M/S Plr Projects Private Limited vs. The Deputy Commissioner (St)Ltu And 2 Others

The Court made the following: ORDER

THE HON' THE CHIEF CE BHUYAN AND THE HON'BLE MRS s ANDA Writ Petition No. 18694of 202r ORDER: @er ttlp 11on,61" 11.r. 6htq Justice tJjja! BhuVatt) Heard Mr. Bhaskar Reddy Vemireddy, learned counsel for the petitioner and Mr. K.Raji Reddy, learned counsel lor the respondents.

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.\ HIGH COURT DATED:0810712022 ORDER W.P.No.18694 ot 2021 ALLOWING THE WRIT PETITION WITHOUIT COSTS ) I( { 2 4 SEP 2tr77 (n \ t \^, \o

l THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI 16853 16896 IVRIT PETITION Nos.7893 9550 r6527 10046 LL4T4 16903 0F 202o 494 7L2a 7054 9622 15853 15942 11996 L2774 15215 L5822 15841 18258 20079 207LO t7095 L7LO2 L73L4 17988 23386 24282 207a8 27542 2265L 22940 23336 32L29 32373 25561 27294 27533 2A797 29743 32653 32697 and 340s4 oF 202L COMMON JUDGMENT & ORDER: (Per Hon'ble the Chief Justice UjjaI Bhuyan) Issue raised in all the writ petitions being identical' those were heard together and are being disposed of by this common judgment and order'

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7 Section 32 or as the case may be, by the Appellate Tribunai under the proviso to Sub-section (4) of Section 33 on account of any stay granted by the Appellate Tribunai or by the High Court or by the Supreme Court, or whereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or the 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 lorce or such appeal or proceeding was pending shall be excluded in computing the period of four years or six years as the case may be for the purpose of making the assessment.

9 mav initiate proceedings to revise, modify or set aside such order or proceeding and may pass such order in reference thereto as he thinks fit. 1 0. 1 . As per Sub-Section (2), such power may also be exercised by the Additional Commissioner, Joint Commissioner, Deputy Commissioner and Assistant Commissioner in the case of orders passed or proceedings recorded by the authorities, officers or persons subordinate to them. However, as per the proviso, such power shall not be exercised by the revisional authority in respect of an issue or question which was decided on appeal by the Appellate Tribunal under Section 33.

l2 Act, after .\rticle 246 of the Constitution of India a neu' Article 246-A cam'z to be inserted. Article 246-A reads as under: "246A. Special Prouision Luith respect to ctoods ctnd seruices tax-- (L) Notuittstanding angthing contained in articles 246 anc) 254, Farliament, and, subject to clause (2), the Legistature of euery State, haue power to make lau-ts with respect to goods and sen.tices tax imltosed bg the Union or bg such State. (2) Parliament has exclusiue poluer to make lauts tuith respect to goods and seruces tax where the supptA of goods, or of seruices, or both takes place in the course of inter-State trade or commerce. Explanation.--The prouisions of this arlicle, in respect ol- goods and seruices tax rekrred to in clause (5) of the article 279A, take efJ,zct from the date recommended bg the Goods and Seruices Tax Council." 12.\ As per Section 7, Article 268-4 oi the Constitution has been omitte d. 1) ) After Article 269, Articie 269-A has beer-r inserted Article 269-4 is as under: "269A. Leuy and collection of goods and seruices tax in course o,f tnter-state trade or commerce--- (1) Goods and Seruices tox on supplies in the course of inter-Sate trade or commerce shall be leuied and collected by the GoDernment of India and such tax shall be apportioned betueen the Unton and the States in the manner as may be prouided by Parlian ent b11 latu on the recommendations of the Goods and Seruices Tax Council. Explanatton--For the purposes of this clause, supplg of goods, or of seruices, or both in the course of import into the territory of India shall be deemed to be supplA of goods, or of seruices, or both in the course of inter-State trade or commerce. (2) The amount apportioned to a State under clause (1) shall not fonn part of the Consotidated Fund of Indta. (3) Where an amount collected as tax leuied under clause (1) has been used for pagment of the tox leuied bg a State under l3 article 246A, such amount shall not form part of the Consolidated Fund of India. (4) where an amount collected as tax leuied bg a State under article 2164 hc.s been used for payment of the tax leuied under clctuse (1), such amount shal[ not fom part of ttle Consolidated Fund of the State. (5) Pctrliantent may, by lau, formulate the pinciples for determining the place of supplg, and uhen a supply of goods, or of seruices, or both takes place in the course of inter-State trade or commerce, "

t..t bg each State Gouemment .....Members. (3) The Members of the Goods and Seruices Tox Council referred to in sub-dause ( c ) of the ctause (2) shall, as soon as may be, choose <tne amongst themselues to be the Vice-Chairperson of the Councit,For such peiod as theg may decide. (4) Tle Goods and, Seruices Tax Councit shall make recommendations to the Union and the State on-- (a) the taxes,. cesses and surcharges leuied by the Union, the States and the local bodies which mag be subsumed in the goods and senices tc,x; (b) the goods and serutces that mau be subjected to, or exenTpted from the goods and seruices tax; ( c ) nrcdel Goods and Seruices Tax Laws, pinciptes oJ'leuy, apportio,Lment of Goods and Serutces Tax leuied on supplies in the course c,f inter-state trade or contmerce uncler article 269'A and the principles that gouem the place of supply; (d) the threshold limit of turnouer belout whtch goods and seruices maA be exempted from goods and seruices tox; (e) the rates including Jloor rates uith bands of goods and seruices tax; (fl ang special rate or rates for a specified peiod, to raise addition'zl resources duing any natural calamitA or disaster; (g) spectal prouision Lutth respect to the States of Antnctchal Pradesh, Assom, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tipura, Himacha[ Pradesh and Uttarakh and; and (h) any other matter relating to the goods and serutces tax, as the Council rnag decide. (5) The Goods and Seruices Tox Council shall recommend the date on which the goods and seruices tax be leuied on petroleum crude, high speed diesel, motor spiit (commonly known as petrol), natural g'as and auiation turbine fueL (6) Whirs discharging the functions confened by this article, the Goods and Seri,,ices Tax Council shal| be guided by the need Jbr a harmonii;ed sttucture of goods and seruices tcLy and Jbr tLLe deueLopntent o.f a harmonised national market Jbr goods and seruices. (7) One-half af the total number oJ Members of the Goods arLd Seruices Tox Council shall constitute the quorum ot its tneertngs.

15 (8) The Goods and Seruices Tox Council shall determine the procedure in the performance of its functions. (9) Euery decision of the Goods and Seruices Tax Council shall be taken at a meeting, by a majoity of not less than three-fourtls of the tuetghted uotes of the members present and uoting, in accordance Luith the follou.)ing principtes, namelg:-- la) the uote of the Central Gouemment shall be a Lueightage of one-th.ird of the total uotes cost, and (b) the uoles of alt the State Gouernments taken together shaLL haue a weightage of tlt)o-thirds of the total uotes cast, in that meeting, 110) No act or proceedings of the Goods and Seruices Tox Council shall be inualid merelq by reason of-- (a) anA uacancA tn, or any dekct in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (c) ang procedural irregulartty of the Councit not affecting the meits of the case. (11) The Goods and Seruices Tax Council shall establish a mechanism to adjudicate any dispute*- (a) between the Gouernment of India and one or more States; or (b) between the Gouemment of India and ang State or States on one side and one or more other States on the other side; or ( c ) between two or more States, artsing out of the recommendations oJ tle Council or imple me ntation the r e of . "

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11 competent authority or until expiration of one year from such commencement \ rhichever is earlier.

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 for coming into force of relevant provisions of the IGST Act, such as, 22.06.2017 and 01.07.2017. Further, two more Acts were enacted by the Parliament post the Constitution (101st Amendment) Act, 2016. 16. Legislature of the State of Telangana enacted the Telangana Goods and Services Tax Act, 2017 ("|GST Act' hereinafter) to make provision for lery 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 25.05.2017 and was first published in the Telangana Gazette on 27.05.2017. Various provisions of the TGST Act came into force on various dates. Whrle Sections l and 2 (definition clause) came into force on 22.06.2017, Section 174 which provides for repeal and saving came into force on 01.O7.2017. 17. As noticed above, Section 174 provides for repeal and saving. As per Sub-Section (1), save as otherwise provided in the TGST Act, on and from the date of commencement of the TGST Act, the VAT Act amongst other Acts except in respect of goods included in l0 Entry 54 of the State List of the VII Schedule to the ConstitLrtion were repealed. Sub-Section (2) clarifies that such repeal w'ould not revive anything not in force or existing at the time of such repeal or affect the previous operation of the repealed Act etc. i 8. Government of Telangana in the Revenue (Commercial Taxes-II) Department issued G.O.Ms.No.107 dated 24.06.2017 directing publication of a notification in the gaz ette appointing 22.06.2017 as the date on which provisions of Sections 1 to 5, 10, 22 lo 30, 139, 146 and 164 of the TGST Act would come into force. Likewise, G,O.Ms.No.123 dated 30.06.2017 rvas issued whereby it was notified that 01.07.2017 would be the appointed date for cc,ming into force various provisions of the TCST Acr inciuding Section 174. 19. Telangana Ordinance No.2 of 2017 r.r,as promnlgated bv the Governor on 17.06.2017 to fr.th.. amend the VAT Act. Preamble to the Ordinance says that Government of india had enacted the CGST Act and Government of Telangana had enacted the TGST Act. Both the Acts had not been brought into force. Though the VAT Act was repealed by the TGST Act, the same rvas yet to be brought into force. It was mentioned that such repeal u,ould not affect any rnvestigation, inquiry, verification including scrutiny

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 hacl not been so amended or repealed' That apart, such repeal r.l,ould not affect any proceedings, such as, appeal, revision, review or relerence 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 llmitations to neln 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 r.l'hich rendered it necessary for him to take immediate action; therelore, in exercise of the powers conferred bv Clause (1) of Article 213 of the Constitution of India, the Governor promulgated Telangana Ordinance No.2 of 2017 called the Telangana Value Added Ta-x (Amendment) Ordinance, 20 17, 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 years'or'four years or six years' or 'three. years' stood substituted bv the words 'six years'.

23 the words 'six years'. The Second Amendment Act reads as foll ou,s: ( I ) This Act may be called the Telangana Value Added Ta-x {Second Amendment) Acl' 20L7. (2) It shall be deemed to have come into force with effecr lrom 17.06.2O17. I j In the Telangana Vaiue Added Ta-x Act, 2005 (hereinafter referred to as the Principal Act), in icctiorr 20. in Sub-section (4), for the words 'four Years' the \ ords 'six -,-ears' shall be substituted' In the prir.rcipal Act in Section 2 1 ,- (r) alier sub section (1), the followrng sub-section shall be in serted, namelY,- "(l-A) (a) Every VAT dea]er shall within such time as may be prescribed, furnish certificates of 'Annu al Consolidated Statement of Turnovers', alor-rg with other statements as may be prescribed, duly certified by a Charted Accountant \^rithin the meining ol the Charted Accountants Act, 1949 or Sales 1ax Practitioner, enrolled with the Commercial Taxes DePartment. Provided that the VAT dealer, whose turnover is less than Rs.50 la-khs per annum, may opt to submit the statements as may be piescribed, by self certihcation, or certified by the Sales Tax Practitioner, enrolled with the Commercial Taxes DePartment. (bl Any VAT dealer, who fails to fumish the certilicates along with other statements under Clause (a) on or before the prescribed date in the manner prescribed shall be liable to pay penaity as may be prescribed. " (ii) In sub-section {3), for the rvords "four years" occurrirtg at two places, lhe words "six years" shall be slr bstiLu ted. (iii) in sub-sections (a) and (6)' for the words 'four years' the words 'six years' shall be su bstitu ted. 3

21 (iv) in sub-sections(7) and {8), for the words 'four years or six years, as the case may be, the words 'six years' sha.ll be substituted. in the principal Act, in section 31, in sub-section ( 1),- (i) the first proviso sha.ll be omitted: (ii) after omitting the first proviso, in the exrsting proviso, for the words "provided fnrther that" the words "provided that' shall be substituted. In the principal Act, in section 32, ir.r sub-section (3), (60 and (7), for the words 'four lears' rhe words 'six years' shall be substitu ted. In the principal Act. in Section 57, in sub-section (5) and the proviso thereunder, for the rvords 'three years', the words 'six years' shall be substituted. The Telangana Va.lue Added Ta\ (Amendment) Ordinance, 2017 is hereby repealed. 2L Follorving the Second Amendment Act, as extracted above, relevant pr,lvisions of the VAT Act would now read as under: Section 20 (4): Every dealer shall be deemed to have been assessed to tax tased on the return hled by him, if no assessment is made within a period of six years from the date of filing of the return. Section 21 (3): Where the authority prescribed is not satisfiecl u,ith a returr filed by the VAT dealer or TOT dealer or the return appe.r.rs to be irLcorrect or incomplete, he shall assess to tl're l:est ol his judgment within six years of due date of the return or u.ithin six years of the date oI filing of the return whichever is later. Section 21 (4): The authority prescribed may, based o:r anv information avarlable or on any other basis, conduct a detailed scrutiny of the accounts of any VAT dealer or TOT dealer and where any assgssment as a result of such scrutiny becomes necessar-v. such assessment shall be made l,ithin a period of six years from the end of the period for rvhich the assessment is to be madc. Sectiorr 2i (6): The authority prescribed may reassess, \\,here an assessment was already made under sub-sections (1) to {5) ancl such assessment understates the corect tax Iiability oI the dealer, within a period of six years from the date of such assessment. 4 ) 6 7

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 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 Tribuna-l 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 the assessment. Section 21 (81; Where an assessment made has been set aside by any Court or as the case may be the Appellate Tribuna-I, the period beiween the date o[ such assessment and the date on which it has been set aside shall be excluded in computing the period of six years as the case rtay be, for making any fresh assessment' Secrior.r 31 (1): Anv VAT dealer or TOT dealer or any other dealer objectir.rg to any olcier passed or proceeding recorded by any ^uiho.iti, r.rnder the provisions of the VAT Act, other than the order passed or proceecling recorded by any authority under the provisions of tl.rc \rAT Act, other than the order passed or proceeding recorcled by an Additional Commissioner or Joint bommissioner or Deputy Commissioner, may within 30 days from the date on whicl.t the order or proceeding was served on him, appeal to such authority in the manner prescribed. Provided that an appeal so prelerred shall not be admitted by the appellate authority toncerned unless the dealer produces proof of puy-..tt of ta,r, penalty, interest or any other amount admitted to te-due, or of such installments as have been granted, and the proof of payment of tlveive and half percent of the difference of the tax, penalty, interest or any other arnount, assessed by the authority prescribed and the tax, pena]ty, interest or any other amount id-itt.d 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 slx years from the date on which the order was served on the dea-ler. 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 any reason, the period between the date of such order and the date on wl.rich it has been so set-aside shall be excluded in computing the period of six years specified in sub-section (3), for the purpoie of makrng a fresh revision, if any, under this Section'

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ls four years i.e., on or before 30.03.2019, in terms of Section 32 (2) of the VAT Act. However, the revisional order u'as passed on 14.O9.2O2O which is beyond four years but u,ithin six 1,'ears. In so far the Second Amendment Act is concerned, it is contended that the said amendment is not valid in the eye of law as it was made after the GST regime had come into effect. Therefore, the extended period of limitation of six years instead of four years was not available to the Deputy Commissioner.

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32 the revisional order dated 05.03.2020 as being barred by limitation and thereafter to quash the same as r'r,ell as the consequential order dated 07.03.2020. 38. Liker,,ise, in all the Writ Petitions forming part of the present batch, the challenge is either to the revisional order passed durring the extend:d period of limitation or to the notices to sho$' caLlse issued during the extended period ol limitation of six .vears ars to why the orCers of assessment should not be revised. Additionalll,, constitutiorlality of the Second Amendment Act has been questioned

-r -1 the VAT Act except for the goods listed in Entry 54 of List II of the VII Schedule. Ordinance No.2 of 2017 was promulgated by the Governor of Telangana under Article 213 of the Constitution of India on 17.06.2017 whereby limitation was extended from four years to six years. O1 .07 .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 29.11.2017 the Second Amendment Act received the assent of the Governor '"l,hereafter it u'as published in the Telangana Gazette on 02.12.2017 giving retrospective effect lrom 17.06.2077. 40. Mr. S.Ravi, Iearned senior counsel, submits that prior to the Constitution Amendment Act coming into force, States had legislative competence to levy Va-lue Added Tax (VAT) on sales of all goods except newspapers in the course of intra-State trade pursuant to Article 246 ol 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 new GST regime based on cooperative federalism-pooled sovereignty. The Second Amendment Act was adoptecl on 02.12.2017 s'ith retrospective effect from 17 '06 '2017

3,1 enlarging the period of limitation more particLllarll' uncier Sections 27 and 32 of the VAT Act from four vears to six vears. He submits that after the Constitution Amendment Act, State ol Telangana did not have the legislative competence to enact the Second Amendment Act for all goods either on the basis ol the erstwhile legislative scheme prior to the Constitution Amenclment Act or on the basis of Article 246 read with Entry 54 of List II, as amended, or under Article 246 A or in terms of Section 19 of the Constitution Amendment Act or on the principle of pooled sovereigntv or on the basis of Ordinance No.2 of 2Ol7 or in terms of Section 174 ol ti:,e TGST Act.

l6 to the corning into force of GST. Thus, Section 6 of the General Clauses A<:t, 1897 cannot be pressed into service to save t]'re pre- amended Entry 54 of List II.

goods in general. If this distinction is not adhered to, the Constitution Amendment Act would become otiose. Thus, the Second Amendment Act could not have been enacted for all goods. If the con stitution ality of the Second Amendment Act is to be saved, then it has to be read down as applying only to the five petroleum products and alcohol for human consumption'

-18 Telangana State Legislature for enacting the Second Amendment Act cannot florv from Articie 246A

1t 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 r.r'as brought into force retrospectively i.e' 17 .06.2017 .

:l.l Amendmenl AcL can onll' be in respect ol the VAT Act as existing ot't 02.12.2O).7, even rf given retrospective effect from 17.06.2017. 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 supra) and a iater single bench decision of the Kerala High Court in Hindalco Industries Limited (3 supra) have struck down VAT legislations enacted post 16.09.2016' He submits that he u'ould adopt the detailed reasonings given by the bench in those tu,o cases.

senior counsel, submits that the State Legislature passed the Telangana Goods and Services Tax Bill, 2Ol7 on 16.O4.2017. It received the assent of the Governor on 25.05.2017 rvhereafter the Telangana Goods and Services Tax Act, 2017 (already referred to as the TGIIT Act') was published in the Telangana Extraordinary Gazette on 27 .05.2077. He thereafter submits that the Ordinance was promu.lgated on ).7.06.2017 whereas the Second Amendment Act was made on 02.12.2017 giving retrospective effect from 17 .O6.2Oli' . He submits that the Second Amendment Act is unconstitutional as the State Legislature had lost its competence to make su.ch amendments after the Constitution Amendment Act came into lorce from 16.09.2016. On and from 16.09.2016 onlv concurrent juri iction could be exercised si:rrultaneousl,r, by the Central Government as rve11 as bv the State Government insofar GST is concerned; that apart, exercise of pou,er under Article 2.16 Bihare, }-re submits that both the Ordinance as well as the Second Amendment Act in their application to goods other than the five petroleum products and liquor for human consumption are void for want of power. While highlighting the difference between amendment to the Constitution and amendment to other 1aws, he submits that post the Constitution Amendment Act coming into effect from 16.09.2016, legislative power which flows from Entry 54 of List II ceased to have effect from 16.09.2016 in respect of goods other than the petroleum products and iiquor for human consumption. Being a constitutional amendment, Section 6 of the Ger-reral Clauses Act, 1897 would not be applicable. He also submits that the Ordinance and the Second Amendment Act cannot be traced to Article 2464. Further, in view of Section 174 of the TGST Act, amendment of a repealed Act is not possible. He also places reliance on Hindalco Industries Limited (3 supra) and Reliance Industries Limited (2 supra). I AIR 1957 SC 699 e (2017) 3 SCC 1

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1/ 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 01.07.2017 . 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 ol India states that 1aw includes Ordinance as well. Section 6 (b) of the General Clauses Act, 1897 also makes it clear that repeal of an Act shall not effect the previous operation of any enactment so repeaied or anything done thereunder. According to him, reliance placed by the petitioners on the decision of the Kerala High Court in Hindalco Industries Limited (3 supra) and on the Gujarat High Court decision in Reliaace Industries Limited (2 supra) would be of no assistance to the petitioners as in those cases there was no Ordinance or legislative enactment pertair-ring to the State VAT Acts prior to introduction of GST. 59 Elaborating further Mr. B.S.Prasad submits that the Ordinance was promulgamated by the Governor of Telangana on ,18 17.06.2011' whereby the time limit for assessments and revisions was extencled from four years to six years before annulment of VAT Act. The Ordinance became an Act i.e. the Second Amendmert Act on 02.12.2017. Prior to that, the Ordinance t'as approved by the legislative assembly of the State of Telangar-ra within six months from the date of the Ordinance. Referring to Article 2 13, (2) of the Constitution of lndia, he submits that an Ordinance promulgated by the Governor would have the same force and effect as an Act of the legislature unless such an Ordinance is not placed before the Iegislative assemblv or rejected by the ieglslative assembiy when placed before it within the stipulated time. Insofar the present case is concerned, the Ordinance was placed before the legisiative assembly and the assembly approved the same. Therefore, in the light of the above constitutional provision, the limitation to make an assessment or reassessment or revision is six years and not four years. According to him, tht-' Ordinance issued and the subsequent legislative Act for prolon5fng the limitation made such extension ol limitation valid. Therefore, the proceedings initiated under the VAT Act in respect of the petitioners are valid, being within limitation. Insofar decision o1' the Kerala High Court in Baiju AA (1O supra) is concerned, the same would not be applicable to the facts of the 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 stil1 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 02.12.2O17 in respect of goods not covered by amended Entry 54 of Lrst II. Po"ver 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 171 of the TGST Act; Article 246A 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 by rvhich the dealers can be assessed etc', but not imposing any new tax or leq/. Legislation being a sovereign function of the State, thus, the Second Amendment Act cannot be questioned as being without competence. 62 State has the power to enforce the Second Amendment Act with retrospective effect. State has the power to even take away

50 vested rights of the assessees i.e. even where assessments become barred by time under the pre-amended provisior-r, State can enlarge the limitation even for such time barred assessments and take away vested rights. Looked at from this perspective, the Second Anrendment Act cannot be sald to be arbitrary, not to speak of being manifestly arbitrary. 63 Provisions for enlarging time limitation on assessments etc., are only procedural aspects of lery and assessment of tax. These are not substantive provisions. Assessing Of{icers are competent to adjudicate on iimitation since it is a mixed question of fact and law. 64 Referring to Hindalco Industries Limited (3 supra|, he period of limitation cannot be called as substantive right' An aggrieved person cannot claim any vested right in procedure; that he should be governed by the o1d 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 Acl. Time and again it has been held and clarified by the Supreme CoLlrt that even, litigant has a vested right in substantive law but no such right exists in procedural 1aw. According to Mr. Prasad, law of limitation is generally regarded as procedural and its object is not to create any right but to prescribe periods within which lega1 proceedings be instituted for enforcement of rights which exists under the substantive 1aw. Statutes of limitation are retrospective insofar those apply to all legal proceedings brought after their operation for enforcing cause of action accrued earlier, rL (2011) 6 SCC 739

52 but they al:e prospective in the sense that thel'- neither have the effectofre'rivingtherightofactionnordotheyhar.etheeflectof extinguishing a right of action subsisting on that daJ'' 66 Learned Advocate General has also placed reliance on a Supreme Court decision in Fuerst Day Lawson Limited Vs' Jindal Exports Limitedrz in support of the proposition that when there is an Ordinance which is followed by an Act on the same subject mErtter, the Act will come into force in continuation of the Ordinance. In that case, a gazette notification was issued on 22.O8.lgg:t u,'hich appointed 22"a day of August, 1996 as the date on which the Act in question would come into force The said gazette no':ification was issued in exercise of the powers conferred by Section 1 (3) of the Arbitration and Conciliation Act, 1996 In the facts of that case, it was held that \\'hi1e the Act came into force on 22.O8.1996, for all practical and legal purposes, it wot'tld be deeme C to have been effective from 25.01 .1996 , when the Ordinance was promulgated, particularly, when the provisions of the Ordina.nce and the Act are similar there being nothing in the Act so as to make the Ordinance ineffective. The Act being a continuation of the Ordinance, would be deemed to have been rz 120011 6 scc 35r:

53 the legislature capriciously, irrationally and / or without adequate determining principle. He submits that wide latitude is allowed to the legislature in enacting a 1aw. The freedom to experiment must be conceded to the legislature, particularly in economic laws' if problems emerge in the ivorking of Iaws and which require legislative intervention, the Court cannot be oblivious of the power ol the legislature to respond by stepping in with necessary amendments. Since the law, in this case, the Second Amendment Act has been enacted to augment the revenue of the State, the constitutional Court will lean heavily in favour of such a law. The law under scrutiny is an economic measure. In economic matters, 13 (2021) 5 SCC 1

5,1 wider latitr.rde is given to the 1aw makers, which is based on sonnd principle. lVIr. Prasad asserts that even a vested right can be the subject matter of retrospective law. No doubt, such a iaw must pass master Articles 14, 19, 21 and 300A of the Constitution of India. Therefore, the issue rea1ly boils down to whether the impugned enactment is manifestly arbitrary or not. If it is not, question of interference by the Court wouid not arise. 68 Leartred Advocate General has referred to and rehed upon the decision of the Kerala High Court in Sheen Golden Jewels (India| Pvt. Limited (7 supra) in great detail. 69 Mr. I)rasad has also referred to an article titled '?ransltlonal Proulsions In Commercial Legislations: An Analysis' by Priyal Parikh acc ording to which the view taken by a majority of Courts is that the revenue authorities retain the power to 1er.y appropriate taxes undr:r the erstwhile indirect tax laws for events prior to the introduction of GST. 70 Mr.S.Ravi. learned senior counsel for the petitioners in reply submits tllat the State has not addressed the follou,ing crucial aspects raised by the petitioners i. Effect of amendment of trntry 54 by Section 17 of the Con st itu tion Amendment Act,

55 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. Requiremerrt of simultaneous lery by Parliament arrd State Legislature for legislative competence under Article 2464, v. Objective and ellect of Section 19 of the Constitution Amendment Act, vi. State did not at all make any endeavour to show any distingursl.rin g feature in the judgment rendered by thre Gujarat High Court in Reliance Industries Limited {2 supra) and why the same should not be applied to the present case.

56 General based on the principles of manifest arbitrariness or retrospecti.rity are not at all germane to adjudicate on the issues raised by the petitioners. 73 Besides reiterating reliance on Reliance Industries Limited (2 supra) and Hindalco Industries Limited (3 supra), Mr'Ravi has also pressed into service a decision of the Allahabad High Court in Jain Distillery Private Limited (4 supra)' 7 4 Insofar extension of time limit in tax nlatters is concerned, Mr.Ravi su.bmits that time limits are a fetter on the juri iction of the deparlmental authorities. Enlargement of time under the Second Amendment Act in extending the limitation period amounts to conferring juri iction on departmental authorities that did not exist earlier. Therefore, such an amendment is not merely fo: securing o1d iiabilities but impacts the rights of assessees, thus being a fresh legislation which is devoid of Iegislative competence. 7 5 Insolar reliance placed by learned Advocate Genera'i in Tirumalai Chemicals Limited {11 supra) it is submrtted that tl-re said decisjon is of no application to the present batch of cases. He submits that the question for determination in that case was whether the limitation to file appeal against order for violation of 57 provisions of Foreign Exchange Regulation Act, 1973 (FERA) would be governed by the appellate mechanism under the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchange Management Act, 1999. The above decision has no relevance insofar the present batch of writ petitions is concerned where the challenge is primarily to the competence of the State Legislature to enact the Second Amendment Act after the Constitution Amendment Act. 76 Regarding Fuerst Day Lawson (12 supra) relied upon by the learned Advocate General, Mr. Ravi submits that in the present batch ol cases petitioners are primarily concerned with the validity of the Second Amer-rdment Act and not the Ordinance. Even if it is assumed that the State had the competence to promulgate the Ordinance in June, 20 17 before onset of GST with effect from O1.O7.201,7, by the time the Second Amendment Act was passed, the State had lost its competence for iegislating on goods in general, except for petroleum products and liquor for human consumption as mentioned in the amended Entry 54 of List IL 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 Amendment Act came into force, the Ordinance could not have been promulgated' Thus, both the Crrdinance and the Second Amendment Act cannot be sustained rrfter 16.09.2016. Agarn in this judgment question ol legislative :ompetence of the State to promulgate an Ordinance followed b] an Act on the same subject matter \\''rs rlot in isslte' He submits that an Ordinance as well as an Act are two pieces of legislation. Legislative competence of each has to be separately determined in the light of the Constitution and 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 down on the ground of being manifestly arbitrary. That apart, u'hile there can be no dispute to the proposition that a wider latitude should be allowed to the legislature while legislating economic laws, rt is also equally clear that while making such lar'"', the Legislature or thc Parliament cannot transgress the constitutional Iimits. ln tl-le instant case, tl-Ie challenge to the Second Amendment Act is purely on the ground of legislative competence; rather lack of legislative competence. Petitioners are not questioning the legislative wi om in extending the limitation for making assessments, reassessments, revisions etc., from four yea-rs to six years, but have questioned the Second Amendment Act on the 58

-ig ground that the State did not have the legislative competence to enact the same. 77 Insofar Sheen Golden Jewels (India) hrt. Limited (7 supra) is concerned, learned senior counsel submits that a division bench of the Gujarat High Court in Reliance Industries Limited (2 supra| has distinguished the said decision. In Sheen Golden Jewels (India) Pvt. Limited (7 supra) petitioners had challenged validity of Section 17 4 of the Kerala Goods and Services Tax Act, 2017 which is pari materia to Section 174 of tine 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 17 4 of the TGST Act. Rather, according to the petitioners, Section \7 4 of the TGST Act only sLlpports what is being contended by the petitioners. 7 B The article, 'Transitional Prouisions in Commercial Legislation: An AnaLysis' follorvs the same logic given by the Kerala High Court 174 of the State GST Act rvas brought in Mr' Ravi subm'its that accordingl-otheaforesaidartrcle,sectionl9toftheConstitutron AmendmertActhaselementsofbothtransitionalasr'r'ellas savings cl.ruse. However, he contends that Section 19 of the Constituticn Amendment Act only suspends invalidity of the inconsistertt 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' 1t is only a transitjonal Provision. 79 Mr.S.R.R.Viswanath, learned counsel for some of the petitioners also made submissions replying to the arguments advanced by the learned Advocate Ceneral. While admitting that learned Arlvocate General was only partly correct in submitting that time limitations are procedural and not substantive, he, however, submits that in tax jurisprudence time limitations prescribed for making assessments, reassessments, revisions etc are juri ictionai in nature and are thus Ietters on the taxing authorities. In this connection, he has placed reliance on a decision of the Supreme Court in S.S.Gadgil Vs' ITO1s. Referring to Tirumalai Chemicals Limited (11 supra) relied upon by the 15 53 ITR 231

61 learned Advocate he submits that in the said case Supreme Court rvas dealing with the limitation prescribed for filing appeals, r,",hich is of entirel_v dilferent nature B0 Mr. Visrvanath submits that two dates are extremely crucial. Firstly, 16.09.2O16 when the Constitution Amendment Act came into force. Secondly, 2z .os.2orz 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 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 promurgate the ordinance or to mal<e the Second Amendment Act after 1,6.0g.2O16 and also after 27.05.2017 8 1 Referring to Section 19 of the constitution Amendment Act, Mr. Viswanath submits that the window provided by Section 19 r'vas completely exhausted on 27 .05.20i.7 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 Generai that Section 19 of the Constitution Amendment Act could be invoked even after 27 .05.2017 and that the Ordinance and the General,

62 Second Areendment Act owe their genesis to Section I 9. He further submits that neither the Ordinance nor the Second Amendmer:Lt Act can be traced to Article 246A of the Constitlltion. 82 Insofar decision of the Kerala High Court in Sheen Golden Jewels (India! Prrt. Limited (7 supra) is concerned, he submits that in the said case the challenge was made to Section 174 of the Kerala Goc,ds and Services Tax Act, 20i7 q'hich is pai matena to Section 174 of the TGST Act. Petitioners herein are not challenging validity of Section 174 of the TGST Act. He, therefore, submits that there is no merit in the arguments advanced by the learned Advocate General. 83 Subnrissions made bv learned counsel for the parties have 84 We shall first deal with the issue relating to legislative competence. Heading of Article 246 of the Constitution of india is subject matter of laws made by Parliament and by the Legislatures of States. Ciause (I) says that notwithstanding anything in clauses (2) and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I (Union List) of the VII Schedule to the Constitr-rtion of India. As per Clause (2), notwithstanding anything in Clause (3), Parliament received the due consideration of the Court.

63 and subject to Clause (l), the Legislature of any State also have power to make larvs with respect to any of the matters enumerated in List III (Concurrrent List) in the VII Schedule. In terms of Clause (3), subject to Clauses (1) and (2) the Legislature of any State has u,ith lespect to anv of the matters enllmerated in List II (State List) in the VII Schedule. Clause (4) clarifies that Parliament has power erclusive pou,er to make latls for such State or any part thereof 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 by the State Legislatures is traceable to Article 246 of the Constitution of India. The Lists in the VII Schedule defines and limit the respectir,e competence of the Union and the States. The to make laws rvith respect to any matter for any part of the various entries rn the three lists of the VII Schedule are not 86 Prior to the Constitution Amendment Act Le., prior to 16.O9.2O16, trntry 54 of List ll \,vas as follows sources of legislative power. These are legislative heads demarcating the field of iegislation; of course, being the field of legislation, the entries should be given the widest possible am p litud e

64 "54: Taxes on the sale or purchase of goods other than ne7.t)splpers' subiect to the prouisions of entry 92 A of List I"'

"

6'7 clelines "goods" to include all materials, commodities and articles' Clause (124) u'hich u,as inserted by the Constitution Amendment Act with elfect 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 (26A), also inserted by the Constitution Amendment Act with effect from 16 'O9 .2016, defines "services" to mean anything other than goods. 94 Article 246 A of the Constitution of India came up for analvsis before the Supreme Court in VKC Footsteps India Private Limited (5 supra), Supreme Court has held as follows:

"

"

69 97 In Baiju A.A. (10 supra) the challenge before a single bench of the Kerala High Court was to the legality of lhe notices and assessment orders issued in connection with the assessments under the I(erala Value Added Tax Act, 2003 for the assessment years 2010-20 11 ar.rd 2Oll-2O12. The challenge was made on the ground that the concerned authorities did not have the juri iction to issue the notices and assessment orders since the amendments introduced to Section 25 (1) of the Kerala Value Added Tax Act, 2003 through the Kerala Finance Acts of 2OI7 and 2018 notified on 19.06.2017 and 31.03.2018 respectively did not contemplate a retrospective operation of ttre 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 lvhich had escaped assessment to tax at an)' time u,ithin live vears from the last 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 2Ol7 , the period of limitation under Section 25 (1) for proceeding to determine escaped turnover was enhanced from five years 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 rvars made up to 31.03.2019 98 One c,f the questions framed by the Kerala High Court lr'as whether aft er the Constitution Amendment Act and repeai of the Kerala Valtre Added Tax Act on 22.06.2017, the State Legislature retained any residual power of legislation so as to amend the provisions of Section 25 (1) through the Kerala Finance Act, 20i8' After due consideration Kerala High Court held as follorvs:

11 legislate on the subject of ta-\es on sale or purchase of toods, 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 exerciscd a power to amend the KVAT Act, save to the extent permitted, ,.vhen ir did not retain any residual right to further legislate on the subject of ta-res on sale or purchase ol 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 Enrry 54 of List ll of the VII Schedule; rather they were conferred rvilh iegislative 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 ciause in the new legislation enacted in respect of the new ievy 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 po.*,er to amend a statute being a facet of the legislative power itself, the State Legislature colrld not have exercised a power to amend the Kerala Value Added Tax Act, 2003 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 goods.

72 100 l\n identical issue came up before another single bench of the Keral,r Higir Court in HINDALCO INDUSTRIES LIMITED (3 supral. Following the same line of reasoning adopted by the previous bench in BAIJU A.A. (10 supra) 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 o1'List ll of the VII Schedule; they have instead been conferred rtith legislative powers to lre exercised simultaneousll' u'ith the Pilrliamer,t rn respect of taxes on supply of goods or services or both. It has been held a:; folloq,s: ........,........,....Afi.er the CAA 2016, the State Legislatures stood denuded of tlrcir pouter to legi.slate in respect oJ taxes on sale or purchase of goods, that u.tas couered under Entry 54 of List II of the Seventh Schedule to the Constitution, and theg u.tere instead confened uith legislatiue poluers, to be exercised simultantzously rDith the Parliament, in respect of ta-xes on supply oJ' goods or seruices or both. While the neLu legislatiue potuer couLd justifA tlLe inclusion of a sauings clause in the neu legislotion enacted .n respect of the neu-t levg of tax, to saue accnted riqhts, piuileges, immunities, etc., under the erstluhile enacttnent, the deletion of Entry 54 of List II automatically denuded the State Legislatu.es of the power to furlher legistate on the subject oJ-taxes on sale c,r purchase of goods, except to the limited exteni retainecl under the Constttutton. The power to ameftd e statute being a fctcet of the ler1islatiue power itself, the State Legislature coltl(l tlot haue exercised a power to amend the KVAT Act, saue to lhe exlent permitted, u'hen it did nat retain any residual ight b Jutlher legtsLate on the subject of taxes on sale or purchcrse oJ g<t<tcis".

7l " (:olo),,-l csTR 2l) (All) 101 A division bench of the Allahabad High Court in M/s. such tax there can be no power to frame any by-laws in that regard. The power to ler,y advertisement tax was traceable to Entry 55 of List II. Allahabad High Court noted that the Constitution Amendment Act came into effect from i6'09.20 i6' U.P. Goods ancl Services Ta-r Act, 2OI7 came into operation with effect from Ot.O7 .2017 . The by-iaws by which the municipalities intended to lery and collect taxes on advertisement were framed on 12.01.2017 but published on 19.08 2017 i.e., alter Ol.O7'2017 r,vhen 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 II of the VII Scheduie 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 lew or collect taxes on advertisement which was earlier

71 available under Entry 55. Further, the bench noted that the power to tar earlier vested with the municipaiities under Section 128 (2\ (VII) of the U.P. Municipalities Act, 1916. Having been omitted bv virtue of Section 173 of the U.P.Goods and Services Tax Act, 2rl 17, the municipalities did not have the statutor) competence to levy, impose or collect advertisement tax Further 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 ll to the VII Schedule but the said entry was deleted by the Constitution Amendmenr: Act with effect from 16.09.2016. The Constitution Amendmen: Act vide Section 17 amended the VII Schedule and omitted Ent.ry 55 of List II, thus deleting the power of the State to make laws in respect of taxes on advertisement. Therefore, r,r'hen the State u'as denuded of the porver to make lau's in respect of taxes on alvertisement, obviouslv the municipalities q'ere zrlso divested of :he power to impose any tax on adrrertisement. 102 'Ihis line of reasoning has also been follo'"ved b-v a later division be:ech of the Allahabad High Court in Jain Distillery Private Limited (4 supra). In this case, the Allahabad High Court exarnined the position as to the competence ol the 75 Parliament and State Legislatures to enact lawg 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 aicohol would be subject to GST laws only. According to the Aliahabad High Court this intent has been expressed through Section 17 4 (ll (i) of the U'P'Goods and Services Tax Act, 2017. Section 174 (l) (i) of the U.P'Goods and Services Ta-r Act, 2017 reads as follows: '' i 7 i. i1) Srir.,c a.s olhe m-,tst 1;rrtuided in ahls Acl, on and from the clate o/ .r)runirr-r.-cnenI o/lhis .4('l lt) The Ltttar Pradesh Value Added Tax Act, 2008, except in respect of goods itcluded in Entry 54 of the State List of the Seuenth Schedule to the Constitution, are herebg repealed. IO2-1 It was in that context Allahabad High Court held as follows:

"

'76 consumption". Hence, in anA case) after the enaclrnent of tlrc UPGST'AII, 2017 and in absence of any amendmenl la Section 174 (1) (i) o-f tl:tat Act, there neither surulues nor e'rists atry clelegctted 'pouter' wtth the State GouemmenL' ro is'sue llrc itllPugned Notif.catton, to impose UPVAT on ENA'

7lJ Value Added Tax Act, 2003 by virtue of the Gujarat Value Added Tax (Amendment) Act, 2018 enacted on 03.04.2018 giving retrospective operation from 01.04.2006. 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 cf the said Act. Therefore, one of the questions which fell for consideration was whether Section 84 A of the Gujarat Value Added Ta-x Act, 2003 u,as ultra uires and beyond the iegislative competence of the State under Entrv 54 ol the List II of the VII Schedule. After due anal,vsis Gujarat High Cor-rrt held as follows:

"90. '\'he Entry 54 in List II in Schedule VII aJ the Constitution of Indta wos amended b ertinguish the pou-rcr oJ' Stafes to leuA ta-yes on sale or purchase of goods except to-Yes on the sale of petroleum products and alcoholic liquor for lwman consumption. Therefore, the power to amend any lotu with tespect to leuA of tox on the sale or purchase of goods such as "G,4arat VAT Acr" could be satd to haue been abolished uith the albresaid amendment in Entry 54 tn List II [n Schedule VII of the Constitution of India.

79 was to replace number of indirect taxes being leuied by the Ilnion and the State Gouemments and to remoue the coscading effect of toxes and prouide for cL common national market for goods and seruices. This is apparent from the statement of ;bjects and reasons referred to bA the Supreme Court in -Mohit Mineral Put. Ltd. 12018158 GSIR I (SC) : [20191 2 SCC 599'

80 benches of Allahabad High Court in M/s' Pankaj Advertising (16 supral'JainDistilleryPrlvateLimlted(4supra}andthedivisiol-r bench of Glrjarat High Court in Reliance Industries Limited (2 supra). Not only the Second Amendment Act cannot be traced to Article 246 of the constitution read with Entry 54 of List II of the VII Schedult:, 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 bl'thc Parliament' 106 [,et us now deal with Section 19 of the Constitution Amendment Act, ivhich reads as under: r07

competent authority or until expiration of one year from such commencement, rvhichever 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 of one year or ti11 such legislations are amended or repealed, whichever is earlier. The objective appears to be for a transition to the GST regime brought into lorce by the Constitution Amendment Act. All that Section 19 does is to provide a period so as to eliminate or remove all laws 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 Legislatures for making amendments to the VAT Act in respect of goods other than the five petroleum products and a,lcohol for human consumption covered by the amended (substituted) Entry 54 of List II. 109 As already discussed above, consequence of amendment ol Entry 54 of List II is denuding the State Legislature of the por'r,er to lerry tax on sale of goods other than those as 82 provided in amended Entry 54; invalidation of State legislations existing as cn 16.09.2016 lerying tax on sale of goods other than those findirrg place in amended Entry 54. Section I9 does not save or I)ostpones deprivation or denuding of legislative competence of State Legislature for ler,1''ing tax on sale of goods other than lhose mentioned in amended (substitr-rted) trntry 54 ol List II. Section i9 only allows operation and 1er'y of ta-r under the VAT Act which is inconsistent with the GST regime for a period of one year or unlil the VAT Act is repealed or amended, rvhichever is earlier. This lvould mean that the State could continue to ler'y tax under the VAT Act for the r,vindow period of one year or ti11 the VAT Act was amended or repealed to align it with the GST regime, whichever rvas earlier. This transitional provision does not enable the State l.egislature to make amendments to the VAT Act in contravention of the amended Entry 54 of List IL 1 10 At this stage, we may refer to Article 2432F of tl:,e Constitution. Part IXA dealing with municipalities u'as inserted in the Constltution by the Constitution (Seventy-fourth Amendment) Act, 1992'r,ith effect from 01.06.i993. Articles 243 P to Article 243 ZG cornprises of Part IXA, all dealing with municipalities. 81, the afore said provisions municipalities and municipal

ti3 administration \vere brought under the umbrella of the Constitution. Article 243 ZF provides for continuance of existing laws and municipalities. This provision is pari mateia to Section 19 of the Constitution Amendment Act. Article 243 ZF reads as under: 243 ZF. Continuance of existing laws and Municipalities:- Notuithstanding anything in thi.s Part, ang prouision of ang laLu relating to Municipalities in force in a State immediatelg before tle commencement of the Constitution (Seuentg-fourTh Amendment) Act, 1992, which is inconsistent u-tith the prouisions of thts Part, shall conttnue to be in force until amended or repealed by a competent Legislature or other competent autlrcity or until the expiration of one year from such commencentent, tuhicheuer is earlier: Prouitiecl that cLLl the MunicipaLtties existing immediately before such cotntnencement shalt continue till the expiration of their duration, nrr/ess sooner dissolued by a resolution passed to that effect by the Legislatiue Assembly of that State or, tn the case of a State hauing a Legislatiue Council, by each house of the Leg{slature of thctt State. 11 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 immediateiy before commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent with Part IXA, shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier.

l,i{ 112 ln Bondu Ramaswamy (6 supra), Supreme Court u'as considering challenge to acquisition of Iand for formation of Arkavathi l-ayout on the outskirts of Bangalore city by the Bangalore Development Authority under the Bangalore DevelopmerLt Authority Act, 1976.It was in that context Supreme Court considered the question as to whether provisions of the Bangalore Development Authority Acl, 1976, more particularly, that of Section 15 dealing with the power of the authority to drar'r' 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 erny provision of lar'v relating to municipalities in 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 r,r'as held as follorvs: "Any statute or provision thereof $'hich is inconsistent uith ant' constitulonal provision witl be struck down by courts Consequentll', iI BDA Act or any provision of the BDA Act is found to be inconsistent with any prov:sion ol Part IXA of the Constitution, it will be struck dorvn b) courts as violat,ve of the Constitution. In regard to an)' provisioll of an) law relat.ng to municipalities, Artrcle 2432F suspends such irrvalidity or postpones the invalidity for a period of one year from 1.6,1993 to enable the competent Legislature to remove the inconsistency by amending or repealing such law relating to municipalities to bring it in consonance rvith the provisions ol Part IXA of the Constitution."

ti5 113 As has been held by the Supreme Court, Article 243 ZF suspends sucl-r invalidity or postpones the invalidity for a period o[ one year to enable the competent Legislature to remove the inconsistency by amending or repealing such 1aw 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 cannot 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 Guj arat High Court in Reliance Industries Limited (2 supra) u'herein it has been held as follows: High Court held as follows:

86 116 Iaws to bring them in harmony with the CA Act. Otherwise, the States must repeal them. And they were given one year for achievillg this. If the States do leither, those inconsistent acts stand repealed.

lt7 ll7 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 Con stitution Amendment Act. 1 1B We have alreadl' noted that the Constitution Amendment Act, more particularly Sections 1 to I 1 and 13 to 20' came into force on and from 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 01.07.2017. State of Telangana also enacted the TGST Act' While majority of the sections came into force on 22'06'2017 ' Section 174 of tkre TGST Act which provides for repeal and saving came into force on and from Ol.O7 .2017 . Section 174 of the TGST Act reads as under: "174. Repeal And Sautng:- (1) Saue as othertuise prouided in this Act, on ancl from the date oJ commencement of this Act, 0 The Telangana Value Added Tax Act, 2005 (Act 5 of 2005); except in respect of goods included in the Entry 54 of the State L{st of the Seuenth Schedule to the Constitution, (ii) The Telangana Entertainments Tax Act, 1939 (Act X of 19s9); (ii, The Telangana Tax on Entry of Motor Vehicles into Local Areas Act, 1996 (Act 26 of 1996);

8rJ (iu) The Telangana Tax on Entry of Goods into Local Areas Act. 2001 (Act 39 of 2001); (") The Telangana Tax on Luxuies Ac| 1987 (Act 24 of 1987); (ui The Telangana Horse Racing and Betting Tax Regulations, 1358F (Regulation XLD( of 1358F); (uiil Thet Telangana Rural Deuelopment Cess Ac; 1996 (Act 11 of .1996); (hereafter rekrred to as the repealed Acts) are herebu repealed. (2) The repeal of the said Acts and the amendmetlt of tlle Acts speciJied in section 173 (hereafter referred lo a.s "-suclt amendnent" or "amended Act", as the cose rnay be) to the extent n entiotled in sub-section (1) or section 173 shall rrot- (a) reuve anything not in force or existing at the tine of such amendntent or repeal; or (b) aff,.-ct the preuious operation of the amended Acts or repealect Acts and orders or angthing dulg done or suffered thereunder; or (c) affect any right, piuilege, obligation, or liabilitg acquired, accrued or incurred under the amended Acts or repealed Acts or order.s under such repealed or amended Acts: Prouidttd that any tax exemption granted as an incentiue against inuestment through a notification shall not continue as priuilege if the said notification is rescinded on or after the appointed day; or (d) affe ct an! tax, surcharge, penaltA, fi.ne, interest as are due or may ,5ecome due or ang forfeiture or punishment incurred or inJlicted in respect of any offence or uiolation committed against the provisions of the amended Acts or repealed Acts; ar (e) afJ,zct any inuestigation, inquiry, ueiflcation (including scrutinA and audit), assessment proceedings, adjudiccttion arrcl anq other tegcLt proceedtngs or recouery of arcears or remedy itt respect of anA such tax, surcharge, penaltA, fine, interest. ight, piuilege , obligation, liabtlity, forfeiture or punishrnent, cts aforesaid, and any such inuestigation, itquiry. uenficcttiort (includit..g scrutinA and audit), assess/nelit proceecLirtgs, adjudictttion cLnd other legal proceedings or recouery of arrears or remedA mag be instttuted, continued or enforcecl, and cLny

89 such ta-y, surcharge, penaltA, fine, interest, forfeiture or punishment mag be leuied or imposed as if these Acts had not been so amended or repealed; (f1 affect any proceedings including that relating to an appeal, reuision, reuietu or reference, instituted before, on or after the appointed day under the said amended Acts or repealed Acts and such proceedings shall be continued under the said amended Acts or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed. (3) The mention of the particular matters refered to in section 173 and sub-section (1) shall not be held to prejudice or affect the general applicatiort of section 8, 8A, 9 and 19 of the Telangana General Clauses Act, 1891 (Act 1 of 1891) tuith regard to the effect of repeol". I19 Thus, as per Section 1.74 (l) (i) the VAT Act stood repealed with eflect from Ol.O7 .2017 except in respect of goods rncluded 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 01.07.20 17. We have a-lready 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 humar consumption; further clarifying that this r'vould not include sale of such goods in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods. Therefore, in terms of Section 174 (1) (i) oi the TGST Act, the VAT Act stood

90 repealed with effect from O1 07 '2017 except in respect of the goods covered by the amended (establisheo) Entry 54 of List II. 12O As a matter of fact, \,'e may obserl'e tl-rat the verl' presence oi Section 17 4 lll (i) in the TGST Act buttresses the stand taken by the Petitioners. l2l In Sheen Golden Jevrels (India) Pvt. Limited (7 sulrral the question before the single bench of the Kerala High Court was whether the State had the legislative competence to enact Section 174 of t]ne Kerala Goods and Services Ta-x Act, 2017 and save the past taxation events when Entry 54 List 1l stood omitted permanently with effect from 16.09.2016. We ma1' mention that Section 174 of the Kerala Goods and Services Ta-x Act, 2Ol7 is pai materia to Section 174 of the TGST Act. The Court was cailed upon to examine constitutional validitv of Section 11 4 of the Kerala Goods and Services Tax Act, 2Ol7 on the anvil of Section 19 of the Constitution Amendment Act, lt u'as contended that State had no legislative po!\'er to over ride Section 19. Kerala High Court took the vierv that u'hile Section i9 is a transitional provision; the job of saving is done by Section 174. Though Section 174 has repealed the Kerala Value Added Tax Act,

91 2003, the repeal has not affected the previous operation of the repealed act. In other words, the repeal has not affected any right, privilege, obtgation or liabiiity 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 l{erala Goods and Services Tax Act, 2Ol7 and accordingly upheld constitutional validity of Section 174. 122 We see no conflict or contradiction between Section 19 of the Constitution Amendment Act and Section i74 of the TGST Act. While Section 19 has deferred invalidity of inconsistent iegrslations till such time those are amended or repealed or for a period of one year u,hichever is earlier, Section 174 of the TGST Act has repealed amongst other enactments the VAT Act with effect from Ol.O7.2Ol7 except in respect of goods covered by the substituted Entry 54 of List II. Thus Section 174 of the TGST Act is in consonance with Section 19 of the Constitution Amendment Act. The above position only supports the case of the petitioners that the State was denuded of its competence to legisiate on GST after 16.09.2016 and certainly after Ol.O7.2Ol7. 92 I23 llepeai of an enactment $/ould mean that such an enactment is erased from the Statute book; it rn,oulcl no longer be in existence. This aspect was gone into b)' the Gujarat High Court in Reliance Industries Limited (2 supra) lt has been held as foilows: "68.8fi"ect of repeal at common lauL-Repeal obliterates the statute as if it has neuer been enacted:

93 MANU/SC/0020/1951 : AIR 1951 SC 128 referred to a passoge from the Crawford's book on Statutory Constntction Luhich reads as under: "lt is Luell-settle-d that if a statute gtuing a special remedg is repealed tuithout a sauing clouse in fauour of pending suits all sulls must stop wlrcre the repeal finds them. If final relief has not been granted before the repeal went into effect, it cannot be a;fter, tf a case is appeaLed, and pending the appeal the law is changed, the appellate court must dispose of the case under the taut in force u-th"en its decision uas rendered, The effect of the repeal is to obliterate the statute repealed as completelg as if it had neuer extsted, except for the purposes of those actions or sults tuhich tuere commenced, prosecuted and concluded uLhtle it u)as an ensting 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, when it comes to announce its d-ecision, conforms it to the law then existing, and may therefore, reuerse a judgment tuhich was coruect when pronounced in the subordinate tibunal from uhich whence the appeal u-tas taken, if it appears that pending the appeal a statute uhich was necessary to support the judgment of the louer court has been ruithdraun by an absolute repeal." (p.601) (emphasis suPPlied)

95 any other enactment, then the repeal sha1l not effect anything done or any offence committed or any fine or penalty incurred or any proceeding taken before commencement of the repealing Act; or reviving anything not in force or existing at the time 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 affect any right, privilege, obiigation or liability acquired, accrued or incurred under any enactment so repealed; or affect any fine, penalty, forfeiture etc, incurred in respect of any offence committed under arty enactment so repealed; or affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obiigation, liability, fine, penalty, forfeiture or punishment and any such investigation, 1egaI proceeding or remedy may be instituted, continued or enforced and any such fine, pena-lty, forleiture or punishment may be imposed as if the repealing Act h ad not been passed. 126 Sec[ron B of the Telangana General Clauses Act, 189 1 is similar to Section 6 of the General Clauses Act, 1897. 727 Section B A of the Telangana Genera1 Clauses Act, 1891 says that where any act repeals any enactment by which the 96 text of any previous enactment was amended by express omission, irrsertion or substitution of any matter then unless a different intention appears, the repeal shall not affect continuance of any such amendment made by the enactment so repeaied and in operation at the time of such repeal. l2B r\rticle 367 of the Constitution of India speaks abourt the interpretation of the constitution of India. clause (l) 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 Arlicle 372, shall apply for the interpretation of the Constitution as it applies for the interpretation of an Act of the Legislature' l2g Gu.1'arat High Court in Reliance Industries Limited (2 suprat examined this aspect as weli and held that General Clauses Act, 1897 applies only for interpretation of the Constitution but in respect of other matters, such as, savings in the case oI repeal etc which are unrelated to interpretation may not apply by virtue of Article 367' Section 5 of the General Clauses Ac:t, 1897 or Sections 8 / BA of the Telangana General Clauses Act, 189i would apply only to repeal ol an enactment. A Constitution Amendment Act is not or cannot be termed as an 97 enactment. Therefore, beyond what is stated in Clause (I) 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 by the Parliament in exercise of its sovereign powers under Article 368 of the Constitution. It has been held as follows:

98

"1. 30. Effecr of section 8 on article 367 -Will sectiorl 8 oI the Genela-l Clauses Act, which provides that $'hen an enactment is retr,ealed and re-enacted, references to the old enactment will be construed as references to that, re-enactecl one' mal<e any difference? We do not think so lt should be noted that the woids 'unless the context otherwise requires' {in article 367) mean that the General Clauses Act, section B, is to be excluled. Even by its terms, section 8 of the Generai Clauses Act vrill ,-rot .ppiy to the Constitution, because expression 'enac-:ment' 1wfiith occu.s in section 8) would not take in the Consiitution, 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 bv virtue of the Second Amendment Act r.vould 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 promuigamation of the Ordinance, thereby making it a valid piece of legislation. 132 It l\,'as strongly argued by learned Advocate General that when the Ordinance lvas promulgated, State of Telangana had the legislative competence to so promulgate the Ordinance ancl the Second Amendment Act which was made subsequently u,as nothing but a continuation of the law as promulgated by way of Ordinance since it was given effect to from the date of promuigamation of the Ordinance. 133 To appreciate the above contention, we may note that the Constitution Amendment Act came into force on and from 1 6 .Og .2016 . Section 19 of the Constitution Amendment Act provided for a window period to the States to remove any inconsistent enactments by way of amendment or repeal or until expiration of one year from such commencement whichever was I (){) earlier. Tetangana Ordinance No.2 of 2017 was promulgated bv the Governor of Telangana on 17 .06.2017 to lurther amend the VAT Act. Though the Ordinance was promulgated after coming into force of the Constitution Amendment Act on 16.09.20 16, it was so promulgated within the r.vindow period of' one year as provided by Section 19 of the Constitution Amendment Act. At this stage we may mention that following the Constitution Amendmer:t Act, State of Telangana enacted the TGST Act with effect from Ol.O7 .2017 . 134 Before we deal with the Telangana Ordinance No.2 of 2017, we may note that power of the Governor to promulgate ordinance is traceable to Article 2\3 of the ConstitLltion ol lndra Article 2 13 provides as follos's "273. Power oJ Governor to promulgate Ordlnances during recess of Izgislature.-(1 ) If at anA time, except when the Legislattue AssenDly o/ a Stare rs in sessior, or ullere there is a Legrslattue Courucil vt c .sl(lle. e-tfepl wltert bollt Houses c'f the Legislature are in sesslorr, lle Gouenrcr rs sali.sfe.i I/r.rl circumstances e^ist which render it necessary for htn to toke tnotrcdiate aclion, lp may promulgate such Ordinances as tlte circurnstances appeor ta hint to require; Provided that the Gouernor shaLl not, u/itllout instructions Jront the Prcsidetl, promulgate ang such Ordionce i,f- (a) a Bill containing the same prouisions would under rhis Con.stitutiorl hove requtred the preuious sanction of the President for the ifttroduction thereof into the legislature; or (b) he would have deemed. it necessary to reserve a Bill conteiting the same prouisions for the consideration of the President; or (c) an Act ol the Legislature of the State containing the same provisions would under this Const urron have been invalid unless, hauing been reserved Ior the consideration of the President, it had received the assent of thc. President. (2) An Ordinance promulgated under this article shall haue the some force and elfect as an Act of the legislature of the State assented to bA the Got'ernor, but euery such Ordi4ance-

l0l . (a) sholl be latcl before the Legislatiue Assemblg of the State, or ahere there i-s .r Leqislatiue Cor]rrci/ in tlrc Stqte, beJore both the Houses, and shalL cease to operale al lhe exptrattotl oj su uteeks from the rcassemblg oJ the Legislature, or if before the expualot of that peiod a resolution disapprouing it is passed bg the Legisl otlue ,A.ssern bly and agreed to bA the Legisldttue Council, if any, upon the posstng of tlrc resalution oL as the case maA be, on the resolulion betng agreecl lo b.tJ tlrc Coutlctl: ancl (b) may be u'rlhclrawn at an! tirne bA the Gouernor' Explanation.-Wpre the Holtses of the Legislature of a State hauing a Legislat{ue Council are summoned to reassemble on different dates, the period of six rteeks shal| be reckoned from the later oJ those dates for the purposes of this clause (3) If and so -far as att Ordindnce under this article makes ang prouision which u,ould not be ualid if enacted in an Act of the Legislature of the State assented to by the Gouemor, shall be uotd: Prouid.eri that, for lhe purposes of the prouisions of this Constitution relating to the effect of an Act of tl'Le Legislature of a State which is repugnant to an Act of Parliament or arL eisting law wlth respect to a matter enumerated in the Concuftent List, an Ordtnance promulgated under this article in pursuance of i$tructions from the President shatl be deemed to be an Act of the Legistature of the State which hos been reserued for the consideration of the President and dssented lo bV himJ 135 While clause (1) provides that if the Governor is satisfied when the Legislative Assembiy 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 shall 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 shall cease to operate at the expiration of six weeks from the reassembly of the Legisiature. Clause (3) says that if an Ordinance makes any provision which would not be valid if 102 enacted as an Act of the Legislature assented to bv the Governor, it sha1l be r,oid 136 .4.s noticed above, the Ordinance was promulgated by the Governor on 17.06.2077. 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 lerry tax on alcoholic liquor for human consumption and on petroleum products, According to the Constitution Amendment Act, levy of ta-r on those petroleLlm products a:od alcohoiic liquor for human consumption is within the compel-ence of the State Legislature. lt further stated that repeal of the VAT Act except in respect of the goods included in Entry 54 of List II of the VII Scheduie by the TGST Act, which was yet to be brought into force, would not affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of ant' such ta-x; surcharge, penalty, line, interest, right, privilege, obligation, liability, forfeiture or punishment and any such investigation etc.,

I03 may be instituted, continued or enforced and any such tax, surcharge etc, may be levied or imposed as if those Acts had not been so amended or repealed. Such repeal would not also affect any proceedings including those relating to appeal, revision, revieu,or reference instituted before, on or after the appointed day under the said amended Acts or repealed Acts and such proceedings shall be continued under the amended Acts or repealed Acts. Therefore, it was considered necessary to strengthen 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 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 conlerred by Clause (1) of Article 213 of the Constitution promulgated the Ordinance which basically extended the limitation from four )'ears to six years in respect of aSsessments, reassessments, revision etc. 137 It is not necessary for us to go into the aspect as to '"vhether the Ordinance was laid before the Assembly or not and as to whether it had ceased to operate after six seeks from 10,1 reassembly of the Legislature. It may also not be necessary for us to labour orr the aspect that the Second Amendment Act though published i:r the Telangana Gazette on 02.12.2017, was deemed to have come into force with effect from 17.06.2017 i.e. the date when the Ordinance was promulgated. This is because legislative competence cannot flow from an earlier legislation, be it an ordinance f,r an enactment. Legislative competence mllst be traceable to the Constitution. Therefore, no reliance can be placed on the Ordinance in support of the conterltion that the Second Amendment Act had derived competence from the Ordinance since it was a continuation of the lan' and had come into force from the date of promulgamation of the Ordinance. Such a line of reasoning, in our considered view, has no legal substance. Therefore, it is immaterial that the Ordinance \.vas not challenged in Court. 138 That apart, the ostensible objective of the Ordinance as could be cliscerned from the preamble is to save an\ investigation, assessment, recovery of dues, Iegal proceedings etc., pending on the date of coming into lorce ol the Constiturtion Amendment Act which is perfectly understandable and valid But that d res not mean that limitation across the board cou1cl be 105 extended by way of amendment to initiate fresh proceedings, such as, fresh revision proceedings, which otherwise had become time barred. 139 With effect from 16.09.2016 the Constitution was amended by virtue of the Constitution Amendment Act. While Article 2464 u/as inserted immediately after Article 246, t]ne earlier Entry 54 of List ll was substituted by the new Entry 54, in the process denuding the States from making any law except on the sale of petroleum crude, high speed diesel, motor spirit (petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption. Thus the States did not have the competence to make law to iely 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 window of one year to remove the laws inconsistent rvith the Constitution Amendment Act either by way of amendment or by way of repeal. The window period was given to remove the inconsistencies; not to prolong the inconsistencies. But rvhat the State of Telangana did by promulgating the Ordinance \ Ias not to remove the inconsistencies in the VAT Act' As mentioned above, the Ordinance, in fact, introduced certain

106 provisions extending limitation to enable initiation of lresh proceedings, such as, revisional proceedings rvhich are completely inconsistent vvith the scheme of the Constitution Amendment Act. On this ground itself, the Ordinance can be said to have no iegal consequen (le. 140 However, by the Second Amendment Act, more particuiarly, by Section 7 thereof, the Ordinance r.r,as repealed. As already stated above, the Second Amendment Act cannot derive legislative competence from the Ordinance. It must derive legislative,:ompetence from the Constitution. Unfortunatelv, a-fter substitution of Entry 54 of List II, State was denuded of such competence traceable to Article 246. As a stand alone legislation, it cannot derive legitimacy traceable to Article 2464 ol the Constitution as well. Therefore, the Second Amendment Act made on 02.I2.?.O17 though given retrospective effect from i7.06.2017 cannot be sustained as the same is devoid of legislative competenoe. 141 Needless to say, wa3r back in 1964, Supreme Cor-rrt in A.HaJee Abdul Shukoor (1 supral was categorical in holding that while the State Legislature is free to enact laws which could have retrospective operation, its competence to make a law for a certain

I r)7 past period would, hor.r,ever, depend on its present legislative power and not on what it possessed at the period of time when the enactment would be in operation. 142 Insofar the decisions reiied 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 lvould give us a clear rdea as to why the Constitution Amendment Act u,as brought about and why the Second Amendment Act cannot be sustained being completely inconsistent with the scheme of the Constitution Amendment Act and being denuded of its legislative competence. In Baiju A.A. (1O supraf , Kerala High Court held as follows:

108 countrv through the introduction ol a Goods ar.tcl Sen ice 'l'a.r. and the phar;ing o-rt of the multitr.tde of indircct tax lcvics, including va.lue added taxes, that rvere levied and coilected b| lhe Cenrre a-rl d the Statcs, Section L9 of the CAA 2016. wirich is the sLlnsct clallse in the s;Lid enactment, envisaged the continllation of the erstwhile system cf ta-xation for a period of one year from the datc o,- enactmeat of rhe CAA or till such time as the State Legislatllrcs amenclecL or repealed their respective VAT legislations. r,r'hichevcr was earlier. When the State Legislature repeaied the KVAT Act. while sirnultaneously bringing into force the neu' State GST Act. with a savings clause of limited operation, it elfectively acknowl:dged the absence of any power to legislate thereafter on the subjr:ct of tax on sale or purchase of goods, except in respect ol the limil-ed commodities for which the said power was retained under the Constitution. In respect of a.ll other commodities, the legislative power of the State was only in respect of taxes on the supply of goods or services or both, a power that had to be exercised simultaneousll' with the Parliament and not unilaterallv or exclusive:ly. 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, action taken etc under the erstwhile enactment as it stood at the time of its repeal, which included the amendments brought in through the Kerala Finance Acl, 2017. There could not have been any further legislative exercise by the State lcgislatttre in relation -o the repea1ed KVAT Act. 1,44 ',Ve are in respectful agreement \\'ith the vie\\rs expressed by the Kerala High Court in Baiju A,A (1O supra). Intention of Parliament in ushering in the GST regime through the Constitution Amendment Act and enactment of the CGST Act arrd simultaneous enactment ol various State GST Acts bv the State Legislatures, is to avoid multiplicity of ta-xe s by subsuming those indirect taxes in a single tax called GST. It is in this context \\'e have analy::ed Section 19 of the Constitution Amendment Act. Viewed thris the amendments brought 1n by the Second Amendmenl. Act, as discussed above, are whcrllv inconslstent w'ith

109 the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act. 145 Thus, upon thorough consideration of all aspects of the matter, we have no hesitation in holding that the Second Amendment Act is unconstitutional being devoid of legislative competence. It is accordingly declared as such. Consequent$, the notices issued and orders passed under Section 32 (3) of the VAT Act which have been impugned in the present batch of writ petitions are hereby set aside and quashed. 146 All the writ petitions are accordingly allowed. However, there shall be no order as to costs. 147 Miscellaneous petitions, if any, pending in all the writ petitions, shall stand closed. UJJAL BHITYAN, CJ SMT, JUSTICE P.MADHAVI DEVI Date:05- 07-2022. Kusn/\/rks/Pln Note: LR copy be marked (By order) pln