.06.2017 , Section 174 which provides for repeal and saving came into force on Ol.O7 .2017 .

2l and audit assessment proceedings etc, which may be instituted, continued or enforced, whereafter tax, surcharge, penalty, fine, 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 heip effective revenue realization besides preventing leakages. Accordingly, it was decided to amend the relevant provisions of the VAT Act by undertaking legislation. Since it was decided to give effect to the above decision immediately and since the Legislature was not in session, and as the Governor of Telangana was 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 273 of the Constitution of India, the Governor promulgated Telangana Ordinance No.2 of 201 7 called the Telangana Value Added Tax (Amendment) Ordinance, 2017, which came into force with immediate effect i.e., 17.06.2017. By the said amendment, certain provisions of the VAT Act, such as, in Section 20 (4), Section 21 (3), (4), (6), (7) and (8), Section 32 (3),

22 (6) and (7) and in Section 57, the words 'four,ye1rs'or 'four years or six years' or 'three years' stood substituted by the words 'six years'.

21 (iv) in sub-sections(7) and (8), foI the wortls 'four years or six years, as the case may be, the words 'six years' sha-ll be subslituterl. In the principal Act, in section 31, in sub-section (1),- (i) tJle first proviso sha,ll be omitled; (ii) after omitting the first proviso, in the existing proviso, for the words "provided furtht:r that" the words "provided that' shall be substituted. In the principal Act, in section 32, in sub-section (3), (60 and (7), for the words 'ftrur years' the words 'six years' shall be substitutecl. In the principal Act, in Section 57, in sub-section (5) and the proviso thereunder, for the words 'three years', the words 'six years' shall be substituted. The Telangana Value Added Ta-x (frnendment) Ordinance, 2017 is hereby repealed.

25 Section 21 (7): Where any assessment has been deferred by the Commissioner under sub-section (5) of Section 32 or as the case may be, the Appellate Tribunal under the proviso to sllb-section (4) of Section 33 on account of any stay order granted by the Appellate Tribunal or as the case may tre, the High Court or the Supreme Court respectively, or whereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or Supreme Court involving a question of law having a direct beanng on the assessment in question, the period during which the stay order was in force or such appeal or proceedings was pending shall be excluded in computing the period of six years as the case may be for the purpose of making the assessment. Section 2l (8): Where an assessment made has been set aside by any Court or as the case may be the Appellate Tribunal, the period between the date of such assessment and the date on which it has been set aside shall be excluded in computing the period of six yearn as the case may be, for mal<ing any fresh assessment. Section 3l (f): Any VAT dealer or TOT dealer or any other dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the VAT Act, other than the order passed or proceeding recorded by aly authority under the provisions of the VAT Act, other than the order passed or proceeding recorded by an Additional Commissioner or ..Ioint Commissioner or Deputy Commissioner, may within 3O days from the date on which the order or proceeding u,as sened on him, appeal to such authority in the manner prescribed. Provided that an appeal so preferred shall not be admitted by the appellate authority concerned unless the dealer produces proof of payrnent of tax, penalty, interest or any other amount admitted to be due, or of such installments as have been granted, and the proof of payment of twelve and half percent of the difference of the tax, penalty, interest or any other amount, assessed by the authority prescribed and the tax, penalty, interest or any other amount admitted by the appellant, for the relevant tax period, in respect of which the appeal is preferred. Section 32 (3): In relation to an order of assessment passed under the Act, the powers conferred by sub sections (1) and (2) shall be exercisable only within a period of six years from the date on which the order was served on the dealer. Section 32 (6): Where an order passed under this Section has been set aside by any court or other competent authority under the Act for aly reason, the period between the .late of such order anrl the date or.r which it has becn so set-:rside sh:rll be cxcluded in computing the period of six years specified in sub section (3). for the purpose of mzrking a fresh revision, if any, lrncic-r this Section.

26 Section 32 (7): Where any proceeding under this Section has been deferred on account of any stay order granted by t1le Appellate Tribunal or the High Court or Supreme Court in any case, or by reason of the fact that an appeal or other proceeding is pending before the tr ppellate Tribunal or the High Court oj' the Supreme Court involving a question of law having a direct lrcaring on the order or proceeding in question, the period during \vhich the stay order was in force or such appeal or proceeding was pending shall be excluded in computing the period of six years specified in sub- section (3), for the purposes of exercising the pou,er under this Section. Section 57 (5): No order for the forfeiture under thil; section, shall be made after the expiration of six years from the date of collection of the amount referred to in sub-section (4).

32 the revisional order dated O5.O3.2O2O as l>eing barred by limitation and thereafter to quash the same as well as the consequentiai crder dated 07.O3.2O2O.

the VAT Act except for the goods listed in Entry 54 of List II of the VII Schedule. Ordinance No.2 of 2O 17 was promulgated by the Governor of Telangala under Articl e 213 of the Constitution of India on 17 .06.2017 rvhereby limitation was extended from four years to six years. O1.O7 .2017 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 Entry 54 of the State List. On Governor u,hereafter it was published in the Telangana Gazette on 02.72.2017 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 legislative competence to levy Value Added Tax (VAT) on sales of pursuant to Article 246 of the Constitution read with Entry 54 of List II of the VII Schedule. Constitution Amendment Act has amended the Constitution of India to redistribute the legislative porvers to give effect to the nelr' GST regime based on cooperative federalism-pooled sovereignty. The Second Amendment Act tvas adopted on 02.12.2077 u'ith retrospective effect fron 77.06.2O17 29.11.2017 the Second Amendment Act received the assent of the all goods except newspapers in the course of intra-State trade

35 reflected in pre-amended Entry 54 of List Il prior to 16'09'2016 for legislative competence on the ground that the Second Amendment Act is retrospective and intended to deal with VAT demands prior 2 2020 82 GSTR 32 [Guj.)

3tt Telangana State Legislature for enacting the Secc'nd Amendment Act cannot flow from Article 246A.

39 competence upon the State for making amendments to the VAT Acl qua goods other thal alcohol for human consumption and the five petroleum products. Therefore, what Section 19 provides is that the State can continue to lery tax under the VAT Act for the window period of one yea-r or till the VAT Act is amended or repealed whichever is earlier. This transitional provision does not enable the States to make amendments to the VAT Act in contravention of the amended Entry 54 of List IL He submits that Section 19 of the Constitution Amendment Act cannot be understood as a source of legislative power, nor as a saving provision in respect of lega1 competence to amend the VAT Act. To buttress this point he has pressed into service the division bench decision of the Gujarat High Court in Reliance Industries Limited (2 supra). According to him, even the single bench of Kerala High Court in Sheen Golden Jewels (India) Pvt. Limited Vs. State Tax OfficerT has taken similar vie."r, though the said decision is relied upon by the respondent.

l0 54 had not yet been amended, even then also the Second Amendment Act having been passed on O2.12.2O.[7 was beyond the one year period in terms of Section 19 of ttre Constitution Amendment Act and therefore invalid.

{1 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 was brought into force retrospectively i.e. t7.06.20t7. 50. Referring to Article 213 (3) of the Constitution of India he submits that the Ordinance would be ultra uires for the very same reason for which the Second Amendment Act is ultra uires. He further submits that life of the Ordinance was only six weeks from date of convening of the State Legislature. This period, he submits, was till 08.12.2017. Even assuming that the State Legislature was competent to enact and apply the Ordinance qua the goods not mentioned in amended Entry 54, such operation could not have continued beyond OS.'12'2O17 as per Article 213 of the Constitution. Clarifying the position' he submits that the Ordinance was not challenged because the Ordinance was repealed by the Second Amendment Act and is no longer in existence. Besides, the Second Amendment Act rvas brought into force u,ith effect lrom 17'06'2017 u'hich lr'as the date of the .t2 Ordinance. Thusi, even for the period when the Ordinance was in existence it was the Second Amendment Act which occupied the legislative field and not the Ordinance. Therefore, any reliance placed on the Ordinance would be misplaced and the fact that the Ordinance was not challenged would have no legal bearing.

13 Amendment Act can only be in respect of the VAT Act as existing on 02.I2.2O17, even if given retrospective effect from 17 .06.2017 .

11 senior counsel, submits that the State Legislatltre pass(:d the Telangana Goods and Services Tax Bill, 2Ol7 on 16.04.2017. It received the assent of the Governor on 25.05.2017 whereafter the Telangana Goods and Services Tax Act, 2Ol7 (already referred to as 'the TGST ActJ was published in the Telanganrr Extraordinary Gazette on 27.O5.2O77. He thereafter submits that the Ordinance was promulgated on 17.06.2017 whereas the Secc,nd Amendment Act was made on 02.12.2017 giving retrospective effect from 17.06.2017. He submits that the Second Amr:ndment Act is unconstitutional as the State Legislature had lost its competence to make such amendments after the Constitution Amendment Act came into force from 16.09.2016. On and from 16.09.2016 only concurrent juri iction could be exercised simultaneously by the Central Government as well as by the State Golernment insofar GST is concemed; that apart, exercise of power under Artlcle 246 A can only be carried out on the recommendation of the GST Council.

17 make laws for saving the repealed Acts under Section 19 of the Constitution Amendment Act. Accordingly, Section 174 rvas 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 respect of transactions made prior to Ol .O7 .2017 . Insofar the VAT Act is concerned, the same was amended by the Second Amendment Act prior to the effective date of repeal by way of an Ordinance dated 17.06.2017. Article 13 (3) of the Constitution of India states that law includes Ordinance as well. Section 6 (b) of the General Clauses Act, 1897 also makes it clear that repeal of arr Act shall not effect the previous operation of any enactment so repealed or anything done thereunder According to him, reliance placed by the petitioners on the decision of the Kerala High Court in Hindalco Industries Limited Industries Limited (2 supral would be of no assistance to the petitioners as in those cases there was no Ordinance or legislative enactment pertaining to the State VAT Acts prior to introduction 59 Elaborating further Mr. B.S.Prasad submits that the Ordinance u,as promnlgamated bv the Clovernor of Telzrngana on (3 supra| and on the Gujarat High Court decision in Reliance of GST.

{lt 17.06.2017 whereby the time limit for assessments and revisions was extended from four years to six years before annulment of VAT Act. The Ordinance became an Act i.t:. the Second Amendment Act on 02.12.2017. Prior to that, the Ordinance was approved by the legislative assembly of the Stal.e of Telimgana within six months from the date of the Ordinance. Referring to Article 213 (21 of the Constitution of India, he s,ubmits l.hat an Ordinance promulgated by the Governor would have th,l Sann€ force and effect as an Act of the legislature unless such an Ordinance is not placed before the legislative assembly or rejected by the iegislative assembly when placed before it within the stipulated time. Insofar the present case is concerned, the Ordinance was placed before the legislative assembly and the assemblv approved the same. Therefore, in the light of the above constitutional provision, the limitation to make err assessment or reassessment or revision is six years and not four years. According to him, the Ordinance issued and the subsequent legislative Act for prolonging the limitation made such extens;ion of limitation valid. Therefore, the proceedings initiated unde r the VAT Act in respect of the petitioners are valid, being u,ithin ljmitation Insofar decision of the I(erala High Cor-rrt in Baiju I,A ( 10 supra) is conccrned, the: same u,ould not be applicable t,) lhe facts of tht:

.19 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.O7.2017 when the VAT Act was still in force. 60 Mr. Prasad, learned Advocate General, asserts that Telangana State was competent to promulgate the Ordinance on 17.06.2017 and thereafter to pass the Second Amendment Act on 02.12.2017 in respect of goods not covered by amended Entry 54 of List IL Power and competence of the State in this regard is traceable to Article 246 of the Constitution read with Section 19 of the Cor-rstitution Amendment Act; the savings provision in Section 174 of the TGST Act; Article 246A of the Constitution; and Sections B and BA of the Telangana General Clauses Act, 1891. 6l Mr. Prasad submits that State is only securing and protecting the revenue due to it by enlarging the duration by which the dealers can be assessed etc., but not imposing any new ta-x or ler,y. Legislation being a sovereign function of the State, thus, the Second Amendment Act cannot be questioned as being without competence. 62 State has the porver to enforce the Second Amendment Act \\,ith retrospective effect. State has the poll'er to cven take an'av

50 vested rights of the assessees i.e. even where assessments become barred by time under the pre-amended provisirtn. Stal:e can enlarge the limitation even for such time barred as;sessments and take away vested rights. Looked at from this lterspective, the Second Amendment Act cannot be said to be arbitrary, not to speak of being manifestly arbitrary. 63 Provisions for enlarging time limitation on arlsessments etc., are only procedural aspects of levy and assessme:t of tax. These are not substantive provisions. Assessing Officers are cornpetent to adjudicate on limitation since it is a mixed question of lhct and 1aw 64 Referring to Hindalco Industries Limite d (3 supra), he submits that decision of the l(erala High Court, as expr,:ssed in the said case, is distinguishable. In the said decision, Kerala High Court did not cleal with the effect of Section 19 ol' the Constitution Amendment Act and the savings provision und:r the Sl ate GST Act. As a nratter of fact, State of Kerala had enacted the impugned la."r, after the permissible windou, pt:riod of one year allowed uncler Section 19 of the Constitution Amendnrent Act. Likervise, Mr.l)rasad submits that decision of the Gujarrat High

5l Court in Reliance Industries Limited (2 supra) '"vould also have aggrieved person cannot claim any vested right in procedure; that he should be governed by the old provision relating to the period of limitation. Procedural law is retrospective, meaning thereby, that it may apply even to acts or transactions under the repealed Act. Time and again it has been held arrd clarified by the Supreme Court that every litigant has a vested right in substantive lau, but no such right exists in procedural law. According to Mr. Prasad, law of limitation is generally regarded as procedtiral and its object is not to create any right but to prescribe periods r,r,ithin u,hich legal proceedings be instituted for enforcement of rights u,hich exists under the substantive larv. Statutes of limitation are retrospective insolar those apply to all legal proceedings brought after their operation for enforcing cause of action accrlled earlier, 11 (2O1 l) 6 SCC 739

52 but they are prospective in tlee sense that they nt:ither have the effect of reviving the right of action nor do they have the effect of extinguishing a right of action subsisting on that daLy. 66 Learned A<lvocate General has also placed reliance on a Supreme Court decision in Fuerst Day Lawso:o Limited Vs. Jindal Exports Limitedl2 in support of the propos,ition that when there is an Ordinance which is followed by an Act on tht: same subject matter, t-he Act will come into force in continuatior. of the Ordinance. In that case, a gazette notification was issued on 22.08.1996 which appointed22^a day of August, 1996 as the date on which the Act in question r.vould come into orce. The said gazette notification was issued in exercise of the lrorvers ccnferred by Section 1 (3) of the Arbitration and Conciliation Act, 1!)

f,) ii. Effect of repeal of VAT Act for all other goods except the goods mentioned in the amended Entry 54 of List II as per Section 174 of the TGST Acr iii. Competence of the State as on 02.72.2017 to pass the Second Amendment Act, given the requirements of the present legislative competence as on that date; iv. Requirement of simultaneous ler.y by Parliament arrd State Legislature for legislative competence under Article 246A, v. Objective and effect of Section 19 of the Constitution Amendment Act, vi. State did not at all make any endeavour to show any distinguishing feature in the judgment rendered by the Gujarat High Court in Reliance Industries Limited (2 supra) and why the same should not be applied to the present case. 7l Mr. Rarri contends that it is not the stand of the petitioners that the State has no competence whatsoever to promulgate the Ordinance or to enact the Second Amendment Act. State does have the power and competence in respect of the goods specifically mentioned in the amended Entry 54 but not goods in general. It is the contention of the petitioners that other tharr the goods mentioned in amended Entry 54, the State does not possess legislative competence. This crucial aspect was not countered by the State. 72 Mr. Ravi submits that it is not the argument of the petitioners that the Ordinance or the Second Amendment Act are manifestly arbitrary or that those cannot be gi\,en retrospective effect. Therelore, the argltment advanced b1" the learned Advocate

56 General based on the principles of manifest a:'bitrariness or retrospectivity are not at all germane to adjudicat€ on the issues raised by the petitioners. 73 Besides reiterating reliance on Reliance Industries Limited (2 supral and Hindalco Industries Limited (3 supraf, Mr.Ravi has also pressed into service a decision of the lJlahabad High Court in Jain Distillery Private Limited 14 supra). 74 Insofar extension of time limit in tax matters is concerned, Mr.Ravi submits that time limits are a fetter on the juri iction of the departmental authorities. Enlargement of ti:me under the Second Amendment Act in extending the 1im itation period amounts to conferring juri iction on departmental authorities that did not exist earlier. Therefore, such an amt:ndment is not merely for securing old liabilities but impacts the rights of assessees, thus being a fresh legislation which is devoid of legislative competence. 75 lnsofar re]iance placed by learned Advocate General in Tirumalai Chemicals Limited (11 supraf it is subrrritted that the said decision is o1-no application to the present batch ofcases. He srtbmits that the question for determination in thal cas,: u,as rvhether thc linritation to file appeal against orcler 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 relevance insofar the present batch of writ petitions is concerned where the challenge is primarily to the coriepetence of the State Legislature to enact the Second Amendment Act after the Constitution Amendment Act. 76 Regarding Fuerst Day Lawson (12 supra) relied upon by the learned Advocate General, Mr. Ravi submits that in the present batch of cases petitioners are primarily concerned with the validity of the Second Amendment Act and not the Ordinance. Even if it is assumed that the State had the competence to promulgate the Ordinance in June, 2017 before onset of GST with effect from O1.O7.2017, by the time the Second Amendment Act was passed, the State had lost its competence for legislating on goods in general, except for petroleum products and liquor for human consumption as mentioned in the amended Entry 54 of List II. However, he submits that though the Ordinance has not been specifically challenged, nonetheless, it is clear that on and from 16.O9.2016 u,hen the Constitution Amenclment Act came into 60 774 of the State GST Act was brought in. Mr. Ravi submits that according to the aforesaid article, Section 19 of the Constitution Amendment Act has elements of both transitional as well as savings clause. However, he contends that Sr:ction 19 of the Constitution Amendment Act only suspends rnvalidity of the inconsistent legislation for a period of one year or till the inconsistent legislations are amended or repealed. He asserts that Section 19 is neither a source of power nor a savings provision. It is only a transitional provision. 79 Mr.S.R.R.Viswanath, learned counsel for some of the petitioners also made submissions replying to the arguments advanced bir the learned Advocate General. While admitting that learned Advocate General was only partly correct in submitting that time limitations are procedural and nol substalltive, he, howeve r, submits that in tax jurisprudence, time limitations prescribed for ma,king assessments, reassessments, revisions etc are juri ictional in nature and are thus fetters on 1,he taxing authorities. in this connection, he has placed reli€mce on a to Tirumalai Chemicals Limited (11 supraf relied upon bv- the rs 53 r?R 231

6l learned Advocate General, he submits that in the said case Supreme Court was dealing with the limitation prescribed for filing appeals, which is of entirely different nature. Firstly, 16.09.2016 when the Constitution Amendment Act came 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 B1 Referring to Section 19 of the Constitution Amendment Act, Mr. Viswanath submits that the window provided by Section 19 was completely exhausted on 27.O5.2017 when the TGST Act was enacted and Section 174 thereof partially repealed the VAT Act. There is no merit in the argument of the learned Advocate General that Section i 9 of the Constitution Amendment Act could be invol<ed even after 27 .O5.2O17 ar-rd that the Ordinernce and the 80 Mr. Viswanath submits that two dates are extremely crucial. into force. Secondly, 27.O5.2O17 when the TGST Act was enacted. The Ordinance as well as the Second Amendment Act were made 27.O5.2017. 62 Second Amendment Act owe their genesis to Section 19. He further submits that neither the Ordinance rror the Second Amendment Act can be traced to Article 246A of the Constitution. Jewels (India) Pvt. Limited l7 supra) is concerned, he submits that in the said case the challenge was made to Section 174 of the I(erala Goods and Services Tax Act, 2017 which is pai mateia to Section 17 4 of the TGST Act. Petitioners trerein are not challenging validity of Section 174 of the TGST Act. F{e, tht:refore, submits that there is no merit in the arguments advanced by the learned Advocate General. 83 Submissions made by learned counsel for the parties have 84 We shall lirst deal with the issue relating to legislative competence. Heading of Article 246 of the Constitr-rtion of India is subject matter of laws made by Parliament and b-v the Legislatures of States. Clause (l) says that notwithstand ir-rg anything ln clauses (2) and (3), Parliament has exclusive powei to makr: lau,s u,ith respect to .rny of the matters enumeratecl in i,ist I (Union List) of the Vll Schedule to the Constitution of .nrlia. A,s per Clause (2), notu,ithstanding anything in Cjause {3}. Parliament a2 Insofar decision of the Kerala High Court in Sheen Golden received the due consideration of the Court.

o-1 and subject to Clause (l), the Legislature of any State also have power 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 thereof with respect to any of the matters enumerated in List II (State List) in the VII Schedule. Clause (4) clarifies that Parliament has porver to make laws with respect to any matter for any part of the territory of India not included in any State notwithstanding that such matter is a matter enumerated in the State List. 85 Thus, the power to make laws either by the Parliament or b-v Constitution ol India. The Lists in the VII Schedule defines arnd limit the respective competence of the Union and the States. The various entries in the three lists of the VII Schedule are not sources of legislative power. These are legislative heads legislation, the entries should be given the ',videst possible amplitude. 86 Prior to tl-rc Constitutior-r Amendment Act i.e., prior to 16.O9.2016, trntrr, 5zl of List ll \\'as as follorvs: the State Legislatures is traceable to Article 246 of the demarcating the field of legislation; of course, being the field of 6{ "54: T'oxes on the sale or purchase of goods other than nell,spapers, subject to the prouisions of entry 92 A of List f'.

"

{r6 inconsistency between laws made by Parliament and laws made by Legislatures of State), Parliament and subject to ciause (2)' the Legislature of every State have power to make laws with respect to goods and services tax (GST) imposed by the Union or by such State. As per clause (2) Parliament has exclusive power to make laws with respect to GST where the supply of goods or of serrrices or both takes place in the course of inter-State trade or commerce. The Explanation clarifies that provisions of Article 246A in respect of GST shall take effect from the date recommended by the GST Council in terms of Clause (5) of Article ,7A_ A 92 Thus what Article 246A provides is thar both parliament and the Legislature of every State have po\4rer :o make laws with respect to GST imposed by the Union or by such State except in the case of GST where the supply of goods or cf services or both takes place in the course of inter-State trade or commerce in which case Parliament has the exclusive competence. Of course, such enactment wilr take effect from the crate of recommendation by the GST Council. 93 Article 366 of the Constitution oi_ Indra defines various exprcssions rvhich finds place in the Constitution Cjarrse (12)

67 defines "goods" to include all materials, commodities and articles Clause (12A) which was inserted by the Constitution Amendment Act with effect from 16.09.2016 defines "goods and services tax" (GST) to mear any tax on supply of goods or services or both except taxes on the supply of alcoholic liquor for human consumption. Clause (26A), atso inserted by the Constitution Amendment Act with effect from 16.O9.2016, defines uservices" 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 supraf , Supreme Court has held as follows:

"

69 97 In Baiju A.A. (1O supra) the challenge before a single bench of the Kerala 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 2010-2011 and 2oll-2012. The challenge was made on the ground that the concerned authorities did not have the juri iction to issue ttre notices and assessment orders since the amendments introduced to Section 25 (1) of the Kerala Value Added Tax Act, 2OO3 through the Kerala Finance Acts of 2Ol7 and 2018 notified on 19.06.2017 and 31.O3.2018 respectively did not contemplate a retrospective operation of the amended provisions. Section 25 of the Kerala Value Added Tax Act, 2003 deals with assessment of escaped turnover. In case of escaped turnover for any reason the assessing authority could determine to the best of his judgment the turnover which had escaped assessment to tax at any time within five years from the iast date of the year to which the return relates. As per the last proviso the period for completion of assessment was extended up to 31'03'2016' By the Kerala Finance Act of 2017, the period of limitation under Section 25 (1) for proceeding to determine escaped turnover was enhanced from five vears to six years and in the last proviso the extension was made up to 31'03.2018' Thereafter' by the Kerala Finance

70 Act, 2018, in the last proviso, the extension was made up to 31.03.2019 98 One of the questions framed by the Kerala High Court rvas whether after the Constitution Amendment Act and repeal of the Kerala Value Added Tax Act on 22.06.2017, the State Legislature retained any residual power of legislation so as to amend the provisions of Scction 25 (1) through the Kerala Finance Act, 2018. After due consideration Kerala High Court held as follows:

7l legislate on the subject of ta-\es on sale or purchase of goods, except to the limited extent retained under the Constitution. The power to amend a statute being a facet of the legislative power itself, the State Legislature could not have exercised a power to amend the KVAT Act, save to the extent permitted, when it did not retain any residual right to further legislate 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 Schedule; rather they were conferred with legislative powers to be exercised simultaneously with the Parliament in respect of taxes on supply of goods or services or both. While the new legislative power could justify the inclusion of a savings clause in the new legislation enacted in respect of the new lely of tax 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 taxes on sa1e or purchase of goods, except to the limited extent retained under the Constitution. It has been held that the power to amend a statute being a facet of the legislative power itself, the State Legislature could not have exercised a por.l'er to amend the Kerala Value Added Tax Act, 2O03 except to the extent permissible when it did not retain any residual right to further legislate on the subject of taxes on sale or purchase of goocls.

72 100 An identical issue came up before another single bench of the Kerala High Court in HINDALCO INDUSTRIES LIMITED (3 supra). Follou,ing the same line of reasoning adopted by the previous bench in BAIJU A.A. (1O supral it has been held that after the Constitution Amendment Act, State Legislatures stood denuded of their power to legislate in respect of taxes on sale or purchase of goods that was covered under Entry 54 of List lI of the VII Schedule; they have instead been conferred with iegislative powers to be exercised simultaneously with the Parliament in respect of taxes on supply of goods or services or both. It has been held as follorvs: ........Afi.er the CAA 2016, the State Legislafires stood denuded of their pouer to legislate in respect of texes ot1 sale or purchase of good-s, that uas auered under Entry 54 of List ll of the Seuenth Schedule to the Constitution, and theg utere irtstead conferred with legblatiue powers, to be exercised simultaneortsh.l uith the Parliament, in respect of taxes on supplg of goods or seruices or both. While the new legislattue potuer coukl justifu the inclusion of a sauings clause in the nelu legislation enttcted in respect of the neu leug of tax, to saue a..ntei ,ights, piuileqes. immunities, etc., under the erstuhile enctctment, the deletion oJ Entry 54 of List II automaticallg denuded the State Legislatures o-f the pourer to further legislate on the subject of tares on sale ctr purchase of goods, except to the timited exlent retained uncler tlle (-onstitution. The lnuter to amend o statute being a facet of the legiskttiue poluer itself, the State Legislature coulcl not haue e-rercise d e pou)er to anend the KVAT Act, saue to the (,xtent perntittc:rl. LLthen it did not retain ang resldut ight to _ftLrther legislate ort the subject of taxes on sale o-r purchose ofioorts,,.

7i 1Ol A division bench of the Altahabad High Court in M/s. rea-lization of advertisement tax under the U.P. Municipalities Act, 1916 on the ground that when there is no provision to impose such tax there can be no power to frame any by-laws in that regard. The power to levy 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 Services Tax Act, 2O77 catne into operation with effect from O1.O7.2017. The by-laws by which the municipalities intended to levy and coilect taxes on advertisement were framed on 12.Ol.2Ot7 but published on 19'08'2077 i'e'' alter Ol'O7 '2017 when the U'P.Goods and Services Tax Act' 2017 came into effect' Allahabad High Court also noted that by virtue of the Constitution Amendment Act, Entry 55 of List II was omitted' It was in that context that Allahabad High Court held that after omission of Entry 55 of List Il of the VII Schedule to the Constitution of India by the Constitution Amendment Act with effect from 16'09'2016' even the State Legislature did not have the legislative competence to levy or collect taxes on advertisement which was earlier ," 1t0lrrl rl GSI n ll5 (1ll)

14 available under Entry 55. Further, the bench noted that the power to tax earlier vested with the municipalities under Section 128 (21 (VII) of the U.P. Municipalities Act, 1916. Having been omitted by virtue of Section 173 of the U.P.Goods and Services Tax Act, 2077, the municipalities did not have the statutory competence to 1evy, impose or collect advertisement tax. F\rther clarifying the position Allahabad High Court held that the State Legislature was invested with the power to make laws in respect of taxes on advertisement vide Entry 55 of List II to the VII Schedule but the said entry was deleted by the Constitution Amendment Act with effect from f6.09.2016. The Constitution Amendment Act vide Section 17 amended the VII Schedule and omitted Entn. 55 of List II, thus deleting the power of the State to make laws in respect of taxes on advertisement. Therefore, when the State ra,as denuded of the power to make laws in respect of taxes on advertisement, obviously the municipalities were also di,ested of the power to impose any tax on advertisement. 1O2 This line of reasoning has also been followed by a iater division bench of the Allahabad High Court in Jain Distillery Private Limited (4 supra). In this case, the Allahabad High as to the corrpetence of the Court exermined the position

75 Parliament and State Legislatures to enact laws to impose duties on excise and to lely tax on sale 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 regime 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 only. According to the Allahabad High Court this intent has been expressed through Section 174 (l) (i) of the U.P.Goods and Services Tax Act, 2O 17. Section 174 (11 (i) of the U.P.Goods and Services Tax Act, 20 17 reads as follows: '174. (1) Saue as otheruuise prouided in this Act, on and from the date of commencement of this Act: l1) The Uttar Pradesh Value Added Tax Act, 2OOB, except in respect of goods included in Entry 54 of the State List of the Seuenth Schedule to lhe Constitulion. are herebg repealed."

76 consumption". Hence, in anA case, aJter the enacttnent of the LIPGST Act, 2017 ond tn absence of ang amendment to Section 174 (l) (4 of that Act, there neither suruiues nor exists ang delegated pou.ter uith the State Gouernment, to issue the impugned Notification, to impose UPVAT on ENA.

78 Value Added Tax Act, 2003 by virtue of the Gujarat Value Added Tax (Amendment) Act,20l8 enacted on 03.04.2018 giving retrospective operation from O1.04.2O06. Section 84 A provided for exclusion of the period spent between the date of the decision of the Appellate Tribunal and that of the High Court as well as the Supreme Court in computing the period of limitation referred to in Section 75 of the said Act. Therefore, one of the questions which fell for consideration was whether Section 84 A of the Ciujarat Value Added Tax Act, 2003 was ultra uires and beyond the legislative competence of the State under Entry 54 of the List II of the VII Schedule. After due analysis Gujarat High Court held as follows "

7t) LUos to reploce number of indirect taxes being leuied by the Union and the State Gouemments and to remoue the cascading elfect of taxes and prouide for a common national market for goods and seruices. This is apparent from the statement of objects and reasons refened to bg the Supreme Court in Mohtt Mineral Put. Ltd. [2018] 58 GS?R I /SC/ : [2019] 2 SCC s99. 92. Further section 18 to the Constitution Amendment Act prouides for compensation to the Stotes for the loss of reuenue aising on account of the implementation of the goods and seruices tax for a peiod of fiue geors. Thus the enttre scheme of the Constttution Amendment Act recognizes imposition of only "goods and seruices tax" under article 246A of the Constitution of India. The phrase the 'goods and seruices tax" is defined under article 366 (29A) to mean anA tax on supply of goods or seruice or both except taxes on the supplg of alcoholic liquor for human consumption. Such "supply" cannot be fragmented into different components bA the State Legislature and assume pouer to impose independent tctx on the sale of goods utthout reference to the Goods and Seruices Tax Council- Such interpretation u.tould be contrary to the entire scheme as u.tell as the object and purpose of the Constitution Amendment Act. ln fact the prouision prouiding for compensation to the States for the loss of reuenue due to the goods and seruices tax uould also be irreleuant if the State Legislatures are independentlg empotuered to enact soles tax/ ualue added tax legislat[ons by tctking recourse to article 246A of the Constitutton of India.

8() benches of Allahabad High Court in M/s. Pankaj Advertising [16 supral, Jain Distiltery Private Limited (4 supra) and the division bench of Gujarat High Court in Reliance Industries Limited (2 supra), Not only the Second Amendment Act cannot be trrrced to Article 246 of the Constitution read with Entry 54 of List 11 of the VII Schedule, the same cannot also be sustained as a stand alone legislation of the State under Article 246A of the Constitution in the absence of simultaneous legislation by the Parliament. 106 Let us now dea-l with Section 19 of the Constitution Amendment Act, which reads as under: 19, Notwithstanding anything in this Act, any provision of any law relating to tax on goods or sen'ices or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent kgislature or other competent authorit), or until expiration o[ one year from such commencement, whichever is earlier. l07 Section 19 starts with a non-obsta nte clause. It says that notwithstanding anything in the Constitution Amendment Act, any provision of any la,vv relating to tax on goods or services or on both in force in anv State immediately before commencemen t of the Constitution Amendment Act, which is inconsistent 'n,ith the provisions of the Constitution as amended by the Constitution Amendment Act shall continuc to be ir-r force until amenderl or repealed blr a competent Legislature or otficr

8l competent authority or until expiration of one year from such commencement, whichever 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 Amendment Act for a period ol one year or till such legislations are amended or repealed, whichever is earlier. The objective appears to be for a transition to the GST regime brought into force by the Constitution Amendment Act. A11 that Section 19 does is to provide a period so as to eliminate or remove all laws inconsistent with the GST regime within arl outer limit of one year period. Section 19 does not and cannot be construed to eclipse the amendments carried out in Entrv 54 of List ll to the VII Schedule or confer legislative competence upon the State Legislatures for making amendments to the VAT Act in respect of goods other than the five petroleum products and alcohol for human consumption covered by the amended (substituted) Entry 54 of List II. 109 As already discussed above, consequence of amendment of trntry 54 of List Il is denuding the State Legislature of the pon er to le'"y tax on sale of goods other than those as 82 provided in amended Entry 54; invalidation of State legislations existing as on 16.09.2016 levying tax on sale of goods other than those finding place in amended Entry 54. Section 19 does not save or postpones deprivation or denuding of legislative competence of State Legislature for levying tax on sale of goods other than those mentioned in amended (substituted) Entry 54 of List II. Section 19 only allows operation and levy of tax under the VAT Act which is inconsistent with the GST regime for a period of one year or until the VAT Act is repealed or amended, whichever is earlier. This would mean that the State could continue to levy tax under the VAT Act for the window period of one year or till the VAT Act was amended or repealed to align it with the GST regime, whichever was earlier. This transitional provision does not enable the State Legislature to make amendments to the VAT Act in contravention of the amended Entry 54 of List II. 11O At this stage, we may refer to Article 2432F- of tbe Constitution. Part IXA dealing ra.ith municipalities ."vas inserted in the Constitution by the Constitution (Seventv-fourth Amendment) Act, 1992 r.r,ith effect from 01.06.1993. Articles 243 p to Article 243 ZC comprises of Part IXA, all dealing with municipalities. By thc aforesaid pror,isions mur-ticipalities ancj municipal

84 1t2 In Bondu Ramaswamy (6 supra), Supreme Court was considering challenge to acquisition of land for formation of Arkavathi Lavout on the outskirts of Bangalore city by the Bangalore Development Authority under the Bangalore Development Authority Act, 7976. It was in that context Supreme Court considered the question as to whether provisions of the Bangalore Development Authority Act, L976, tnore particularly, that of Section 15 dealing with the power of the authority to draw up schemes for development of Bangalore Metropolitan area became inoperative, void or was impliedly repealed by virtue of Part IXA of the Constitution. Supreme Court held that Article 243 ZF is a provision enabling continuance of any provision of law relating to rnunicipalities ln spite of such provision being inconsistent rvith the provisions of Part IXA of the Constitution for specified period of one year or until amended or repeaied, a whichever is earlier. It lvas held as follo'*,s: "Any statute or provision thereof which is inconsistent with any constitutional provisiorr rvill be struck dorvn by courts. Consequently, if BDA Act or anv provision of the BDA Act is found to be inconsistent with any provision of Part IXA of thc Constitution, it will be struck down by courts as violatjve of the Constitution. ln regard to ar.r] provision oi'any larv relating to municipalities, Arlicle 2432F suspends such invalidity or l)ostpones thc invaliditv lor a period ofone year from 1.6. 1993 to enable the c-ompetent Legislature to rcmove the inconsistencl by amending or repealing such larv relating to municipalities to bring it in consonance with th€ provisions of Part IXA of the Constitution."

1i3 As has been held by the Supreme Court, Article 243 ZF suspends such invalidity or postpones the invaiidity 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 with the provisions of Part IXA of the Constitution. 114 On the above analysis we have no hesitation in holding that Section 19 of the Constitution Amendment Act carnot be understood or cannot be construed as a source of legislative power. It is also not a saving provision in respect of suspending legislative competence to amend the VAT Act. This aspect was gone into by the Gujarat High Court in Reliance Industries Limited (2 supra) u,herein it h:rs bern hcld ars follorvs:

86 larvs to bring t hem in harmony rvith the CA Act. Otherwise, the States must repeal thL'm. And they were given one year for acbieving this. lf the States do neith(:r, those inconsistent acts stand repealed- 1.,12. llere, the States acted; they amended a ferv inconsistent Acts. They also repealed a few more. As with the KVAT Act, the repeal, tf it were, has not resulted in its abrogation or annihilation. So the operatior) of the so-called sunset clause (as provided in Section 19) has not denuded the State's power to enforce the KVAT Act in its amended form. The Act remained, with its remit reduced, though. Thus goes out of reckoning the petitioners' another assertion: that with the rep€al of the enactments, the proceclural mechanism has disappeared. lt has not. The prospectivit:/ of the amendment undisputed, rvhat remains to be examined is the State's power to save what had happened before the CA Act came into force or, more precisely, until one year after that Act came into force. Indeed, the CA Act allowed the State Acts in the same legislative freld to coexist for one year: the rvin<low period,

tt7 8l Therefore, from the above analysis we can safely conclude that Section 19 of the Constitution Amendment Act is not a source of power to enable the State Legislature 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 11 and 13 to 20, came into force on and lrom 16.09 .2016. Thereafter Parliament enacted the CGST Act and other related enactments, most provisions of such enactments having come into force on and from O1.O7.2017. State of Telangana also enacted the TGST Act. While majority of the sections came into force on 22.06.2017, Section 774 of the TGST Act u,hich provides lor repeal and saving came into force on and from 01.O7.2017. Section 174 of the TGST Act reads as under: "174. Repeal And Sauing:- (1) Saue as othenoise prouided in this Act, on and from the date of commencement of this Act, 0 The Telangana Value Added Tax Act, 2OO5 (Act 5 of 2O05); except in respect of goods included in the Entry 54 of the Slare -List of the Seuenth Schedule to the Constitution, (ii) The Telangana Entertoinments Tax Act, 1939 (Act X of 19s9); (iii) The Telangarta TcLr on Entry of Motor Vehicles into Local Areas Act, 1996 (Act 26 of 1996);

88 (iu) The Telangana Tax on Entry of Goods into Local Areos Act, 2OO1 (Act 39 of 2OO1); (u) T'he Telangana Tox on Lunties Act, 1987 (Act 24 of 1987); (ul The Telangana Horse Racing and Betting Tax Regulations, 1358F (Regulation XLIX of 1358F); (uiil The Telangana Rural Deuelopment Cess Act, 1996 (Act 11 of 1996); (hereafter refened to as tle repealed Acts) are herebu repealed. (2) The repeal of the said Acts and tle amendment of the Ac:ts speciJied in section 173 (hereafier refened to as "such amendment" or "amended Act', a,s the ca,se mag be) to the extent mentioned in sub-section (1) or section 173 shall not- (a) reuiue anything not in force or eisting at the time of such arnendment or repeal; or (b) alfect the preuious operation of the amended Acts or repealed Acts and orders or angthing duly done or suffered thereunder: or (c) affect arry ight, piuilege, obligation, or liability acquired, accnted or iuttrted under the amended Acts or repealed Acts or orders Lrncler such repealed or amended Acts: Prouided that ang tax exemption granted as an incentiue agctinst inuestment through a notijication shall not continue as priuilege if tle said notification is rescinded on or after the appointed dag; or (cl) trffect attA tax, surcharge, penalty, fine, interest cts are due or moA becone due or ang forfeiture or punishment inanred or irtJlicted in respect of ang offence or uiolation committed against tlte prouisiorts of the amended Acts or repealed Acts; or (e) affect any inuestigation, inquiry, ueirtcation (includittg sctutir"rg ancl audit), assessment proceedings. ad.judicatiort and ctrt.g other leglal proceedings or recouery of arrears or retnedy in respect of atty such tax, surcharge, penalty, fine, interest, right, priuilege. oltligation, liability, forfeiture or punishmert, as o.foresaicl. and ang such inuestigation, inquiry. ueification (irtchrdirtg sct-utinA artd ctudit), assessmenl proceedings, ncljttdicatiort and oth-er legal proceedings or recouety <sf arre,trs or rerrterTy rrtay be instituted. continued or enforcerl. and ony

89 such tax, surcharge, penolty, fine, interest, forfeiture or punishment maA be leuied or imposed as if these Acts had not been so amended or repealed; (fl affect ang proceedings including that relating to an appea| reuision, reuieut or refereruce, instituted before, on or after the appointed day under ttrc said amended Acts or repealed Acts and such proceedings shall be continued under the said amended Acts or repealed Acts as if this Act had not come into force and the said Acts had not been omended or repealed. (3) The mention of the partianlar matters refened to in section 173 and sub-section (1) shall not be held to prejudice or affect the general application of section 8, 8A, 9 and 19 of the Telangana General Clauses Act, 1891 (Act 1 of 1891) utith regard to the effect of repeal". 119 Thus, as per Section 174 (l) (i) the VAT Act stood repealed with effect {rorn Ol .O7 .20 17 except in respect of goods included in Entry 54 of the State List in the Seventh Schedule. When we refer to trntry 54 of the State List i.e., List II it means the entry as it stood on 01.07.2017. We have already noticed that post the Constitution Amendment Act, Entry 54 of List II has been substituted whereafter the field of legislation under the said entry is confined only to taxes on the sale of petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption; further clarifying that this rvould not include sale of such goods in the course of inter-State trade or commerce or sale in the course of international tradc or commerce of srlch goods. Therefore, ln terms of Section 174 (11 (i) of the TGST Act, the VAT Act stood

90 repealed with effect from o1.o7 .2017 except 1n respect of the goods covered by the amended (established) Entry 54 of List II. t20 As a matter of fact, we may observe that the very presence of Section 17 4 (ll (i) in the TGST Act buttresses the stand taken by the petitioners. 121 h-r Sheen Golden Jewels (India) Pvt. Limited (7 supral the question before the single bench of the Kerala High Court was whether the State had the legislatrve competonce to enact Section 174 of the Kerala Goods and Services Tax Act, 2077 and save the past taxation events when Entry 54 List II stood omitted permanently with effect from 16.09.2016. We may mention that Section 174 of the Kerala Goods ancl Services Tax Acl, 2Ol7 is pai mateia to Section 174 of the TGST A<:t. The Court r.vas czrlled upon to examine constitutional validity of Section 174 ol the Kerala Goods and Services Tax Act, 2>.O 17 on the anvil of Se<:tion 19 of the Constitution Amendment Act. It rvas contended that State had no legislative power to over ride Section 19. Kerala High Court took the vieu, that while Section l9 is a transitional provision; the job of saving is done b-v Section 174. Though Section 174 has repealed the Kerala Valtre Added Tax Acr,

9t 2003, the repeal has not affected the previous operation of the repealed act. In other words, the repeal has not affected any right, privilege, obligation or liability acquired, accrued 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, 2017 and accordingly upheld constitutional validity of Section 174. t22 We see no conflict or contradiction between 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 those are amended or repealed or for a period of one year whichever is earlier, Section 174 of the TGST Act has repealed amongst other enactments the VAT Act with effect from 01.O7.2017 except in respect of goods covered by the substituted Entry 54 of List II. Thus Section 174 ol the TGST Act is in consonance with Section 19 of the Constitution Amendment Act. The above position onlv supports the case of the petitioners that the State $,as denuded of its competence to legislate on GST after 16.O9 .20 1 6 and certainiv after 01 .O7 .2017 .

92 123 Repeal of an enactment would mean that such an enactment is erased from the statute book; it would no longer be in existence. This aspect was gone into by the Gujarat High Court in Reliance Industries Limited (2 supra|. It has been held as follows: "68.Effect of repeal at common law-Repeal obliterates the stahtte as if it has never been enacted:

93 MANU/SC/O020/1951 : AIR 1951 SC 128 referred to a passage from the Crau-tford's book on Statutory Construction uthich reads as under: "It is uell-settled that if o statute giuing a special remedy is repealed uithout a sauing clause in fauour of pending suits all suifs musl stop uhere the repeal ftnds them. If final relief has not been granted before the repeal went into effect, it cannot be after, if a cose is appealed, and pending the appeal the latu is changed, the appellate court must dispose of the case under the la ut in force uLhen its decision was rendered. The effect of the repeal is to obliterate the statute repealed as completely as if it had neuer eisted, except for the purposes of those actions or suits tuhich u-rcre commenced, prosecuted and concluded u-thile it was an existing latu. Pending judicial proceedings based upon a statute cannot proceed after its repeal. This rule holds tnte until the proceedings haue reached a final judgment in the court of last resort, for that court, uhen it comes to announce its decision, conforms it to the laut then existing, and may therefore, reuerse a judgment uthich utas correct u.then pronounced in the subordinate tibunal from tuhich tohence the appeal uas taken, if it appears that pending the appeal a stotute uhich utas necessary to support the judgment of the louer courr has been uithdrautn bg an absolute repeal." @.641)

9{ "

95 any other enactment, then the repeal sha1l not effect anything done or any oflence 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 when the repeal takes effect; or affect the previous operation of any enactment so repealed or anything duly done or suffered under any enactment so repealed; or alfect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or affect any fine, penaltv, forfeiture etc, incurred in respect of any offence committed under any enactment so repealed; or affect any investigation, legal proceeding or remedy 1n respect of any such right, privilege, obiigation, liabiiity, fine, penalty, forfeiture or punishment and aly such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such fine, penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed. 126 Section B of the Telangana General Clauses Act, 189 1 is similar to Section 6 of the General Clauses Act, I897 127 Section B A of the Telangana Generzrl Clar-rses Act, 189 1 sa_r,s that r,l,here any act repeals an_v enactmcnt bv s'hich the 96 text of any previous enactment was amended by express ornission, insertion or substitution of any matter then unless a different intention appears, the repeal shall not affect continuance of any such amendment made by the enactme4t so repealed and in operation at the time of such repeal. ),28 Article 367 of the Constitution of India speaks about the interpretation of the Constitution of India. Clause (I) of Article 367 is relevant. It says that unless the context otherwise requires, the General Clauses Act, 1897, subject to any adaptations and modifications that may be made therein under Article 372, shall apply for the interpretation of the Constitution as it appiies for the interpretation of an Act of the Legislature. 129 Gujarat High Court in Reliance Industries Limited (2 supra) examined this aspect as well and held that General Clauses Act, 1897 applies only for interpretation of the Constitution b r-rt in respect of other matters, such as, sar, ings in the case of repeal etc which are unrelated to interpretation may not applv ll' r,irtue of Article 367. Section 6 of the General Clauses Act, .l897 or Sections B/8A of the Telangana General Clauses Act. 189 1 r.r.ould applv onlv to repeal of an enactntent. A Constitution Amcndment Act is not or cannot be terme<l as ar-r

97 enactment. Therefore, beyond what is stated in Clause (l) of Article 367 of the Constitution, provisions of the General Clauses Act, either the Central Act or the State Act, would not apply to the Constitution, including the Constitution Amendment Act since a Constitution Amendment Act is made bv the Parliament in exercise of its sovereign powers under Article 368 of the Constitution. It has been held as follows:

" 1. 30. Effect of section 8 on articie 367.-Will section 8 of the General Cla.uses Act, which provides that when an enactment is repealed and re-enacted, references to the old enactment will be constmed as references to that, re-enacted one, make any difference? We do not think so. It should be noted that the words 'unless the context otherwise requires' (in article 3671 mean that the General Clauses Act, section 8, is to be excluded. Even by its terms, section 8 of the General Clauses Act will not apply to the Constitution, because expressiorr 'enactment' (which occurs in section 8) rvould not take in the Constitution, which is not an 'enactment'. The Constitution is supreme and is, in fact, the foundation of all enactments."

99 the repealed act in respect of those goods by virtue of the Second Amendment Act wouid not arise. 131 Though there is no challenge to the Ordinance, nonetheless we may also examine the same since it is the contention of the State that the Ordinance was promulgated during the window period and the subsequent Second Amendment Act is given effect to from the date of promulgamation of the Ordinance, thereby making it a valid piece of legislation. 1 ?O It was strongly argued by learned Advocate General that when the Ordinance was promulgated, State of Telangana had the legislative competence to so promulgate the Ordinance and the Second Amendment Act which was made subsequently was nothing but a continuation of the lau, as promulgated by way of Ordinance since it was given effect to from the date of promulgamation of the Ordinance. r33 To appreciate the above contention, we may note that the Constitution Amendment Act came into force on and from 16.09 .2016. Section 1 9 ol the Constitution Amendment Act provided for a vvindow period to the States to remove any inconsistent enactments bv s'av of amendment or repeal or until expiration of one -vear from such commencement r'r'hichever r.l'as I U0 earlier. Teiangana Ordinance No.2 of 2Ol7 tvas promulgated by the Govern or of Telangan a on 17 .06 .20 17 to lurther amend the VAT Act. Though the Ordinance was promulgated after coming into force r)f the Constitution Amendment Act on 16.09.2016, it WAS SO prom ulgated within the window period of one year as provided by Section 19 of the Constitution Amendment Act. At this stage we may mention that following the Constitution Amendment Act, State of Telangana enacted the TGST Act with effect from O1.O7 .2017 . 134 Before we deal with the Telangana Ordinance No.2 of 20L7, we 1na\- note that power of the Governor to promulgate ordinance is traceatrle to Article 213 of the Constitution of India. Article 213 provides as follows: "273. Power of Gouernor to promulgdte Ordina.nces during recess of Leglslature. (1) ]f at ang time, except uhen the Legislative Assemblg of a State is in .ses.sion. or uthere there is a l,egislatiue Council in o Stete, except uhen both I/cruse.s o/ tle Legislature ore in sessron, the Gouenwr is satisfed lhat circtirrslcnces exist tuhich render it necessary for him lo take imrriediate action, lE tnall promriljole such Ordtnances as the circumstances appear to hitn to tequire: Prouided tltot tlrc Gouernor shall not, tuithout instructions from the President, prontulllcrte ang such Ardinance if- (cr) ct Bill contaiting the saite proursions w<tuld ttrrder tllis ()onstitutiotr Itore r<:quired the preuious sanclion of the Pre,sicleti for the lntroductiolt tllereof lnto tlTe Legis[ature; or (b) le utonld haue deemed i, necessqry to reseru,. ct Bill corftairing the sorr,r. prouisions for the cotlsideration of lhe President: or (c) (ot Act of tte Legislature of the State contttitri g the sanrc prouision-s roottlcl totder ll[.s Consritufiort haue been inualid ur].less, hQuing beert res(tn,ed f<tr the consideratiotr of tlrc President, it lnd receiued tle assent of llle Pr"sidetlt. (2) An ()tdttotlce prolurlguletl ttrrder this arltcle sholl lta:.'e tlrc sonre force and aJ'fccl rts .ot Ad of the leglislttlure of tlrc Stole asserilc.cl to brl ttrc Gouenror. but etery1 stu lt Chtlirranct

I01 (a) shalt be taid before the Legtslotiue Assembly of the Slate, or whete lhere is a iegislatiue Council in the State' behre both the Houses, and shall cease to operati at the expirotiotl of sLr weeks from the reassemblg of the Legistature, or ij a"\or. the expiration of that peiod a resolution disapprouing it is passed bg ihe Legislatiue Assemblg and agreed to by the Legislatiue Council, if ang, upon the pissing of the resolution or, os the case mog be, on the resolulion being agreed to bg lhe Council; and (b) maA be Luithdraun ol ang time bg lhe Gouemor. Explanation.-Where the Houses of the Legislahtre of a Stote houing a Legislitiue Council are summoned to reassemble on dilferent dates, the period of six uJeks shall be reckoned from the loter of those dates for the purposes o.,f this clcuse' (3) If and so Jar as an Orclinance under lhis arlicle makes ang prouision tuhich woulil not be uatid if enacterl in an Act of the Legislature of the State assented to bg the Gouernor, it shall be void: Prouided that, for the purposes of the provisions of this Constitution relating lo the effect of an Act of the Legislature of a State uthich is repugnant to an Act of Parliament or an eisting lau uilh respect to a matter enumerated in the Concurrent List, an Ordinance promulgated under this article in pursuance of instructions from the President shall be deemed to be an Act of the Legislature of the State uhich has been reserved for the considerotion of lhe President and assented to bg him.' 135 While clause (l ) provides that if the Govemor 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) clarifies that an Ordinance so promulgated under Article 2 13 of the Constitution sha,ll have the same force and effect as an Act of the Legislature of the State assented to by the Governor. However, every such Ordinance shall be laid before the Legislature and sha-ll cease to operate at the expiration of six weeks from the reassembly of the Legislature. Clause (3) says that if an Ordinance makes any provision urhich would not be valid if --_-

l 102 enacted as an Act of the Legislature assented to by the Governor, it shal'l be void 136 As noticed above, the Ordinance was promulgated by the Governor on 77.06.2017. As per preamble to the Ordinance, it is stated that Government of India had enacted the CGST Act and Government of Telangana had enacted the TGST Act. But both the Acts had not been brought into force. Referring to the provisions of the VAT Act, it is stated that it empowers the State Government to lery tax on alcoholic liquor for human consumption and on petroleum products. According to the Constitution Amendment Act, lely of tax on those petroleum products and alcoholic liquor for human consumption is within the competence of the State Legislature. It further stated that repeal of the VAT Act except in respect of the goods included in Entry 54 of List II of the VII Schedule by the TGST Act, which was yet to be brought into force, would not affect any investigation, inquiry, r,erification (including scrutiny and audit), assessment proceedings, adjudication and any other 1ega1 proceedir-rgs or rccover-v of arrears or remedy 11-l respect of any such tax; surcharge, penalty, fine, interest, right, privilege, obligation, liabilit"v-, forfeiture or punishment and any such investigation etc.,

l0.l may be instituted, continued or enforced ald any such tax, surcharge etc, may be levied or imposed as if those Acts had not been so amended or repealed. Such repeal would 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 shal1 be continued under the amended Acts or repealed Acts. Therefore, it was considered necessary to strengthen certain provisions of the VAT Act to overcome an-v limitations to help effective revenue realization. Therefore, it was decided to amend certain provisions of the VAT Act by undertaking a legislation. Since it was decided to give effect to such decision immediately and as the Legislature of Telangana was not in session, therefore, the Governor, in exercise of powers conferred by Clause ( 1 ) of Articl e 213 of the Constitution promulgated the Ordinance which basically extended the limitation from four years to six years in respect of assessments, reassessments, rev1slon etc. t.)/ It is not necessarv for us to go into the aspect as to u,hether the Ordinance u'as laid before the Assembly or not and as to whether it had ceased to operate after six seel<s from 104 reassembly of the Legislature. It may also not be necessary for us to labour on the aspect that the Second Amendment Act though published in the Telan gana Gazette on 02.12.2017, was deemed to have come into force with effect from 17.06.2017 i.e. ttre date when the Ordinance was promulgated. This is because legislative competence cannot flow from an earlier legislation, be it an ordinance or an enactment. Legislative competence must be traceable to the Constitution. Therefore, no reliance can be placed on the Ordinance in support of the contention that the Second Amendment Act had derived competence from the Ordinance since it was a continuation of the lau, and hacl come into force from the date of promulgamation of the Ordinance. Such a line of reasoning, in our considered vieu,, has no legal substance. Therefore, it is immaterial that the Ordinar-rce was not challenged in Clourt. 138 That apart, the ostensible objective of the Ordinance as could be discerned from the preamble is to save any inl,estigation, assessment, recovery of dues, legal proceedings etc., pending on the date of coming into force ol the Constitution Amendment Act which is perfectly understandable and valid. BLlt that does not mean that limitation across the boar-d could be 105 extended by way of amendment to initiate fresh proceedings, such as, fresh revision proceedings, which otherwise had become time barred. 139 With eflect from 16.09.2016 the Constitution was amended by virtue of the Constitution Amendment Act. While Article 246A was inserted immediatelv after Article 246, the earlier Entry 54 of List II was substituted by the new trntry 54, in the process denuding the States from making any law 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 law to lely VAT or such tax on any goods other than the above goods. Section 19 of the Constitution Amendment Act, which can be construed to be a sunset clause, provided for a rvindow of one year to remove the laws inconsistent -"vith the Constitution Amendment Act either by way of amendment or by u,ay of repeal. The 'w,indow period r'r,as given to remove the inconsistencies; not to prolong the incon sistencies. But what the State of Telangana did by promulgating the Ordinance \4,as not to remove the inconsistencies in the VAT Act As mentioned above, the Ordinance, in fact, introclucecl certain

I06 provisions extending limitation to enable initiation of fresh proceedings, such as, revisional proceedings which are completely inconsistent with the scheme of the Constitution Amendment Act. On this ground itself, the Ordinance can be said to have no legal consequence, l4O However, by the Second Amendment Act, more particularly, by Section T.thereof, the Ordinance was repealed. As already stated above, the Second Amendment Act cannot derive legislative competence from the Ordinance. It must derive legislative competence from the Constitution. Unfortunately, after substitution of Entry 54 of List II, State was denuded of such cornpetence traceable to Article 246. As a stand alone legislation, it cannot derive legitimacy traceable to Article 246A of the Constitution as well. Therefore, the Second Amendment Act made on 02.12.2017 though given retrospective effect from 17.O6.2O17 cannot be sustained as the same is devoid of legislative competence. 141 Needless to say, way back in 1964, Supreme Court in A.Hajee Abdul Shukoor (l supra) was categorical in holdir.rg that nhile the State Legislature is free to enact lal,s s'hich could have retrospective operation, its competence to makc a iau,for a certain

107 past period would, however, depend on its present legistative power and not on what it possessed at the period of time when the enactment would be in operation. r42 Insofar the decisions relied upon by the learned Advocate General are concerned, we have already discussed why those would not be applicable to the facts and grounds of challenge made in this bunch of writ petitions. 143 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 Amendment Act was brought about and why the Second Amendment Act cannot be sustained being completely inconsistent with the scheme of the Constitution Amendment Act (10 supra), Kerala High Court held as follows:

108 country through the introduction of a Goods and Sen'icc Tax, ald the phasing out of the multitude of indirect tax levies, including value added taxes, that were levied and collected by the Centre and the States. Section 19 of the CAA 2016, which is the sunset clause in the said enactment, envisaged the continuation of the erstwhile system of taxation for a period of one year from the date of enactment of the CAA or till such time as the State Legislatures amended or repealed their respective VAT legislations, whichever was earlier. When the State Legislature repealed the KVAT Act, while simultaneously bringing into force ttre new State GST Act, vdth a savings clause of limited operation, it effectively acknowledged tJ:e absence of any power to legislate thereafter on the subject of tax on sale or purchase of goods, except in respect of the limited commodities for which the said power was retained under the Constitution. In respect of all other commodities, t-lle legislative power of the State was only in respect of taxes on tJ"e supply of goods or services or both, a power that had to be exercised simulta;reously with the Padiament ard not unilaterally or exclusively. Thus, at the time of repeal of the KVAT Act, and simultaneous enactment of the State GST Act with a savings clause therein, the savings clause operated only to save rights, privileges, immunities, ;rction taken etc under the erstwhile eniictment as it stood at the time of its repeal, which included the amendmonts brought in through the Kerala Finance Act, 2O17. There could not have been arly furthcr legislative exercise by the State legislature in relation to thc repealed KVAT Act. ),44 We are in respectful agreement with the views expressed by the Kerala High Court in Baiju A.A (1O supra). Intention of Parliament in ushering in the GST regime thror-rgh the Constitution Amendment Act and enactment of the CGST ,\ct and simultaneous enactment of various State GST Acts bv the State Legislatures is to avoid multiplicity of taxes b1' subsuming those indirect taxes in a single tax called GST. It is in this context we have analyzed Section 19 of the Constitution Amendmt:nt Act. Vieu,ed thus the amendments brought in b1, the Second Amendment Act, as discussed above, are u.hollr, inconsistcnt rvith

I09 the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act. i45 Thus, upon thorough consideration of a1l 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 such. Consequently, the notices issued and orders passed under Section 32 (3) of the VAT Act which have been impugned in the present batch of rvrit petitions are hereby set aside and quashed. 146 AI1 the writ petitions are accordingly allowed- Hor,r,ever, there shall be no order as to costs. 147 Miscellaneous petitions, if any, pending in all the u,rit petitions, shall stand ciosed UJJAL BHITYAN, CJ SMT. JUSTICE P.MADHAVI DEVI Date:05- 07-2022. KusnNrks/Pln Note: LR copy be marked (By order) pln