M/S. Kishore Enterprises vs. Assistant Commissioner(CT)Audit

COMMON ORDER WP.Nos.21 928, 2197 5, 27 021, 27031 & 27048 of 2022 Allowing the WPs Without costs. s q" O} arr. c ara*''\ t\ o"' A^A)- 6^v

THE HON'BLE THE CHIEF JUSTICE UJJAL BHTryAN AND THE HON'BLE SMT. JUSTICE P.MADHAVI DDVI WRIT PETITION Nos.7893. 955O, L6527,16853, 16896, 16903 0F 2020 494 7t2a 7054 9622 10046 IL4L4 LL996 t2778 15215 Lsa22 15841 158s3 Ls942 17095, L7LO2. L7314. 17988, 18258,20079,207LO, 20744. 2L542. 226sL. 22940, 23336, 233a6.242a2. 25561. 27294, 27533. 28797, 29743, 32t29, 32373, 32653, 32697 and 34O54 OF 2O2l COMMON JUDGMENT & ORDER: (Per Hon'ble the Chief Justice Uijal BhuI an) Issue raised in all the u,rit petitions being identical, those were heard together and are being disposed of by this common judgment and order.

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9 may initiate proceedings to revise, modily or set aside such order or proceeding and may pass such order in reference thereto as he thinks fit.

l2 Act, a-fter Article 246 of the Constitution of Inrlia a nerv Article 246-A came to be inserted. Article 246-4 reads as under: "246A. Special Prouision with respect to goods and serutces tax-- (1) Notwith,standing angthing contained in a4icles 246 and 254, Parliament, and, subjed to clause (2), the Legi:lature of euery State, haue power to make laus utith resped to goods and senrices to-x imposed bg the Union or bg such State. (2) Parliament has exclusiue power to mc ke lauts u-tith resped to goods and seruices tax uhere the supply of goods, or of seruices, or both takes place in th.e course of inter State trade or commerce, Explanation.--The prouisions of this article, in respect of goods and seruices tox referred to in cLause (5) of tl'Le article 2',79A, take effect from the date recommended bg the Good.; and Sen'ices Tax Council."

article 246A, such amount shall not fonn part of the Consolidated Fund of India. (4) Where an omount collected as tcLx leuied bg a State under article 246A has been used for pagment of the ta-x leuied under clause (1), such omount shall not form part of the Consolidated Fund of the State. (5) Parliament mag, bg lau.t, formulate the pinciples for determintng the place of supplg, and u.then a supply of goods, orgf seruices, or both takes place in the course of inter-State trade or commerce." t2. 3. As per Section 10, after Clause (l) of Article 270, Clauses (1A) and (1B) have been inserted. Clauses (1A) and (1B) afe as under: "(14) TlLe tax collected by the Union under clause (1) of article 246A slnll also be distibuted betu,een the Union and the States in the manner prouided in clause (2).

l{ bg each State Gouerutment .....Members (3) The Members of the Goods and Seruices Tax Cottncil refenczd to in sub-clause ( c ) of the clause (2) shall, as soon as mag be, choose otie utlotlgsl iiLenseiues to be the 'vice-Chairperson of tirc Council for such peiod as they mcty decide. (4) The Goods and Seruices Tox Council shall make recommendations to the Union and the State on-- (a) the taxes, cesses cnd surcharges leuied bg the Union, the States and the local bodies tuhich may be subsumed tn the goods and seruices tox; (b) tlLe goods and seruices thot mag be subjected to, rr exempted from the goods and seruices tax; (d) the thresLrold limit of turnouer belou ulhich good,s and seruices ntag be exempted from goods and seruices tax: (e) the rates including Jloor rates uith bands of goods ancl seraices tax; (J) any special rate or rates for a specifted perioC, to raise. additional resources during ang natural calamity or disaster; (g) special prouision with respect to the Stotes of Arunacha,l Pradesh, Assam, Jammu and Kashmir, Manipur, tl[eghalaga, Mizorom, Nagaland, Sikkim, Tipura, Himachctl Prodesh anci Uftorakhanrl; arzd (h) ang other matter relating to the goods and seruices tox, as tte Council mag decid.e. (5) The Goods and Seruices Tax Council shall reconmend the date on uhich the goods and seruices tax be leuied on petroleum crude, high speed diesel, motor spiit (commonlg knoun as petrol), natural gas attd auiation turbine fuel. (6) While discharging the functions confetred bg this article, the Goods and Seruices Tax Council shall be guided bg the need for a hannoni:zed stnlcture of gloods artd seruices tox ar.d for the deuelopment of a hannonised rtatknol market for croods and seruices. (7) One-hatf of the total number of Members of the Goods and Seruiccs Tox Council shall constitute the c|uotum at tts meetings- ( c ) model Goods and Seruices Tax Laws, pinciFles of leuA, apportionment of Goods and Seruices To,x leuied on sultplies in the course of inter-state trade or commerce under article 269-A and the pinciples lhat gouem the place of supply;

l5 (8) T he Goods and Seruices Tax Council shall determine the procedure in the perfotmance of tts functions. (9) Duery decision of the Goods ond Seruices Tax Council shall be taken at a meeting, bg a majoitg of not less than three-fourths of the u.teighted uotes of the members present and uotirLg, in qccordance uttth the following pinciples, namelg:-- (a) the uote of the Central Gouemment shall be a weightage of one thtrd of the total uotes cast, and (b) the uotes of alt the State Gouernments taken togetLler shall haue a u.teightage of tu.to-thirds of the total uotes cast, in that meeting. (1O) No act or proceedings of the Goods and Serwices Tax Council stnll be inualid merelg bg reason of-- (a) ang uacancA in, or any defect in, the constitution of the Council; or (b) ang defect ir the appointment of a person os a Member of the Council; or (c) ang procedural inegularitg of the Council not affecting the meits of the case. (11) The Goods and Seruices Tax Council shall establish a mechanism to adjudicate ang dispute-- (a) betuteen the Gouemment of India and one or more States; or (b) betu,teen the Gouemment of India and any State or Srates on one side and one or more other States on the other side; or ( c ) betu;een tLUo or more States, arising out of the recommendation-s of the Council or impleme ntatio n the re of. "

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t7 competent authority or until expiration of one year from such commencement whichever is earlier.

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l9 and coilection 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, 22.06.2O17 and Ol.O7 .2017 . Further, two more Acts s'ere enacted by the Parliament post the Constitution (101s Amendment) Act, 2O16. 16. Legislature of the State of Telangana enacted the Telangana Goods and Services Tax Act, 2017 (TGST Act' hereinafter) to make provision for levy and collection of tax on intra-State supply of received the assent of the Governor on 25.05.2017 and u,as first published in the Telangana Gazette on 27.05.2017. Various provisions of the TGST Act came into force on various dates. While Sections 1 and 2 (definition clause) came into force on 22.06.2017, Section 174 which provides for repeal and saving came into force on O1.O7.2017 . goods or services or both by the State of Telangana. TGST Act

2t 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 repea-led. That apart, such repeal would not affect any proceedings, such as, appeal, revision, review or refcrence u,hich shall be continued under the amended Acts or repealed Acts. It was also mentioned that it was considered necessar1/ 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 u,as 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 2 1 3 of the Constitution of India, the Governor promulgated Telangana Ordinance No.2 of 2Ol7 called the Telangara Value Added Ta-x (Amendment) Ordinance, 2017, which came into force v,ith immediate effect i.e., 17.O6.2017. By the said amendment, certain provisions of the VAT Act, such as, in Section 20 (4lr, Section 21 (3), (4), (6), (7) and (B), Section 32 (3),

2? (6) and (7) and in Section 57, the words 'four years'or 'fc,ur years or six years' or 'three years' stood substituted by the words 'six years'-

25 Section 2l (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 sub section (4) of Section 33 on account of aly stay order granted by the Appellate Tribunal or as the case may be, 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 bearing 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 tfre assessment. Section 21 (8): Where an assessment made has been set aside by any Court or as the case may be the Appellate Tribunal, the period between t}le date of such assessment and the date on u4rich it has been set aside shall be'excluded in computing the penod of six years as the case may be, for making any fresh assessment. Section 31 (1): Any VAT dealer or TOT dealer or any other clealer objecting to any order passed or proceeding recorded by any authority under tlre provisions of the VAT Act, other than the order passed or proceeding recorded by any authority under thc provisions of the VAT Act, other than the order passcd or proceeding recorded by an Additional Commissioner or Joint Commissioner or Deputy Commissioner, may within 3O dat's from the date on which the order or proceeding was sen ed on him, appeal to such authority in the manner prescribed. Provided that an appeal so prelerred shall not be admitted bv the appellate authority concerned unless the dealer produces proof of payment of tax, penalty, interest or any other amount adn tted to be due, or of such installments as have been granted, and the proof of palrment of twelve and half percent of the difference of the tax, penalty, interest or aly other amount, assessed by the :ruthority prescribed and the tax, penalty, interest or any other amount admitted by t.I:e appellant, for the relevant ta-x period, in respcct of which the appeal is preferred. Section 32 (3): In relation to an order of assessment passed rrnclcr the Act, the powers cooferred by sub-sections (I) and (2) shall lrt: exercisable only within a period of six years from the clate on rr'hiclr the order was served on the dealer. Section 32 (6): Where an order passed under this Section h:rs been set-aside by any court or other competent atrthority undr-'r thc Act for any reason, the period between the date of such ordcr and the date on which it has been so set-asidc shall be exclurlcd in computing the period of six years specified in sub-sectior.r {3}. frrr the purpose of making a fresh revision, if aly, under this Section.

26 Section 32 (7): Where any proceeding under this St:ction has'ceen deferred on account of any stay order granted bl the 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 beiore tire Appellatv Tribunal or the High Court oi (he Supreme Court involving a question of law having a direct :earing on the order or proceeding in question, the period during which the stay order was in force or such appeal or proceeding war; pending shall be excluded in computing the period of six years st'ecified in sub- section (3), for the purposes of exercising the povrer under this Section. Section 57 (5): No order for the forfeiture under tl.i: section, shall be made after the expiration of slx years from the date of collection of the amount referred to in sub-section (4).

28 four years i.e'., on or before 30.03.2019, in termr; of Section 32 (2) of the VAT Act. However, the revisional orde r was pzLssed on 14.09.2O2O u,hich is beyond four years but withirr six yeals. In so far the Second Amendment Act is concerned, it:s contended that the said amendment is not valid in the eye of iarv as it w.as made after the GST regime had come into effect. Therefore, tJ.e extended period of limitation of six years instead of four ycrars was not availerble to the Deputy Commissioner.

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32 the revisional order dated 05.03.2020 as being barred ,py limitation and thereafter to quash the sam,: as well as the consequential order dated 07.O3.2O2O.

the VAT Act except for the goods listed in Entry 54 ol List II of the VII Schedule. Ordinance No.2 of 2077 was promulgated by the Governor of Telalgana under Article 213 of the Constitution of India on 17.06.2017 whereby limitation was extended from four years to six years. O1.O7.2O17 is the date on arrd from which TGST Act became enforceable. Section 774 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 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 legislative competence to lev-v Value Added Tax (VAT) on sales of all. goods except newspapers in the course of intra-State trade 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 powers to give effect to the net' GST regime based on cooperative federalism-pooled sovereigntl'. The Second Amendment Act was adopted on 02.12.2017 r,"'ith retrospective effect from 17.06.2017 29.LL.2017 the Second Amer-rdment Act received the assent of the Governor whereafter it was published in the Telangana Gazette on 3.1 enlarging the period of limitation more pa,rticularly under Sections 2l and 32 of the VAT Act from four years to six vears. Ht: submits that after the Constitution Amendment Act, Stat: of Telangana did not have the legislative competence to enact the Second Amendment Act for all goods either on the basis of the erstwhile legislative scheme prior to the Constitution Amendment Act or on the basis of Article 246 read with Entry 54 of Lirst II, as amended, or under Article 246 A or in terms of Section 191 of the Constitution Amendment Act or on the principle ol pooled sovereignty or on the basis of Ordinance No.2 of 2Ol7 or in terms of Section 174 of the TGST Act.

36 to the coming into force of GST. Thus, Sectiorr 6 of thr: General Clauses Act, 1897 cannot be pressed into servic:e to save the pre- amended Entry 54 of List II.

37 Legislatures is based on the principle of pooled sovereigntr' / cooperative lederalism. Further, he submits that all such Iegislations must be based on recommendations of the GST Council. Therefore, he contends that lcgislative competcnce of 5 2O21 SCC Online SC 7O6

38 Telangana State Legislature for enacting the Sccond Anrendment Act cannot flow from Article 2464. 46. Mr. Ravi also highlighted the trals tiona-l prrovisions contained in Section 19 of the Constitution Antendment Act and points out that the said provision is in pan mateia to Article 243- ZF of the Constitution u,hich was brought in as a trrmsitional provision regarding the law relating to municipalities inserted by Part IXA of the Constitution of India. Relying upon the decision of the Supreme Court in Bondu Ramaswam'7 Vs. Bangalore Development Authorityo, he submits that Scction 19 only suspends constitutional invalidity or postpones such invalidity for a period of one year to enable the competent legisl€rtures lo remove the inconsistency by amending or repealing :;uch law to bring them in consonance with the post amended provisions. Object of such transitional provision is to provide fo - a transition by suspending invalidity of inconsistent legislation for a period of one year to enable the competent legislatures to anrend / repeal their laws to bring them in consonance with post iimr:nded provision. Therefore, Section 19 of the Constitution Amenrlmcnt Act does not eclipse the amendment to Entrv 54 of List I[ or- <:onfer legislative 6 (2O1O) 7 SCC 129

39 competence upon the State for making amendments to the VAT Act qua goods other than a-lcohol for human consumption arld the 54 had not yet been amended, even then also the: Second Amendment Act having been passed on 02.12.2017 was beyond the one year period in terms of Section 19 of the Constitution Amendment Act and therefore invalid.

{l 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. 02.12.2017 and also on the day when it was brought into force retrospectively i.e. 17.06.2017. 50. Referring to Article 213 (3) of the Constitution of India he submits that the Ordinance would be ultra uires for the very sarne reason for which the Second Amendment Act is ultra uires. He further submits that life ol 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 u.'as competent to enact and apply the Ordinance qua the goods not mentioned in amended Entry 54, such operation could not have continued beyond O8.12.2OL7 as per Article 213 of the Constitution. Clarifl,ing the position, he submits that the Ordinance was not challenged because the Ordinance was repealed by the Second Amendment Act and is no longer 1n existence. Besides, the Sccond Amendment Act was brought into force u,ith effect from 17 .06.2017 which was the date ol the 42 Ordinarce. Thus, even for the period when the Ordinance was in existence it r.t,as the Second Amendment Act nhich occupied the legislative field and not the Ordinance. Thert:fore, anv reliance placed on the Ordinance would be misplaced and the fact that the 51. Final11'Mr. Ravi refers to Section 174 of the TGST Act. Section 174 of the TGST Act provides for repei and sa,vings. It clearlv says that on and from the date of commencemt:nt of the TGST Act, the VAT Act stood repealed except in respecl of goods includcd in Entry 54 of List II of the VII Schedule. To that extent, Section 1,7 4 of the TGST Act vindicates t he stand of the petitioners. Mr. Ravi submits that Section 17 I of the TGST Act was brought into force with effect from Ol.O7 .20 17. The effect of repeal u,ould be that the VAT Act with respect to ail goods other than those mentioned in amended Entrv 5,f of List ll stood obliterated and was not in existence any rrrore on and from Ol.O7.2Ol7. From 01.07.2017 t}.e VAT Act 'c,as alive only 111 respect ol the goods mentioned in the amended Entry 54 of List II The same u,ould also apply to the date 02. .2.2017 r.vhcn the Second Amendment Act was enacted. Therefore, tl-re Second Ordinance was not challenged would have no lega-l bearing.

43 Amendment Act can only be in respect ol the VAT Act as existing on 02.12.2077, even if given retrospective effect frorn 17.O6.2017. 52. Summing up his arguments, Mr. Ravi submits that both the Ordinance as well 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 supraf and a later single bench decision of the Keraia High Court in Hindalco Industries Limited (3 supra) have struck down VAT legislations enacted post 16.09.2016. He submits that he would adopt the detailed reasonings given by the bench in those two cases.

"l-l senior counsel, submits that the State Legis lature pzLssed the Telangana Goods and Services Tax Bill, 2Ol7 on 16.042017. It received the assent of the Governor on 25.O5.2OI7 whereafter the Telangala Goods and Services Tax Act, 2017 (;rlready r,:ferreditb as the TGST Act') was published in the Telangana Extraordinary Gazette on27.O5.2O17. He thereafter submits that the Ordinance was promulgated on 17.06.2017 whereas the S,:cond Anrendment Act was made on 02.12.2017 giving retrospective eflect from 17.06.2017. He submits that the Second Amendment Act is unconstitutional as the State Legislature had l,rst its competence to make such amendments after the Constitution Amenctment Act came into force from 16.09.2016. On and frorn 16.09.12016 only concurrent juri iction could be exercised simrrltaneour;ly by the Centra-l Government as well as bv the State Covernment insofar GST is concerned; that apart, exercise of pos'er under Article 246 Council.

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17 make laws for saving the repealed Acts under Section 19 of the Constitution Amendment Act. Accordingly, 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 respect of transactions made prior to OI.O7.2OI7. 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 Ciauses Act, 1.897 also makes it clear that repeal of an 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 (3 supra) and on the Gujarat High Court decision in Reliance lndustries Limited (2 supra) ',r,ould 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 of GST. 59 Elaborating further Mr. B.S.Prasad submits that the Ordinance rn'as promulgamated b1, the Governor of Telangana on decision of the Kerala High Cor-rrt in Hindalco Industries Limited

,t8 17.06.2017 u'hereby the time limit for assessmrlnts and revisions was extended from four years to six years belbre annrilment of VAT Act. The Ordinance became an Act i.e. the Second Amendment Act on 02.12.2017. Prior to that, the Ordinance was approved by the legislative assembly of the State of T'elangana within six months from the date of the Ordinance. Referring to Article 213 (21 of the Constitution of India, he' submits that an Ordinance promr-rlgated- by the Governor would have r-he same force and effect as an Act of the legislature unless such an Ordinance is not placed before the legislative assembly or rejected by the legislative assembly when placed before it within the stipulated time. Insofar the present case js concerned, the Ordinance was placed before the legislative .rssembly and the assembly approved the same. Therefore, in the light of lhe above constitutional provision, the limitation to make an assessment or reassessment or revision is six years and not fou.r years. r\ccording to him, the Ordinance issued and the subseqi-.ent legislative Act for prolongir-rg the limitation made such exterrsion of limitation valid. Therefore, the proceedings initiated under the V,\T Act in respect of the petitioners are valid, being within [imitatiorr. Insofar decision of the Kerala High Court in Baiju AA (1O supra) is concerned, the same would not be applicable ,-o the far:ts of the 49 present case inasmuch as amendment to the Kerala VAT Act nas made long after annulment of the Kerala VAT Act. Insofar the present case is concerned, the Ordinance was promulgated prior to Ol.O7.2Ol7 when the VAT Act was still in force. 60 Mr. Prasad, iearned Advocate General, asserts that Telangana State was competent to promulgate the Ordinance on 77.06.2017 ar-rd thereafter to pass the Second Amendment Act on 02.12.2017 in respect of goods not covered by amended Entry 54 of List II. Povger and competence of the State in this regard is traceable to Article 246 of the Constitution read with Section 19 of the Constitution Amendment Act; the savings provision in Section 174 ol the TGST Act; Article 2464 of the Constitution; and Sections B and BA of the Telangana General Clauses Act, 1891. 61 Mr. Prasad submits that State is only securing and protecting the revenue due to it by enlarging the duration b1, rvhich the dealers cal be assessed etc., but not imposing anl/ new tax or 1evy. Legislation being a sovereign function of the State, thus, the Second Amendment Act cannot be questioned as being r,vithout competence. 62 State has the power to enforce the Second Amendment Act urith retrospective effect. State has the power to even take awav

50 vested rights of the assessees i.e. even where assessments become barred by time under the pre-amended provision. State can enlarge the limitation even for such time barrec. assessrrrents and take away vested rights. Looked at from this perspe:tive, the Second Amendment Act cannot be said to be arbitrary, not to speak of being manifestly arbitrary. 63 Provisions for enlarging time limitation on assessments etc., are only procedural aspects of levy artd assessnrent of tax. These are not substantive provisions. Assessing Officers are competent to adjudicate on limitation since it is a mixed question ol fact and lau'. 64 Referring to Hindalco Industries Limited (3 supra), he submits that decision of the Kerala High Court, as expressed in the said case, is distinguishable. In the said cle,:ision, Ke.rala High Court did not deal with the effect of Section 19 ,rf the Co lstitution Amendment Act and the savings provision unrfer the Sitate GST Act. As a matter of fact, State of Kerala had enacted the impugned law after the permissible r,r,indou, tr'eriod of one year allowed under Section 19 of the Constitution Amendrnent Act. Likeu,ise, Mr.Prasad submits that decision of the Guj;rrat High

51 .t,:,:':. ,.., pgriod of limitation cannot be cailed as substantive right. An 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 and clarified by tJle Supreme Court that every litigant has a vested right in substantive law but no such right exists in procedural 1aw. According to Mr. Prasad, . ,-i,.! lait of limitation is generally regarded as procedural and its object , i.Si:not to create any right but to prescribe periods within which legal proceedings be instituted for enforcement of rights which exists under the substantive lanv. Statutes of limitation are retrospective insofar those apply to aii legal proceedings brought after their operation for enforcing causc of action accrued earlier, rr 12011) 6 SCC 739 no persuasive value for this Court. of Indialr to contend that while right of appeal may be a <, but they are prospective in the sense that theT neither have the effect of reviving the right of action nor do thel' have the effect of extinguishing a right of action subsisting on that day. 66 Learned Advocate General has also pla,:ed reliance on a Supreme Court decision in Fuerst Day Lacrson Liurited.-Vs. 12 l2ooLl 6 scc 356 Jindal Exports Limitedrz in support of the proposition l:hat when' there is an Ordinance which is followed by al Act on the same subject matter, the Act will come into force in <:ontinuation of the Ordinance. In that case, a gazette notificati,>n was issued on 22.O8.L996 u,hich appointed 22"d day of August., 1996 as the date on which the Act in question would come into force. The said gazette notification was issued in exercise of th,: powers conferred by Section 1 (3) of the Arbitration and Conciliation Act, 1996. In the facts of that case, it was held that while the Act r:ame into force on 22.08.1996, for all practical and legal purposes, it would be deemed to have been effective from 25.OL.7996, when the Ordinance was promulgated, particularly, when the provisions of the Ordinance and the Act are similar there be:ing nothing in the Act so as to make the Ordinance ineffective. The Act being a continuation of the Ordinance, would be dee.rred to trave been 53 effective from 25.01. 1996 when the lirst Ordinance came into force. determining principle. He submits that wide latitude is allowed to the legislature in enacting a lau,. The freedom to experiment must be conceded to the legislature, particularly in economic laws. If probiems emerge in the u'orking of laws and which require legislative intervention, the Court cannot be oblivious of the power of the legisiature to respond by stepping in with necessa{/ amendments. Since the iau,, in this case, the Second Amendment Act has been enacted to augment the revenue of the State, the .''|:l ,:i the- legislature capriciously, irrationally and / or without adequate

5,1 wider latitude is given to the law makers, which is based on sound principle. Mr. Prasad asserts that even a vested right c,an be the subjcct matter ol retrospective law. No doubt, such a law must pass master Articles 14, 19, 2l and 300A of the Constitution of India. Therefore, the issue really boils down to rrvh:ther the impugned enactment is manifestly arbitrary ol not. If it is not, question of interference by the Court would not arise. 68 l,earned Advocate General has referred to and relied upon thc decision of the Kerala High Court in Sher:n Golden Jewels (India) Pvt. Limited (7 supra| in great detail. 69 Mr. Prasad has also referred to an article titled 'Transitional Prouisions In Commercial Legistations: An Analysis' by Priyal Parikh according to which the view taken by a majority of Courts is that the revenue authorities retain the power to levy appropriate ta-xes under the erstwhile indirect tax laws for events prior to the introduction of GST. 7O Mr.S.Ravi, learned senior counsel for the petitioners in reply submits that the State has not addressed the followir.rg crucial aspects raised br. the petitioners: i, l-llfect of amendment of Entry 54 by Se,:tion 17 of the Constitu tion Amendment Act,

55 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 t}re TGST Act, iii. Competence of the State as on 02.72.2017 to pass the Second Amendment Act, given the requirements of the present legrslative competence as on that date; v. Objective and effect of Section 19 of the Constitution Amendment Act, Vi. State did not at all make aoy endeavour to shorv any distinguishing feature in the judgment rendered by the Gujarat High Court in Reliance Industrles Limited (2 supral and why the same should not be applied to the present case. 7L Mr. Ravi 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 than the goods mentioned in amended Entry 54, ttre State does not possess legislative competence. This crucial aspect was not countered by the State. petitioners that the Ordinance or the Second Amendment Act are manifestly arbitrary or that those cannot be given rctrospective effect. Therefore, the argument advanced by the learned Advocate iv. Requirement of simultaneous iely by Parliament arrd State Legislature for legislative competence under Article 246A, 72 Mr. Ravi submits that it is not the argument of the 56 General based on the principles of manifest arbitrariness or retrospectivity are not at all germar-re to adjudicate on the issues raised by the petitioners. 73 Besides reiterating reliance on Reliance l:ndustries Limited (2 supra) and Hiadalco Industries Limited 13 supra), Mr.Ravi has also pressed into service a decision of ttLe Alla-habad Higlr Court in Jain Distillery Private Limited (4 suprra|. 74 Insofar extension of time limit in tax mar-ters is ccncerned, Mr.Ravi submits that time limits are a fetter on the juri iction of the departmental authorities. Enlargement of time uLnder the Second Amendment Act in extending the limitation period arnounts to conferring juri iction on departrrental authorities that did not exist earlier. Therefore, such an amendm,:nt is not merely for securing old liabilities but impacts the rights of assessees, thus being a fresh legislation which is devoid of legislative competence. 7 5 Insofar reliance placed by learned Ad'rocate General in Tirumalai Chemicals Limited (11 supra) it is submitted tirat the said decision is of no application to the present batch of ,:ases. He submits that the question for determination in that case u,as whether the limitation to file appeal against order for vLolation of 57 provisions of Foreign Exchange Regulation Act, 1973 (FERA) would be governed by the appellate mechalism under the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchange insofar the present batch of writ petitions is concerned where the challenge is primarily to the competence ol 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 tl-rat in the present batch of cases petitioners are primarily concerned u'ith the validity of the Second Amendment Act and not the Ordinance. Bven if it is assumed that the State had the competence to promulgate the Ordinance in June, 201.7 before onset of CST u.ith effect from 01.O7.2017, by the time the Second Amendment Act was passed, the State had lost its competence for legislating on goods 1n 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 Management Act, 1999. The above decision has no relevance 16.09.2016 when the Constitution Amendment Act came into 58 force, the Ordinance could not have been pr()mulgate(1. Thus, both the Ordinance and the Second Amendmr:nt Act c:annot be sustained after 16.09.2016. Again in this judgment question of legislative competence of the State to promulg;ate an ()rdinance followed by an Act on the same subject matter was not in issue. He submits that an Ordinance as well as an Act are two pieces of legislation. Legislative competence of each har; to be separately determined in the light of the Constitution ancl the point of time when those were enacted. Insofar Manish Kumar (13 supra| is concerned, he submits that it is not the case of the petitioners that the Second Amendment Act should be struck dovrn on the ground of being manifestly arbitrary. That apart, while there can be no dispute to the proposition that a wider latitude should be allowed to the legislature while legislating econcmic laws, it is also equally clear that vi.hile making such law, the Legislatr.rre or the Parliament cannot transgress the constitutiorLal limits. In the instant case, the challenge to the Second l.mendment Act is purely on the ground of legislative competence; rather lack of legislative competence. Petitioners a-re no.- questioning the legislative u'i om in extending the limitation for making assessments, reassessments, revisions etc., fro.n four yr:ars to six years, but have questioned the Second Amer:dment Act on the ground that the State did not have the legislative competence to enact the same. 77 Insofar Sheen Golden Jewels (Indiaf Pvt. Limited (7 .,:r supra) is concerned, learned senior counsel submits that a rt, 1.:"t ; division bench of the Guj arat High Court in Reliance Industries Llmited (2 supra) has distinguished the said decision. In Sheen Golden Jewels (Indiaf Rrt. Limited (7 supra) petitioners had challenged validity of Section 17 4 of the Kerala Goods and Services Tax Act, 2O17 which is pari materia to Section 174 of the TGST Act, on the anvil of Section 19 of the Constitution Amendment Act. According to Mr.Ravi, petitioners herein are not questioning validity of Section 174 of the TGST Act. Rather, ing to the petitioners, Section 174 of the TGST Act only pports what is being contended by the petitioners. 78 :i The article, 'Transttional Prouisions in Commercial Legislation: An Analysis' follows the same logic given by the Kerala High Court in Sheen Golden Jewels (Indiaf Pvt. Limited (7 supra). That apart, the article also relied upon tl're decision of the Gauhati High with validity of shou' cause notices for service tax after Section 14 2018 ScC Online Gau 1457 59

60 174 of the State GST Act was brought in. Mr. Ravi submits that according to the a-foresaid article, Section 19 of the Corrstitution Amendment Act has elements of both tralsitiona-l asr well as savings clause. However, he contends that rsection 19 of the Constitution Amendment Act only suspends invalidity of the inconsistent legislation for a period of one yea-r or ti1l the inconsistent legislations are amended or repealed. He asserts that Section 19 is neither a source of oower nor a s€Lvings provision. It is only a transitional provision. 79 Mr.S.R.R.Viswalath, learned counsel lbr som(: of the petitioners also made submissions replying -o the arguments advanced b}, the learned Advocate General. Wlfle admitting that learned Advocate General was only partly cor:ect in s-rbmitting that time limitations are procedural and not: substanrtive, he, hou,ever, submits that in tax jurisprudence time limitations prescribed for making assessments, reassessments, revisions etc are juri ictional in nature and are thus fetters on the ta-xing authorities. In this connection, he has plar:ed relia::rce on a decisior-r of the Supreme Court in S.S.Gadgil Vrr. ITOrs. Referring to Tirumalai Chemicals Limited (1 1 supra) r'elied upon b_r, the Is 53 ITR 231

6t learned Advocate General, he submits that in the said case Supreme Court was dealing with the limitation prescribed for filing appeals, u,hich is of entirely different nature. 80 Mr. Viswanath submits that two dates are extremely crucial Firstly, 16.09.2016 when the Constitution Amendment Act came into force. Secondly, 27.O5.2O17 when the TGST Act was enacted The.Ordinance as well as the Second Amendment Act were made subsequent to the enactment of the TGST Act. Therefore, learned Advocate Generai 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 16.09.2016 and also after 27 -O5.20t7 81 Referring to Section 19 of the Constitution Amendment Act, Mr. Visrvalath submits that the window provided by Section 19 u,as completely exhausted on 27.05.2017 when the TGST Act rvas 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 ol the Constitution Amendment Act could be invoked even after 27.O5.2O17 and that the Ordinance and the ,:., :.'

62 Second Amendment Act owe their genesis t I Sectiolt 1 9. He further submits that neither the Ordinance nor thr: Second Amendment Act can be traced to Article 246A of the Consrtitution. a2 Insofar decision of the Kerala High Court in Sheen Goldgn Jewels (India) Rrt. Limited (7 supral is cor-rc:rned, h<: submits that in the said case the challenge was made to Section i74 of the Kerala Goods and Services Tax Act, 2017 u,hictL is pari rnateia to Section 174 of the TGST Act. Petitioners herein are not che{lenging validity of Section 1.74 of the TGST ,\ct. He, therefore, submits that there is no merit in the arguments advanced by the learned Advocate General. 83 Submissions made by learned counsel for the par-ties have received the due consideration of the Court. 84 We shall first deal with the issue rela ting to legislative competence. Heading of Article 246 of the Consititution of India is subject matter of laws made by Parliament and ry the Legislatures of States. Clause (I) says that notwithstarrdir-rg an ytl-ring t clauses (2) and (3), Parliament has exclusive prxver to rrake lau,s with respect to any of the matters enumerated in List I (Union List) of the VII Schedule to the Constitution of India As per Clause (2), notwithstanding anything in Clause (3), Parliament

63 and subject to Clause (I), the Legislature ol aly 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 power to make laws with respect to any matter for any part of the territory of India not included in any State notu.ithstanding that such matter is a matter enumerated in the State List. 85 Thus, the power to make laws either by the Parliament or by the State kgislatures is traceable to Article 246 of the Constitution of India. The Lists in the VII Schedule defines and various entries in the three lists of the VII Schedule are not sources of legislative power. These are legislative heads demarcating the field of legislation; of course, being the field of legislation, the entries should be given the widest possible amplitude. 86 Prior to the Constitution Amendment Act i.e., prior to 16.O9.2016, Entry 54 of List II \.vas as follot's: limit the respective competence of the Union and the States. The 6{ "54: Toxes on the sale or purcha.se of goods other than netDspapers, subject to the prouisions of entry 92 A of Lbt 1".

"

66 92 Thus u'hat Article 2464 provides is that both Pa::liament and the Legislature of every State have power tc make laws with respect to GST imposed by the Union or by such State except in the case of GST rri.here the supply of goods or of services or both takes place in the course of inter-State trade or comrnerce in such enactment wiil take effect from the date of recommendation by the GST Council. 93 Article 366 of thc Constitution of India defines various expressions ri,hich finds place in the Constituti,rn. Clause (12) inconsistency between laws made by ParliamerLt and laws made by Legislatures of State), Parliament and subject to clause (21, the Legislature of every State have power to make larvs with respect to goods and services tax (GST) imposed by the [Jnion or by such State. As per ciause (2) Parli.ament has exclusive power to make laws vvith respect to GST where the supply of goods or of services or both takes place in the course of inte:r-State trade or commerce. The Explanation clarifies that prorrisions of A::ticle 246A in respect of GST shall take effect from the date recommended by the GST Council in terms of Cliruse (5) of Article 279-A. which case Parliament has the exclusive compet(lnce. Of course,

67 defines "goods" to include all materials, commodities and articles. Clause (12A) which was inserted by the Constitution Amendment '' 11::' : tAcI with effect from 16.09.2016 defines "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 (264), also inserted by the Constitution Amendment Act with elfect from L6.O9.2016, defines "services" to 94 Article 246 A of the Constitution of India came up lor

analysis before the Supreme Court in VKC Footsteps India .,,. Plivate Limited (5 supral, Supreme Court has held as follows:

"

68 power is available both to Parliament as well as to -,-he Stltfi,.: 'l': ' Legislatures except in the course of supply of goods or services or both in the course of inter-State trade or comm,3rce. What Article 246A embodies is the principle of simultaneou s levy by both the Parliament and by the concerned State Legisla -ure, distinct from the principle of concurrence. 96 The nature of Article 246A of the Constit'rtion of lndia was examined by the division bench of the Gujalat High Court in Reliance Industries Limited (2 supra) whereaJter it has been held as foilows:

"

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 lor the assessment years 2O1O-2011 ald 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 Finalce Acts of 2Ol7 and 201B notified on 19.06.2017 and 31.03.2018 respectively did not contemplate a retrospective operation of the amended provisions Section 25 of the Kerala Value Added Tax Act, 2OO3 deals with assessment of escaped turnover. In case of escaped turnover for any reason the assessing authority couid determine to the best of his judgment the turnover which had escaped assessment to tax at any time within five years from the last date of the vear 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 Finalce Act of 2077 , the period of limitation under Section 25 (1) for proceeding to determine escaped turno\rer rn,as enhanced from five years to six years and in the last proviso the extension was made up to 31.03.2018. Thereafter, b1" the Kerala Finance

70 Act, 2O 18, in the last proviso, the extension was made up to 31.03.2019. 98 One of the questions framed by the Kerala High C)ourt was whether a-fter the Constitution Amendment Act and rep,:al of tlre Kerala Value Added Tax Act on 22.06.2017, the State Lr:gislature retained any residual power of legislation so as to arnend the provisions ol Section 25 (1) through the Kerala lrinance Act, 2O18. After due consideration Kerala High Court held rr-s follows:

7t legislate on the subject of taxes 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 pou,er 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, a-fter the Constitution Amendment Act, the State Legislatures stood denuded of ttreir 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 :.ofi.goods or services or both. While the new legislative power could ''.juitify the inclusion of a savings clause the new legislation ln enacted in respect of the new lev-v 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 sale 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 power to amend the Kerala Value , l -:: 1r i1:r: : Added Tax Act, 2OO3 except to the extent permissible when it did taxes on sale or purchase of goods not retain any residual right to further legislate on the subject of 72 100 An identical issue came up before, arrcther single bench of thc I(eralrL High Court in HINDALCO INDIISTRIES LIMITED {3 supral. Foilowing the same line of reasoning, adopted by the previous bench in BAIJU A.A. (1O supra) it has been held that after the Constitution Amendment Act, State Legislatu.res stood denuded of their power to legislate in respect c,f taxes on sale or purchase of goods that was covered under Entr5z 54 of List II of the VII Schedule: thev have instead been conferrr:d with legislative powers to be exercised simultaneously with 'Lhe Parliament in respect of ta:<e s on supply of goods or services or bot?r. It has been held as follows: ........Afi.er the CAA '2016, the State Legislatures stood denuded of their pouter to legislzte in respect of lar:es on sale or purchase of goods, that uas couered under Eniry 54 of List II rf the Seuenth Schedule to the Constitutior'-, and theg uere tnsleod con-Jbrred utith legislatiue powers, tc be exe.cised sirnultaneouslg uith the Parliament, in resped of taxes on supplg of goods or seruices or botLt While the neut legislatiue pouer could justify the inclusion of a sauings clause in the netu legklation enacted in respect of the neut leug of tax, to saue accrued fights, pnuileges, immunities, etc., under tlrc erstuthile en@ctment, the deletion of Entry 5a of List II automaticallg derruded the State Legislatures of the power to further legislate on the subject of toxes on sale or purchase of goods, except to tte limitect. ertent retained under the C-onstitution. The power to omend a statute being a. facet of the legislatiue pouer itse[, lhe State Legi.slature could nol haue cxercisecl a poLuer to amend the KVAT Act, saue to the ertent permitted, tuhen it did not retain any residual right to Jurther Iegislate on the subject of taxes on sole or purcha.se of goods".

t 73 101 A division bench of the Allahabad High Court in M/s. rea-lization of advertisement tax under the U.P. Municipalities Act, t 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 16.09.2O16. U.P. Goods and Services Tax Act, 2Ol7 carne into operation with effect from Ol.O7.2Ol7. The by-laws by which the municipalities intended to lery and collect taxes on advertisement were framed on 12.O1.2O17 but published on 19.O8.2017 i.e., after O1.O7.2017 when the U.P.Goods and Services Tax Act, 2017 carne 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 II of the VII Schedule to the Constitution of India by the Constitution Amendment Act with effect from 16.O9.2016, even the State Legislature did not have the legislative competence to ler'y or collect taxes on advertisement which was earlier '6 (2020) r.r csl'R 2-r5 (A ) : I : t

74 available under Entry 55. Further, the bench noted that the power to tax earlier vested with the municipalit,ies under Section 128 (2) (VII) of the U.P. Municipalities Act, 1916. Having been omitted by virtue of Section ).73 of the U.P.Goods and Services Tax Act, 2OI7, the municipalities did not have the statutory competence to levy, impose or collect advertisernent tax. Further clarifying the position Allahabad High Court held that the State Legislature rvas invested with the power to mal<e laws in respect of taxes on advertisement vide Entry 55 of List II to the VlI Schedule but the said entry was deleted by the Constitution Amendment Act with effect from 16.09.2016. The Constitution Amendment Act vide Section 17 amended the VII Schedule and omitted trntry 55 of List II, thus deleting the po',ver of th,r State to make laws in respect of taxes on advertisement. Therefore, r.vhen the State was denuded of the power to make lanr,s in respect of taxes on advertisement, obviously the municipalities rvere a-lso divested of the power to impose arry tax on adve:tisemen1.. t02 This line of reasoning has also been folloned by a later division bench of the Allahabad High Court jn Jain lDistillery Private Limited (4 supra). In this case, the Allahaoad High Court examined the position as to the cc,mpetence of the 75 Parliament and State Legislatures to enact laws to impose duties on excise and to levy 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 chalge made vide the Constitution Amendment Act was to tax alcohol under the GST regime except a-lcoholic liquor for human consumption. Thus, alcoholic liquor not for human consumption or industria-l alcohol or non potable alcohol would be subject to GST 1au,s only. According to the Allahabad High Court this intent has been expressed through Section 174 (ll (i) of the U.P.Goods and Services Tax Act, 2017. Section 174 (71 (i) of the U.P.Goods and "174. (1) Saue a-s otLeru.tise prouided in this Act, on and from the date of ammencement of this Act: (i) The Uttar Prad.esh Value Added Tat Act, 2008, except itt respect of goods included in Entry 54 of the Stafe List of the Seuenth Schedule to th.e Cotlstitution, are hereby repealed." lo2.l It was in that context Allahabad High Court held as follows: '

76 corl,sumption'. Hence, in anV case, afier the e,aactment of the UPGST Act, 2O17 and in absence of ang omendment to Section 174 (l) (t) of that Act, there neither suruiues nor eisL; ang delegated power witlt the State Gouernment, lo issue the impugned i'{otifrcation, to impose UPVAT on ENA.

78 Value Added Tax Act, 2003 by virtue of the Guiarat Valtre Added Tax (Amendment) Act, 2018 enacted on C3.04.2O18 giving retrospective operation from 01.04.2O06. Sect.on 84 A provided for exclusiorr of the period spent between the drrte of the decision of the Appellate Tribunal and that of the High C,:urt as well as the Supreme Court in computing the period of limitation referred to in Section 75 of the said Act. Therefore, one of tJle questions which fell for consideration was whether Section 84 A of the Gujarat Value Added Tax Act, 2OO3 was ultra uires and be'1ond the legislative competence of the State under Entry 54 of the List II of the VII Schedule. After due analysis Gujarat Fiigh Coutt held as follorvs: 91 . Hauing giuen our earnest ansideration to all the releuant aspects of the matter, tue haue retcLed to the concluston that arlicle 2464 of the Constitution of In-d.ia does not saue section 84A of the VAT Act from being deckved inualicl or ultra uires. As noted cLboue, article 246A of the ConstituLion uLas isefled bg the 1O1a Constitution Amendmett Act with the sole or rather the preci.se object of subsuming multiple indi.ect taxes and to confer conc'Ltrrent poluer to the P,zrliament and State Leglislature to impose "goods and seruices tox" in accordance u.)ith the rec:om.mendation s of tfu,, Goods and Seruices Tax Courtcil statute under article 279A of the Constitulion. of India. 'l-he uery object of such laroe scale reJorm "

79 , lDos to replace number of indirect taxes being leuied by the ,..'.. Union and the State Gouemments and to remoue the cascadinq :,; effect of taxes and prouide for a common national market for .: goods and seruices. This is apparent from the statement of i objects and rea.son-s referred to bg the Supreme Court in Mohit Mineral Put. Ltd. [2018] s8 G,STR 1 (SC) : [2019] 2 SCC s99

80 '{ I 1::'_ benchcs of Allahabad High Court in M/s. Pankrj Advertising (16 supra), Jain Distillery Private Limited (4 supra) and the division bench of Guj arat High Court in Reliance IndtLstries L:imited (2 supra). Not oniy the Second Amendment Act cannot be traced to Article 246 of the Constitution read with Entry 54 of List ll 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 Parliarnent. 106 Let us now deal with Section 19 of the Constitution Amendment Act, which reads as under:

;.. ...^ r. -' I,: ir .:. -.--: t.. ':;1,: 81 , 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 .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 54 of List II. '-l 109 As already discussed above, consequence of amendment of Entry 54 of List II is denuding the State Legisiature ,,: . :ria1i, tr; +^ I '. Constitution Amendment Act for a period of one year or till such :.l legislations are amended or repealed, whichever is earlier. The r:a i. ."i'r- ' ' : ,::' r..:r;., .':. -" objective appears to be for a transition to the GST regime brought ', . Legislatures for making amendments to the VAT Act in respect of :i i 'r-,r' ' , ';igbtlds other than the live petroleum products and alcohol for . .1. ,.+'. \ ' :l :tlj': " ' human consumption covered by the amended (substitured) trntry' of the po\.'er to levy tax on sale of goods other than those as inconsistent with the GST regime within an outer limit of one year period. Section 19 does not and cannot be construed to eclipse the amendments carried out in Entry 54 of List II to the VII Schedule or confer: legislative competence upon the State

82 provided in amended Entry 54; invalidation of State legislations existing as on 16.09.2O16 ievying tax on sa-le ol'goods olher than those finding place in amended trntry 54. Section 19 does.not save or postpones deprivation or denudi.eg competence of State Legislature for lelying ta;i. o other than those mentioned in amended (substitu of legis ted) Entry 54 of n sale of goo List II. Section 19 only allows operation and levy of tax under the VAT Act which is inconsistent with the GST reg me for a period of one year or until the VAT Act is repealed or anrended, lvhichever is earlier. This would mean that the State could contimre to levy tax under the VAT Act for the window period of cne year or till the VAT Act was amended or repealed to align it with the GST regime, whichever was earlier. the State Legislature This transitional provision does not enable .a: il.:.:r,: . to make amendments tl lhe VI.T Act 'in contravention of the amended Entrry 54 of List II. 110 At this stage, we may refer to Article 243i,F of the Constitution. Part IXA dea-ling with municipalities was inserted in the Constitution by the Constitution (Sever-rt1, fourth Amendment) Act, 1992 with effect from 01.06.1993. Article s 243 P to Article 243 ZG comprises of Part IXA, all dealing u,ith municipalities. By the aforesaid provisions municipalities ald rnunicipal

ti3 administration were brought under the umbrella of the Constitution. Article 243 ZF provides for continuance of existing and municipalities. This provision is pari mateia to Section f the Constitution Amendment Act. Articlc 243 ZF reads as uilder: , 243 ZF. Continuance of eistinq lanus and Municipalities:- Notu-tithstanding angthing in this Part, ang prouision of any lau relating to Municipalities in force in a State immediatelg before the commencement of the Constitution (Seuenty-fourth Amendment) Ac| 1992, Lulticlt is inconsistent tuith the prouisions of this Paft, shall corttinue to be in force until amended or repealed by a competent Legislature or other competent authoitg or until the expiration of orte gear from such commencement, whicheuer is earlier: ;, Prouided that all the Municipalities existitg inmediatelg 'before such commencement shall corttinue till the expiration of ltLleir duration, unless sooner dissolued by a resolution passed r',to that effect by the Legislatiue Assemblg of that State or, in the ,co.se of a Stote hauing a Legislatiue Council, by each house of the Legi-slature of that State. 1 1 1 As per this Article, notwithstanding anything in Part IXA 'of the Constitution, any provision of law relating to municipalities in force in a State immediately before commencement of the Constitution (Seventy-fourth Amendment) Act, L992, which is inconsistent with Part IXA, shall continue to be in force until amended or repealed by a competent Legislature ol other competent authority or until expiration of one year from siich commencement, ',thichever is earlier.

84 1L2 considering challenge to acquisition of land for fornration 'of Arkavathi Layout on the outskirts of Bangz[ore cig- by the Bangalore Development Authority under the Bangalore Development Authority Act, 1976. It was in thal. context Supreme Court considered the question as to whether provisions of the Bangalore Development Authority Act, 1976, iarore particularly, that of Section 15 dealing with the power of the authority to draw up schemes for development of Bangalore ,l\4etropolitan aqga became inoperative, void or was impliedly rep,?aled by virtue ]Lf Part IXA of the Constitution. Supreme Court held that Ar:ticle 243 ZF is a provision enabling continuance of anv provision of law relating to municipalities tIt spite of such provision being inconsistent with the provisions of Part IXA of the Constitution for a specified period of one year or until amended or repealed, whichever is earlier. It was held as follows: "Anv statute or provision thereof which is inconsistent with any constitutional provision rvill be struck down by courts. Consequently, if tlDA Act or any provision of the UDA Act is found to b(, inconsiste,lt with any provision of Part tXA of the Constitution, it will te struck down by courts as violative of the Constitution. In regard to any provision of any Iaiv relatirlg to municipalities, Article 2432F suspends such invalidity or postpones the invalidity for a period of one year from ...6.1993 to enable the competent Legislature to remove the inconsistency by amencling or repealing such larv relating to rnunicipalities to bring it i: consonanr:e with the provisions of Part [XA of the Corlstitution." + ,.1. .: *tilt i, ;.S" .::'.:. In Bondu Ramaswamy (6 suprat, Srrtreme Courtffi-t#

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 with the provisions of ,, Pait IXA of the Constitution. On the above analysis we have no hesitation in hoiding r. that Section 19 of the Constitution Amendment Act cannot be uhderstood 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) wherein it has been held as follows:

86 larvs to bring them in harmony vrith the CA Act. Otht:nvise, the States must repeal them. And they were given one year for aclrieving this. If the States do neither, those inconsistent acts stand repealed.

88 (i") The Telangana Tax on Entry of Goods into Local Areas , |1-r9, Act, 2001 (Act 39 of 2001); ;, ,-ilj $i, ,,*,-,,#.: (u) The Telangana Tox on Luxuies Act, 1987 (Act 24 of tii:-1' 1987); (ul The Telangana Horse Racing and Betting Tax Regula:\ions, 1358F (Regulation XLB of 1358F); (uii) The Telangana Rural Deuelopment Cess Act, 1996 (Act 11 of 1996); fttereofter refened to as the repealed Actt) are lrcrebu repealed. (2) me repeal of the said Acts and the amendrent of the Acts specifred in section 173 (hereafter referred to as 'such amendment' or "amended Act', as the case tnag be) tc the extent mentioned in sub-section (1) or section 173 shall not- (a) reuiue angthing not in force or existing at tne time oJ such amendment or repeal; or (b) aJfeet the prguious operation of the an.tended Acts or repealed Acts and orders or angthing dulg dc,ne or suifered tLLereunder; or (c) affect ang right, piuilege, obligation, or liobilitg acqtired, accnted or inanrred under the amettded Acts o" repealed Acts or orders under such repealed or amended Acts: Prouided tlwt any tax exemption granted as an incentiue against inuestment through a notificatiort shall 'tot continue as piuilege if the said notijlcation is rescinded on or afie'r the appointed dag; or (d) affect ong tax, surcharge, penalty, fine, itte rest as are due or moA beame due or ang forfeiture or punishntent inanned or inflicted in respect of ang offence or uiolation conmitted aglainst the prouisions of the amended Acts or repealed t\cts; or (e) affect any inuestigation, inquiry, uerificcttion (including scruting and audit} assessment p roceedings, adjudication and ang other legal proceedings or recouery of anrears or remetdy in respect of any such tax, surcharge, penaltg, fine, interest, right, piuilege, obligation, liability, forfeiture or p.unishmen| as aforesaid, and ong such inuestigation, inqu'.ry, ueriftcation (including scrutinA and audit), ossessrnerlf proceedings, adjudication and other legol proceedings or recouery of arears or remedg mag be instituted, cotttirtued or enJcrced, ond ang

ti9 such tax, surcharge, penaltA, fine, interest, forfeiture or punishment mag be leuied or imposed as if these Acts had not been so amended or repealed; (fl affect any proceedings including that relating to an appea| reuision, reuiew or reference, instituted before, on or after the appointed dag under the said amended Acts or repealed Acts and such proceedings shall be continued under the said amended Acts or repealed Acts as if this Act hod not come into :, force and tlrc said Acts had not been amended or repealed. 119 Thus, as per Section L74 (11 (i) the VAT Act stood repealed with effect from 01.07.2017 except in respect of goods included in Entry 54 of the State List in the Seventh Schedule. When we refer to Entry 54 of the State List i.e., List II it means the entry as it stood on Ol.O7.2Ol7. We have already noticed that ,,a: r;:.pobqthe Constitution Amendment Act, Entry 54 of List II has been ) .(. :.:idrt t i ''a- .{la',;:' : :. ". ': j:st6stituted whereafter the field of legislation under the said entry t ,.,- is -qonfined only to taxes on the sale ol petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption; further clarifying that this would not include sale of such goods in the corlrse of inter-State trade or commerce or sale in the course of international trade or commerce of such goods. Therefore, 1n terms of Section 174 (ll (i) of the TGST Act, the VAT Act stood I @ fhe mention of the particttlar matters refered 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 effed of repeal".

90 repea-led \\.ith effect from 01.o7.201,7 except 1n respect of the goods covered by the amended (established) Entry 54 of List II. 120 As a matter of fact, we may obse rve that the very presence of Section 174 (ll (i) in the TGST ^A.ct buttresses the stand taken by the petitioners. t2t Ir.r Sheen Golden Jewels (India) Pvt. Lirnited supraf the question before the single bench of the Kerala High Court was whether the State had the legislative competence to enact Section 174 of the Kerala Goods and Services Tax Act,2OI7 and save the past ta-xation events when Entry 54 List II stood omitted permanentiy vvith effect from 16.O9.2OL6. We may mention th:rt Section 174 of the Kerala Goods and Services Tax Act, 2Ol7 is pcti materia to Section 174 of the TGST .Act. The Court Section was called upon to examine constitutional validity ..9f ;. .:,-t.t4, 174 of the Kerala Goods and Services Tax Act, 2Ol7 on the anvil of Section 19 of the Constitution Amer,dment Act. It was contended that State had no legislative power to over ride Section 19. Kerala High Court took the vierrv that u,hile Sectiqn 19 is a transitional provision; the job of saving is dorLe by Section 174 Though Section 174 has repealed the Kerala Value Added Tax Act,

9t .::2OO3, the repeal has not affected the previous operation of the .'-,I :'i-' tr: i .: lrepealed act. In other words, the repeal has not affected any . ,. air,. .: :'. ridht; privilege, obligation or liability acquired, accrued or ':.' !r :r iniurred 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 Act. I i' t't. r^. *. f. -consti 1CC ,: o1 the : tutional validity of Section 174. We see no conflict or contradiction between Section 19 Constitution Amendment Act and Section t74 of the TGST While Section 19 has deferred invalidity of inconsistent legislations till such time those are amended or repealed or for a Act has repealed amongst other enactments the VAT Act with effect from Ol .O7 .2017 except in respect of goods covered by the substituted Entry 54 of List II. Thus Section 174 of the TGST Act . is in consonance r.l,ith Section 19 of the Constitution Amendment ' ' r.'*i i.ir.' , l,lld.,ett: , The above position only supports the case of the petitioners :,'.1.:&l:4"1 ,1,;:[!-.- t "i tfi?t the State vgas denuded of its competence to legislate on GST alter 16.O9.20 16 and certainly alter Ol .O7 .2017 . ] period of one year rvhichever is earlier, Section 174 of the TGST

I a') 92 Repeal of al enactment would mean that such an , enactment is ln exlstencc. in Reliance Industries Limited (2 supral. It has been follou,s: "68.Effect of repeol at common la ut-Repeal obliterate:; the stotute as if it has neuer been enacted:

94 "Under the common law tule the consequence:; oJ repeat. of a statute are ueru drastic, Except as to transactions past and closed, a statute after its repeal is as completely obliterated as if it had neuer been enacted. The effect is to destroy all inchoate rights and all causes of action that nrag haue risen under the repealed stafi)te. Therefore, leauing oside tle <:ases where proceedirtgs were commenced, prosecute d and" brought to a finalitg before tle repeal, no proceeding under the repealed stotute can be commenced or continued after the repeal'."

95 rri r ob-ligation or liability acquired, accrued or incurred under any l'?,! i?!:. ':- .uij :- , ,t:,-' ;::'eriActment so repealed; or affect aly fine, penalt1,, forfeiture etc, ..: -:i.r.' incurred in respect , of arly offence committed under a-rry any' other enactment, then the repeal shall not effect anything done or any offence committed or a-ny 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 arly . enactment so repealed; or affect any right, privilege, enactment so repealed; or affect any investigation, legal pr:oceeding or remedy in respect of any such right, privilege, obligation, liability, Iine, penalty, forfeiture or punishment and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such fine, penalty, . i:forfeiture or punishment may be imposed as if the repealing Act -. . .\,,: ! -, /tr'\. .' ;hHd not been passed.: ' ,]r' !}lir,' i :.Lnif.il'"i 1,.},!',!r !.'t2:O', Section'8'of the Telangana General Clauses Act, 1891 is similar to Section 6 of the General Clauses Act, 1897. 127 Section B A of the Telangana General Clzruses Act, 1891 says that where any act repeals arry enactment l>r's'hich the 96 text of anv previous enactment was amerLded by expre,s-s omission, insertion or substitution of any mat':er then unless,,a different intention appears, the repeal shall not:rffect con of any such amendment made by the enactmen.t so repealed in operation at the time of such repeal. t28 the interpretation of the Constitution of India. Olause (I) of Article 367 is relevant. It says that unless the context otherwise requires, the General Clauses Act, 1897, subject to arly adaptations and modihcations that may be made therein under Article 372, shall apply for the interpretation of the Constitutign , '11i,. .' as it applies for the interpretation of an Act of the l,egislanrre. -:: i:r:;:: ,. '.:,;: ' -', ;-l{f--' 129 Gujarat High Court in Reliance ladrrstries Limited (2 supral examined this aspect as rvell and L.eld that General Clauses Act, 1897 applies only for interpretation of the Constitution but in respect of other matters, srrch as, savings in the case of repeal etc which are unrelated to interpretation may not apply b1, virtue of Article 367. Section 6 of the General Clauses Act, 1 897 or Sections B / BA of the 1'elanganet Genera-l Clauses Act, 189 1 u,ould apply onlv to repeal o an enactment. A Article 367 of the Constitution of India speaks about Constitution Amendment Act is not or cannot be tern:,.ed as an 97 I, I enactment. Therefore, beyond what is stated in Clause (I) of Article 367 of the Constitution, provisions of the General Clauses i..:ject, either the Central Act or the State Act, would not apply to the .tlrr'r . C6nstitution, including the Constitution Amendment Act since a ' Constitution Amendment Act is made by the Parliament in exercise of its sovereign powers under Article 368 of the Constitution. It has been held as follows:

9tt " l 30. Effect of section 8 on article 367.-Will se:tion 8 of the General Clauses Act, which provides that when an enactment is repealed and re-enacted, references to the c,ld enactment will be construed as references to that, re-enacted one, make any difference? We do not think so. It should be ::roted that the w'ords 'unless the context otherwise requires'(in article 367) mcan that the General Clauses Act, section 8, is to be cxcluded. Even by its terms, sectioa I of the General Ciauses Act will not apply to the Coostitution, because expression 'enactment' (which occurs in section 8) would not take in t}re Clonstitution, which is not an 'enactment'. The ()onstitution is supreme and is, in fact, the foundation of all ena(:tments." 7 1 .5 Thus, section 6 of the General Clauses Act 189'f will not apply to thc Constitution (contrary view taken by the Allahatrad High Court in thc case of Farzand v. Mohan Singh, MANU/UP/ )018/ 196fi : AIR 1968 All 67 {73],. However, no reasoning has been given trr apply se ction 6 of the Genera.l Clauses Act, 1897 to ttre Coustitution).

during the window period and the subsequent Second iI sfti. t.: +,. .' I ! : the repeaied act in respect of those goods by virtue of the Second Amendment Act would not arise. 131 Though there is no challenge to the Ordinance, contention of the State that the . Ordinance was promulgated endment Act is given effect to from the date of promulgamation the Ordinance, thereby making it a valid piece of legislation. r32 It u,as 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 subsequentlr' was nothing but a continuation of the law as promulgated by u'ay of Ordinance since it was given effect to from the date of promuigamation of the Ordinance. To appreciate the above contention, \,e may note that the Constitution Amendment Act came into force on and from 16.09.2016. Section 19 of the Constitution Amendment Act provided for a rn indow period to the States to remove any inconsistent enactments by way of amendment or repeal or until expiration of one year from such commencement u,hichever s'as it '., i 99 nonetheless we may also examine the same since it is the 100 earlier. Telzingana Ordinance No.2 of 2017 u,as promulgated by the Governor of Telangan a on 17.06.2017 to further anend the VAT Act. Though the Ordinance was promulg.lted after co promulgated within the window periol of one year provided by Section 19 of the Constitution Anrendment Act. this stage we may mention that following the Constitution Amendment Act, State of Telangana enacted the TGST Act with effect from Ol.O7 .2OL7 . 134 Before we deal with the Telangana ()rdinalce No.2 of 2017, we may note that power of the Goverrror to promulgate ordinance is traceable to Article 213 of the CorLstitution of India. Article 213 provides as follows: l'l "273. Pourer of Goaenrcr to promulgate OrdinqrLces during recess of Legistaj].tre.--t7) If at anu time, except when tle l,egistatit e Assernblg of a State.is in session, or uhere there is d Legislatiue Council in a ,;tate, a.cept u'hen both Houses of tle Legislature cre dn sessiorL the Gouentor is sLttisf.ed that circumstances exist uthich render it necessary for lim to luke immedicrte action, he ntaa promulqate such Ordinance.s as the circumstances app?ar to lint tc, require: Prouided that the Gouernor shall not, u,ithout instructions frorn tlrc President, promulgate anA sltch Ordinance if- (a) a Bill containing the same prouisions woLtl(t uttder tiris Conslilulion have required th.e previous sanction of the Prcst(letLt for rc itroduction tl'Lereof into the legislature; or (b) he ttould haue deemed it necessarg to res(rue a []ilt c:;ntaining the sanre provisions for th.e consideration of tlTe Presidefi; or (c) an Act of the Legislature of the Stote cotttailittg tlte sol".e prouisions txould under this Constitution haue beert inrrnld unless, hauirrg been reserued" for the ansideration of the Prcsident, it tutd r<,ceived the assent of tlTe President. (2) An Ordinatrce promulgated under this anlicle slutll tlaue tlrc sante force and effect as an Act of the legislahre of the Slate assented lo b, the Gouenor, but euery such Orditctnce- mlng into force of the Constitution Amendment Act on 16.09.2016,l WAS SO S

101 (a) shall be laid before the Legislatiue Assemblg of the State, or where there is a l-egislatiue Council in the State, before both the Houses, and shall ceose to operate at the expiration of sk ueeks from the reossemb\.1 of the Legislature, or : - if before the eryiration of that peiod a resoLution disapprouitg it is passed bg :;;,-, the Legislative Assembly and agreed to bA the Legislatiue Courtcil, if any, upon ,, . the passing of the resolution or, as the case may be, on the resolution being ',:. agreed to bg the Council; and (b) may be urithdraun at ang time bg the Gouenlor. Explanatton--Wlrcre the Houses of the Legislalure of a Stote ltouirtg o Legislatiue Council are summoned to reassemble on different dates, tlte peiod of six ueeks shall be reckoned from the later oJ those dates for the purpo-ses o]]f this clause. (3) If and so far as an Ordinance under this article makes any provisiorr rthich taould not be ualid if enacted in an Act of the l,egistature of the State assented to bg the Gouemor, it shall be uoid: Prouided that, for the purposes of the prouisiorts oJ this Constitution relating to the elfect of an Act of the l,egislature of a State urhich is repugnotlt to an Act of Parliament or an eisting lau uith respect to q matter enumeraled iL the Concurrent List, an Ordinance promulgdted under this article in pursuonce of ilstructions from the President shall be deemed to be an Act of tlrc Legislature of tltc State whiclt hrts been reserued for the cotl-sideration of the President otld ossented to bg hirrt " i35 While clause (1) provides that if the Governor 1s . satisfied when the Legislative Assembly of a State is not in session #- 6{;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 213 of the Constitution shall have ttre 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 shall cease to operate at the expiration of six .'r,eeks from the reassembly of the Legislature. Clause (3) says that if an , i.i:i.! :*i':ii , Oiitinarrce makes'any provision which would not be valid if enacted as arl Act of the lrgislature assented to by the Govern :l 102 it shall be void. 136 the Governor on 17.06.2017. As per preamble to the Ordinance, it is stated that Government of India had enacied the C:GST Act and Government of Telangana had enacted tht: 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 enrpowers rhe State 9lr :i-' ',: l. As noticed above, the Ordinance was promulgated by consumption and on petroleum products. Accordinlg human to,'the.,i.- lr Constitution Amendment Act, lery of tax on those petroleum products and alcoholic liquor for human consrrmption 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, '*,hich was yet to be brought into force, would not affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other leg.al proceedings recovery of arrears or remedy 1Il respect of any such tax; surcharge, penaity, fine, interest, right, privilege, obligation, liability, forfeiture or punishment and an1, such investigation etc., Government to lery tax on alcoholic liquor for { 103 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 repea,led. Such repeal would not also a-ffect any proceedings including those relating to appeal, revision, r rqview or reference instituted before, on or after the appointed day er the said amended Acts or repealed Acts and such i. I edings shall be continued under the amended Acts or aled Acts. Therefore, it was considered necessa5r to stiengthen certain provisions of the VAT Act to overcome any limitations to help effective revenue realization. Therefore, it was decided to amend certain provisions of the VAT Act by undertaking a legislation. Since it lr,as decided to give effect to such decision immediately and as the Legislature of Telangana was not in session, thereforc, the Governor, in exercise of powers by Clause (1) of Article 213 of the Constitution ulgated the Ordinance which basically extended the Ilm1tation from four years to si-x years in respect of assessments, I redssessments, revision etc. i I .. I " [; I I -:: ii.' : L37 It is not necessary for us to go into the aspect as to whether the Ordinance \(ras laid before the Assembly or not and as to whether it had ceased to operate after six seeks from t

106 provisions extending limitation to enable injtiation of proceedings, such as, revisional proceedingsiwhir:h are comp inconsistent with the scheme of the Constitution Amendmen On this ground itself, the Ordinance can be said to have no consequence. fresl-t 1ctely t Act. ' 1ega1 140 However, by the Second Amendr-rcr-rt Act , more particularly, by Section 7 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. Ur fortunatt:ly, after ,,;l'i substitution of Entry 54 of List II, State was ,lenuded of sugfr :, '.tt . competence traceable to Article 246. As a stand alone legislation, it cannot derive legitimacy traceable to Arti(rle 246A of the Constitution as well. Therefore, the Second Amenclrnent Act made on 02.12.2077 though given retrospective eflect from 17.06.2017 cannot be sustained as the sarne is devoicl of le gislative competence. 141 Needless to say, way back tn 1964, Siupreme Court in i,;t: A.Hajee Abdul Shukoor (1 supra) was categoric:rl ir.r holcling that ."vhile the State Legislature is free to enact la'"vs which could havb I ,i retrospective operation, its competence to make ir lau,for a certain

nge en e t.w S I o Finall ent in en 't- fi.li 107 depend on its present legislative trpossessed: Lt.the p..iod of time when eration upon by the lear-ned rn ;havd.already discussed why grounds of eriod w and no owever, 1 ca 'the : facts and of wTl ;rr1,,...'..t. petitrons. t also look t into the intention of the e Constitution Amendment Act. This is clear idea AS to why the Constitution and why the Second ned being completely e e Constitution Amendment Act eglslative . competence. In Baiju A.A. llows: I m Pra Court d to determine i the intention of tl.rc the language used in the statute but also o C 1 16 en e lr I 'i :,' I Ij I and purpose of the CAA was indirect taxation in ollr t aspect of the matter. It is trite that of a legislative enactrnent validity of the enactment to thc extent strike down the iaw onlv when it is State of Bihar v. Bihar Distillen, - JT (1996) 10 SC 8541. At the same time, .andlanr understanding of the be remedied by the statute. Whcn one took place after the CAA,

144 country through the introduction of a Go the phasing out of the multitude of in value added taxes, that were levied ald t]le States. Section 19 of the CAA 2016, whic with a savings clause of limited opq{ acknowledged tJ e absence.:of any power.: the subject of tax on sale oqpurchase.of the limited commoditie! for. which tle .s under the Constitution. In respect of all legislative power of t'l:e S supply of goods or services simultaneously with the Parliament exclusively. Thus, at the time of repeal simultaneous enactment of the State GST therein, the savings clause operated only immunities, action taken etc. under the e stood at the time of its rej:eal, brought in through the Kerala Finan have been any further legislative exercise by relation to the repealed KVAT Act. We are in respectful Intention of P:rrliament in ushering in the. Constitution Amendment Act and enactmen simultaneous enactment of ,various l,egislatures is to avoid multiplicity of indirect taxes in a single tax;called GST.'I- have analyzed Section 19 of . the Consti Viewed thus the arnendments brought the Centre' r: sunset claus in the said enactment, envisaged ihe continuation of the erstr system of taxation for a period of one year.fro:n the date enactment of the CAA or till such time as thp.,Stat" t€gislatures amended or repealed their respective VAT leg!s1ati,)ns, wtricL, was earlier. When the State Legislature repegled i the KVAT A while simultaneousiy bringing into force the new,- litate GST Act it effecti erea-ite tate .was or both, a po jwhich incl ce Acti: 3:legislatu expressed by the Kerala High Court i" ri{Siilli.a 1rO ,,jldritiui I . Stat su con endmen 'bv the Se Amendment Act, as discussed above, ane wholly, i-lconsistent ..,.'-'..: 108 E, i* rl: rl the tution Amendment Act read with the Thus, atter, , we - ave shall be n LR copy b (By order). pln nsti to costs. uons are accor ,l I rough consideration of all aspects of esitation in holding that the Second i tutional being devoid of legislative '.: declared as such. Consequently, the ection 32 (3) of the VAT present batch of writ enl* ngly allowed. However, ose petition i, UJJAL BHIIYAN, CJ ' s, if any, pending in all the writ t I ed i) !; a I i -'ilrl SMT.: JUSTICE P.MADHAVI DEVI EI E ! tn (' fl I .+r, r I

Ir I l 'i I I f. il t ; .i. -"fr''') ' ,,tri',' .: : r.:. i ffi