M/S Plr Projects Private Limited vs. The Deputy Commissioner (St)

The Court made the following: ORDER I I

THE HON'BLE MRS JUSTICD SUREPAILI NANDA Writ Petition No.18764 of 2O2l ORDER: eer tte tton'bt" tle Ctu.l Jusn.l.tttet BtM,tt1t4 Heard Mr. Bhaskar Redcly Vemireddy, learned counsel for the petitioner and Mr. K.Raji Reddy, learned

/ / HIGH COURT DATED:0810712022 ORDER W.P.No.18764 of 2021 * l LIE S 16 sEP i ALLOWING THE WRIT PETITION WITHOUT COSTS i I i I i ..R o^'\ (g*' %p--- (-v

3 THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HON'BLE SMT. JUSTICE P.MADHAVI DEVI WRIT PETITION Nos.7893 9550 t6527 16853 16896 16903 0F 2020, 494, 7 L28, 7054.9622, 1!046, LL4t4, r1996 L2774 15215 L5822 15841 rs853 r5942 20744 2L542 22651 22940 23336 23346 24242 25561 27294 27533 28797 29743 32129 32373 32653 32697 and 34O54 OF 2O2l COMMON JUDGMENT & ORDER: (Per Hon'ble thc Chief Justice Ujjal 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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() 8. 1 . As lrer Sub-Scction (2), if a VAT dealer or 'I'OT dealer sltbmits ir return along ri.ith evidence for [Lll paymerrt of tax, st-tbsccluent to the prescribecl time the assessmcnt madc under Sub-Scction (1) shall bc withdran.n without prejudic: to arry intcrest or penalty leviable.

s .Joint Commissioncr or Deputy Commissioner, may u.ithin 30 days lrom the datc on w,hich the order or proceecling was served on him, appeal to such authority in the manner prescribed. As per the first proviso, the appellate authority may admit al appeal within a further period of 30 days if he is szLtisfied that the appellant had sufficient cause for not preferring the appeal within the initial period of 30 days. The second proviso says that unless the appellant produces proof of pavment of 12 Y-,ok of the disputed tax, penalty, interest or any other amount, the appeal so preferred shall not be admitted by the appellate authority. Sub-Sections (2) to (6) lav down the procedure to be followed by the appellate authority; the relief that may be granted and the hnalit_v attached to such appellate order.

9 i I I i I t I I I i ma-y initiate proceedings to revise, modify or set zrside such order or procceding and mav pass such order in relerence tl'rereto as hc thinks ht.

I0 Su1>remc Court involvrng a question of law having a dircct bearing on the ordt:r or proceeding in question

i 1 . Section 57 which finds place in Chapter VIII dealing u,ith offences and penalties provides for penalty for unauthorized / excess collection of tax. Sub-Section (1) prohibits any dealer from coliecting any sum by walr of tax in respect of sale or purchase of any goods which are not liable to tax under the VAT Act.

ll Act, after Article 246 of the Constitution of lndiir a ne',r' Article 246 A came to be inserted. Article 246-A reads as under "246A. Special Prouisiort uilh respect to goods trnC seryices 1Qx'-- (1) Notwit.hstandinll anllthitlg contained itl arltcles 246 artd 254, Partiamert, artd, subject to clause (2), tle Legisktture o-f ,zuen1 State, lnue power to make lauts tuilh respect to gloods and serzices tar imposed bA tlrc Uniotl or by such State. (2) Parliament has exc[usive pouer to make lauts witlt respect to goods and seruices to-x Lullere tlrc supplll ol goo<ls, or o.f seruices, or both takes place in tlte course of itter-State tra,7e c.tr cotnmerce. Explanatiort---The proutsiorts of this article, it resp<.ct of good"s and seruices tax refered to in cLause (5) oJ the article 2794, take elfect frorn the date recornmertded bg tte Goods and Se,-ulces Tax Council."

l-1 arlicle 246A, -such arnoL{nI shall ttot fonn parl of llrc Consolidated Fund of India. (4) Where an amount collected as tax lettied by a State under arlicle 246A l:ns been used for payme:nt of the tcat leuied under ctause (1), such anount sltall rtot fonn parl o.f tlp- Consolidated F'ut:.d of the State. (5) Parliament mag, bg latu, fonnulate the pittciples J'or determining the place of supply, and uhen a supply of goods, or of serutces, or botll takes place in tlte course of tnter-Stote trade or cornrterce."

l{ bg eaclt State Gouenunent .....Menbers (3) Th,e Members of the Goods and Seruices Tar Counctl refen'ed to in sub-clause ( c ) of the clause (2) shall, as soon as ntag be, claose one amongst themselues to be the Vice-Chttirpersort of Llte Courtcil for such pertod as theg may decide. (4 ) TlLe Goods and S-eruices Tax Council shall muke reconmerrdatiorTs to tlrc Urion and the State on--. (a) the taxes, cesses and surcharges leuied by llle Uniotl. Ilrc Stctes and the local bodies whiclt mng be subsurne{l in tlrc got)ds and seruices tax; (b) the goods and seruices tFat maA be subjected to, or exettlpled front lhe qoods and seruices tax; ( c ) model Goods and Seruices Tax Lau.ts, pirx:iples of Le'uy, apportionmetTt of Goods and Seruices Tax leuied ort supplies irr llte course of tlter-state trade or comnterce uttder oJlicle 269-A rtrttl the pirtciples tlnt gouem tlte place of supplg; (d) the threshold ltmit of turtTouer belout tuhiclt goods dtld seruices mag be exempted from goods atld seruices tox: (e) the rates including floor rates with bands of goods 'tttd serui.ces tax; (fi any speciat rate or rates for a speciJied peiod, to rerse additlonal resources duing ang natural calamitg or clisaster; (g) special provision uith respect to the States of Anuuchal Pradesh, Assam, Jammu and Kashmir, Martipur, Meghekrlla, Mizoram, Nagaland, Sikkinr. Tipura, Himachal Pradesh artd Uttarakharul; and (h) ang other matter relating to the goods aruJ seruices ta,y, as IlLe Courrcil may decide. (5) The Goods and Services Tax Courtcil shall recotnnlend tlle date on which the goods and seruices tax be leuied ot7 petroleum crude, high speed diesel, nl.otor spirit (cornmor y knoutn as pelrol), natural gas antd auiation turbine fuel. (6) While dischargtng the functions conferred bA tlis article. tlrc Goods and Seru[ces Tax Council shalt be guided by tlte rteed for ct hanrronized structure of goods an-d seruices ta-y and for tlrc deueloprnent of a harmonised national market for goods crrtd serr.,ices. (7) Oneltalf of the totol number of Members oJ tlrc Goods and Services Tax Council shrtll constitute the quorurrt at its meetings.

l (8) The Goods and Seruices'l'ax Courtcil sltcrll detennirc tlu; procedure tn the performarrce of its futlctions. (9) Eue4l decision of llrc Goods and Seruices 'l-ax Courtcil shall De taken at a meeting, by a nmjoity ojr not less than three fourlhs of the weighted uotes of the trtentbers presett antl uottttq, ir accordance uith the follotuing prhrciples, namely: (a) the uote of the Central Gouentment shall lrc a weightage of one-thtrd of the total uotes cast, and (b) the uotes of all the. State Gouernmerlrs lake,r tocJetlter shall lnue a u,eightage of two thirds of the totat uoles cast, itl that meeting. (10) No act or proceedings of tlrc Goods and Seruices Tar Councll shall be inualid merely bg reason of-- (a) ang uacancg in, or any defect in, the constitlllion of tlrc Council; or (b) ang defect in the appoittntent of a person as a Meutber o.f lhe Council; or (c) any procedural irregulaitll of the Courtctl not aflectirtq tlrc meits of the case. (11) The Goods and Serurces Tax Council .shc// e-stabli.sh a mechanism to adjudicate anA dispute - (a) betuteen the Gouernrr"tent of lrrdia artd one or tnore Slates; or (b) betueen the Gouemment of India and onA State or Stale.s on one side and one or more other Slates on the other sicle: or ( c ) bettueen tuo or more Stotes, aising out of the recomttendotiotls of tlle Council or imp I em.e nt atio n t her e of .'

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11 competent authority or until expiration of one yezrr frorn such commencement whichever is earlier.

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t9 and collection of tax on inter-State supply of goods or services or both b1z the Central Government and lor matters connected therewith or incidental thereto. Like the CGST Act, Central Government notified various dates as thc date for coming into force of relevart provisions of the IGST Act, such as, 22.06.2017 ar,d Ol.O7.2Ol7. 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 (TGST Act'hereinafter) to makc provision for levy and collection of tax on intra-State supply of goods or services or both by the State of Teiangana. TGST Act received the assent of the Governor on 25.05.2017 and u'as first published in the Telangara Gazette on 27.O5.2O 17. Various provisions of t1 e TGST Act came into force on various dates. Wtrile Sections 1 and 2 (deirnition clause) came into force on 22.06.2017, Section 174 which provides for repeal and saving came into force on Ol.O7.2Ol7. 17. As noticed above, Section 174 provides for repeal and saving. As per Sub-Section (1), save as othenvise 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 Lin 11 -v 54 ()i' thc State l,ist of the Vlt Schedule to lhe Co:rstitution u,ere rcpcaled. Sub-Scction (2) clarifies thzrt such repcal rvould nol revive anything not in force or existing at the tim,: of such repezrl or alfect the prcvious operation of the repealed Act etc

2l and audit assessment proceedings etc, which ma-v be instituted, continued or enforced, whereafter tax, surcharge, penalty, Iine, interest, forfeiture or punishment may be levied or imposed as if those Acts had not been so amended or repcaled. That apart, such repeal would not affect any proceedings, such as, appeal, revision, review or reference which shall be continued under the amended Acts or repealed Acts. It was also mentioned that it was considered necessary to strengthen certain provisions of the VAT Act to overcome any limitations to help elfective revenue realization besides preventing leakages. Accordingly, it r,r,as 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 u,as not in session, and as the Governor of Telangana was satisfied that circumstances exist which rendered it necessary for him to take immediate action; therefore, in exercise of the powers conferred by Clause (1) of Article 213 of the Constitution of India, the Governor promulgated Telangana Ordinance No.2 of 2Ol7 called the Telangana Value Added Tax (Ameadment) Ordinance, 2017, which came into force with immediate effect i.e., 17.06.20 17. By thc said amendment, certain provisions of the VAT Act, such as, in Section 2O (4), Section 21 (3), (4), (6), (7) and (8), Section 32 (3), I I I

72 (6) and (7) zrnd in Section 57, the words 'four years'or'iour ycars or six .years' or 'three ycars' stood substituted b,y the',vords 'six

2 2l the n ords 'six years'. The Second Amendment Act rcads as lollou.s: (1) This Act may be called the Telarrgana Valuc Added Ta,x (Second Amendment) AcL, 2O)-7 . (2) It shall be deemed to have come into force with effect from 77 .06.2017 . In the Telangana Value Added Tax Act, 2005 (hereinafter referred to as the Principal Act), in Section 20, in Sub-Section (4), for the words '[our years' the words 'six years' shall be substituted.

21 (n1 in sub-sections(7) and (8), for the words 'Iour years or six years, as the case may be, the words 'six years' shall be substitutcd. In the principal Act, in section 31, in sub-section (1), (i) the first proviso shall be omitted; (ii) afrer omitting the first proviso, in the existing proviso, for the words "provided fur--her that" the words "provided that' shall be substituted. In the principal Act, in section 32, in sub-seclion (3), (60 and {7), for the words 'four years' the words 'six years' shall be substituted. In the principal Act, in Section 57, in sub-section (5) and the proviso thereunder, for the words 'Lhrce years', the words 'six ycars' shall be substituted. The Telangana Value Added Tax (Amendrr ent) Ordinance, 2017 is hereby repeaied.

25 Section 21 (7): Where any assessment has been deferred br. the Commissioner under sub-section (5) of Section 32 or as the carse may be, the Appellate Tribunal under the proviso to sub-section (.1) of Section 33 on account of any stay order granted by the Appellate Tribunal or as the casc may be, the High Court or the Supreme Court respectively, or rvhereas appeal or other proceedings is pending before the Appellate Tribunal or the High Court or Supreme Court involving a question of law having a direct bearing on the assessment in question, the pcriod during which the stay order rvas in force or such appeal or proceedings was pending shall be excluded in computing the period of six years as the case mav be lor the purpose of making the assessment. Section 21 (8): Where an assessment made has been set aside by any Court or as the case may be the Appellate Tribunal, the period between the date of such assessment and the date on which it has bccn set aside shall be excluded in computing the period of six years as the casc may be, for making any fresh assessment. Scction 31 (1): Any VAT dealer or TOT dealer or any other dealer objecting to any order passed or proceeding recorded by any authority under the provisions of the VAT Act, other than the order passed or proceeding recorded by a.y authority under the provisions of the VAT Act, other than the order passed or proceeding recorded by an Additional Commissioner or Joint Commissioner or Deputy Commissioner, rnay within 30 days from the date on which the order or proceeding was served on him, appeal to such authority in the manner prescribed. Provided that an appeal so preferred sha.ll not be admitted by the appellate authority concemed unless the dealer produces proof of payment of tax, penalty, interest or any other amount admitted to be due, or of such installments as have been granted, and the proof of payment of twelve and half percent of the difference of the tax, penalty, interest or any other amount, assessed by the authority prescribed and the tax, penalty, interest or any other amount admitted by the appellalt, for the relevant tax period, in respect of which the appeal is preferred. Section 32 (3): In relation to an order of assessment passed under the Act, the powers conferred by sub-sections (1) and (2) shall be exercisable only within a period of six years from the date on rvhich the order was served on the dealer. Section 32 (6): Where an order passed under this Section has been set-aside by any court or other competent authority under the Act for any reason, the period between the date of such order and the date on which it has been so set-aside shall be excluded in computing the period of six years specihed in sub-section (3), for the pllrpose of making a fresh revision, if any, under this Section.

)6 Secrion 32 (7): Where any proceeding under this Section has been deferred on account of ar1y stay order grar]tccl by the Appellate Tribunal or thc High Cour-t or Supreme Court in aly case, or by reason of the fact that an appeal or other procccding is perding bcforc thc Appellate Tribunal or the High Court of the Supreme Court involving a question of law having a direct bearing on the order or proceeding in question, the period during which tho stay order was in force or such appeal or proceeding w:rs pending shall be excluded in computing the period of six years specilted in sub- section (3), for the purposes of exercising the power under this Section. Section 57 (5): No order for the Iorfeilure under this section, shall be made alter the expiraLion of six years from the date of colkrction of the arnount referred to in sub-section {4).

iI I I )t I i ).1 this connection, show cause notice was issued on 30.1 I-2O19 stating that on scrutiny of assessment records it was found that petitioner had imported 71 metric tons of Basmathi Rice valued at Rs.6O,35,000.00 which was neither reported by the petitioner in the returns nor subjected to assessment. Therefore, the assessment order dated 31.03.2015 was found to be prejudicial to the interest of revenue. Accordingly a view was taken that revision under Section 32 (21 of the VAT Act was warranted.

t8 four years i.e., on or belore 30.O3.2O19, in terms of Section 32 (2) of the VAT Act. However, the revisional order was passed on 14.O9.2O2O which is beyond four years but within six years. 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 r,vas made after the GST regime had come into effect. Therefore, the extended period of limitation of sk years instead of four vears was not ervailable to the Deputy Commissioner. 2n. Deputy Commissioner, Commercial Tax, re-designated as Joint Commissioner (State Tax) has filed counter affidai,it. After making averments on merit, it is contended that the Depu\r Commissioner was justified in passing the revisional orcler under Section 32 (21 of the VAT Act. Due notice was given to the pe titioner. Information required by the petitioner were sought for from the Regional Vigilance and Enforcement Officer but the same was not received. As such those could not be furnished to the petitioner. Nonetheless, petitioner also did not submit a-ny details/ documents, books of accounts etc., in his defence.

29 replaced by the Second Amendment Act u,hich is in force. Therefore, contention of the petitioner that the amendment was carried out during GST regime lacking legal sanctity has been denied. The impugned notice and revisional order were passed within the limitation period of six years. Therefore, those are legal and valid.

-1t 36. it is contended that under Sub-section (3) of Section 32 of the VAT Act, limitation prescribed for passing revisional order was four years from the date of service of the original order sought to be revised. Referring to the Second Amendment Act, it is stated that by the aforesaid amendment, the period four years appearing in Sub-section (3) of Section 32 amongst other provisions was substituted by the period six years. In other words, the limitation period to complete the revision was extended from four years to six years. Since the original assessment order was passed and served on 24.03.2014, as per the four years limitation period the last date for passing ordcr of revision was 23.O3.2O 18 but the . impugned order was passed on O5.03.2O2O. Refcrring to the amended provision extending limitation to six years, it is stated that the last date as per the amended provision was 23.O3.2O2O. If the Second Amendment Act is held to be un-constitutional, the additional two years of limitation wouid not be available to the respondents and consequently the revisional order dated 05.03.2020 would be beyond limitation. It is in that context that uires of the Second Amendment Act has been put to challenge.

-11 the rcvisional orcler dated 05.O3.2O2O as being barred by limitation and thcreafter to quash the same ers rvell as the conseqlrenlial orcler dated 07 .O3.2O2O.

-1-1 the VAT Act except for the goods listed in trntry 54 of List ll of the VII Schedule. Ordinance No.2 of 20 17 q.as promulgated by the Governor of Telangana under Article 213 of the Constitution of India on 17.06.2017 whereby limitation r,r,as extended from four years to six yea-rs. Ol.O7.2Ol7 is the date on and from which TGST Act became enforceable. Section 17 4 ol 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 whereafter it was published in the Telangana Gazette on 02.12.2017 giving retrospective effect frorn 17 .06.2017 .

-1-l cnlarginll lhe period of limitation more particularly under Scctions 21 ancl 32 of lhe VAT Act from four years to six 1'cars. Hc submits that alie r' lhe Constitution Amendment Act, State of Telangana did not havc the lcgislative competence to enact the Second Amcndmcnt Act for all goods either on the basis of the erstwhile lcgislative scheme prior to the ConstituLion Amendment Act or on the bersis of Articlc 246 read with Entry 54 of List Il, as amended, or under Article 246 A or in terms of Section 1.9 of the Constitution Amendment Act or on the principle of pooled sovcrcignty or on the basis of Ordinance No.2 of 2Ol7 cr in terms of Section 174 of the TGST Act. 4),. Elaborating on the above aspect, Mr. Ravi submil.s that the Second Amendment Act seeks to retrospectively amend the VAT Act to t'nlarge the limitation period with retrospectiv,: effect to ; reflected in pre-amended Entry 54 of List II prior to 16.09.2016 for legislative competence on the ground that the Second Amendment Act is retrospective and intended to deal nith VAT demands prior 2 2O2O 82 GSTR 32 (Guj.) -r5

-16 to thc coming inlo force of GST. Thus, Section 6 of the General Clauses Act, 1897 cannot be pressed into service to save the pre- amended trntry 54 of List il.

37 goods in E{eneral. If this <listinction is not adhered to, the Legislatures is based on the principle of pooled sovereignty / cooperative federalism. Further, he submits that all such iegisiations must be based on recommendations of thc GST Council. Therefore, he contends that legislative competcnce of s 2021 SCC Online SC 706 1 I I t t I t i

-1ti Telangzrna Srate Legislzrture lor enacting the Second Amendment Act cannot llou. lrom Articlc 24{rA

.19 competence upon the State for making amendments to the VAT Act qua goods other than alcohol for human consumption and the Iive petroleum products. Therefore, r.r,hat Section 19 provides is that the State can continue to 1er'y tax under the VAT Act for the window period of one ycar or till the VAT Act is amended or repealed whichever is earlier. This transitional provision does not enable the States to make amcndments to the VAT Act in contravention of the amended Entry 54 of List II. He submits that Section 19 of the Constitution Amendment Act cannot be understood as a source of legislative power, nor as a saving provision in respect of legal competence to amend the VAT Act. To buttress this point he has pressed into service the division bench decision of the Gujarat High Court in Reliance Industries Limited (2 supra). According to him, even the single bench of Kerala High Court in Sheen Golden Jewels {Indiaf Pvt. Limited Vs. State Tax Officerz has taken similar view though the said decision is relied upon by the respondent.

.l {) 54 had not yet bcen amended, even thcn also tht: Second Amendment Act having been passed on O2.L2.2O17 was beyond the one year period in terms of Section 19 of the Constitution Amendment Act and therefore invalid.

JI of the one year window pcriod. On the day of enacting the Second Amendment Act, the State Legislature had lost its competence lor ',. making law in respect of other goods barring thc goods mentioned . in the amended Dntry 54 ol List II. Statc Legislarture must have the competence both on the date of enactment i.e. 02.12.2017 and also on the day when it rrga s brought into force retrospectively L. e. t7.o6.20t7. 50. Referring to Articlc 213 (3) of the Constitution of India he submits that the Ordinance would be ultra uires for the very same reason for which the Second Amendment Act is ultra uires. He further submits that life of the Ordinance q,as onlv six q.eeks from date of convening of thc State Legislaturc. This period, he ubmits, was til1 08.12.2017. Even assuming that the State Legislature was competent to enact and apply the Ordinance quo e goods not mentioned in amended Entry 54, such operation could not have continued beyond 08.12.2O17 as per Article 213 of the Constitution. Clarifying the position, he submits that the Ordinance was not challenged because the Ordinance \\ras repealed by the Second Amendment Act and is no longer in existence. Besides, the Second Amcndment Act was brought into force with effect from 17.06.2017 which rvas the datc ol the 1l Ordinance . Thus, even for the period when the Ordinance was in cxistence it was the Second Amendment Act which occupied the legislative freld and not the Ordinance. Therefore, al'r reliance placed on the Ordinance would be misplaced and the fact that the Ordinance was not chailenged would have no legal bearing.

-l--l Amendment Act can only be in respect of the VAT Act as cxisting on 02.12.2017, even if given retrospective effect from 17 .06.2017. 52. Summing up his arguments, Mr. Ravi submits that both the Ordinance as well as the Second Amendmenl Act are unconstitutional being devoid of legislative competence. He submits that division bench of the Gujarat High Court in Reliance Industries Limited (2 supra) and a later single bench dccision of Ithe Kerala High Court in Hindalco Industries Limited (3 supra) 'have struck down VAT legislations enacted post 16.09.2Oi6. He submits that he would adopt the detailed reasonings given by the bench in those two cases.

{-l senior counsel, submits that the State Legislature perssed the Telangana Goods and Services Tax Bili, 2Ol7 on 16.04 2017. It received the assent of the Governor on 25.05.2017 whereafter the Telangana Goods and Services Tax Act, 2017 (already referred to as 'the TGST ActJ was published in the Telangana Extrirordinary Gazette on 27.O5.2017. He thereafter submits that the Clrdinance was promulgated on 17.06.2017 whereas the Second Amendment Act was made on 02.12.2017 giving retrospective efl'ect from 17 .06.2017 . He submits that the Second Amendment Act is unconstitutional as the State Legislature had lost its cornpetence to make such amendments after the Constitution Amendment Act came into force from 16.09.2016. On and from 16.09.2016 only concurrent juri iction could be exercised simultaneously by the Central Government as well as by t1le State Government insofar GST is concerned; that apart, exercise of power under Article 246 A can only be carried out on the recommendation of the GST Cou ncil.

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! ! I Il I I i 17 make laws for saving the repealed Acts under Section 19 of the Constitution Amendment Act. Accordingly, Section 174 was included in the TGST Act as a measure to save the repealed Acts, including the VAT Act. He submits that Section 174 save s operation of the VAT Act in respect of transactions made prior to Ol.O7 .2017 . Insofar the VAT Act is concerned, the same ldras amended by the Second Amendment Act prior to the eflective date i{.Lt,ri of repeai by way of an Ordinance dated 17.06.2017. Article l3 (3) of the Constitution of India states that law includes Ordinance as well. Section 6 (b) of the General Claused Act, 1897 also m:rkes it clear that repeal of an Act shall not effect the previous operation of any enactment so repealed or anything donc thercunder. According to him, reliance placed by thc petitioncrs on the decision of the Kerala High Court in Hindalco Industries Limited (3 supraf and on the Gujarat High Court decision in Reliance .; Industries Limited (2 supra) would be of no assistance to the ,' petitioners as in those cases there was no C)rclinance or lcgislative ...; snactment pertaining to the State VAT Acts prior to introduction Of GST. 59 Elaboraling further Mr. B.S.Prasad submits that tl're Ordinance was promulgamated by the Governor of Telangana on I I I I i j

{u 17.0().20 l7 '"vhereby the time limit for assessmenls and revisions u as extcnded tiom four years to six years beforc annuLment of VAT Act. The Ordinance became arr Act i.e. the Second Amendment Act on 02.12.2017. Prior to that, the Ordinalce was approved by the legislative assembly of the State of Telangana lr,ithin six months from the date of the Ordinance. Referring to Article 2 13 (2) of the Constitution of India, 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 legislative assembly or rejected by the legislative assembly when placed before it within the stipulated time. Insofar the present case is concerned, the Ordinance \ fas placed before the legislative 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, the Ordinance issued and the subsequent legislative Act for prolonging the limitation made such extension of lirnitation valid. Therefore, the proceedings initiated under the VAl' Act in respect ol the pctitioners are valid, being within limitation. Insofar dccision of the Ke rala High Court in Baiju AA (1O supraf is concr:rned, the same would not be applicable to the facts of the I II I

l9 prescnt casc inasmllch as amcndrnent to tire Iicllila VIYI' Act u ris made long aftcr annulment of thc I(erala VAT Act. Insofar tlre ' ,.'1. present casc is concerned, the Ordinancc \\-as l)romlrlgirted 1;r-ior to 01.O7.2017 rvhen the VAT Act rvas stiil in forcc. 60 Mr. Prasad, learned Advocate General, asserts that Telangana State was competent to promulgate the Ordinance on 17.06.2017 and thereafter to pass the Second Amendment Act on 02.12.2017 in respect of goods not covered by amended trntry 54 . of List II. Power and competence of the State in this regard is : traceable to Article 246 of the Constitution read with Section 19 o[ .. ;, the Constitution Amendment Act; the savings provision in Section ;ln 174 of thc TGST Act; Article 246A ol the Constitution, :rncl Sections 8 and 8A of the Telangana General Clauses Act, 189 I 6l Mr. Prasad submits that State is only securing and protecting the revenue due to it by eniarging the duration by which the dealers can be assessed etc., but not imposing any ne\ / tax or levy. Legislation being a sovereign function of the State , thus, the Second Amendment Act cannot be questioned as bcing without competence. I I 62 State has the power to enforce the Second Amendment Act with retrospective effect. State has the power to even take au'a1'

5{) vcsted rights of the assessees i.e. even where assessmenl,s become . i.i;; :. barred b-v time under the pre-amended provision. State can ... ,r: j enlarge tl-rc limitation even for such time barred assessments and take arvav vested rights. Looked at from this perspective, the Second Amcndment Act cannot be said to be arbitrary, not to spcak of being manifestly arbitrary. 63 Provisions for enlarging time limitation on assessments etc., are only procedural aspects of levy and assessment of tax. These are not substantive provisions. Assessing Officers are competent to adjudicate on limitation since it is a mixed question of fact and law. ,, i, 64 Refcrring to Hindalco Industries Limited (3 supral, he submits that decision of the Kerala High Court, as expressed in the said case , is distinguishable. In the said decision, Kerala High CoLrrt did not deal with the effect of Section 19 of the Constitution Amendment Act and the savings provision under the State GST Act. As a matter of fact, State of Kerala had enacted the impugncd lau, after the permissible window period o: one year zrllon ed under Section 19 of the Constitution AmenCment Act. I-ikcu,isc, Mr.Prasad submits that decision of the Gujarat High II i I I

! : I II I I I : It { I . 5l Cor:rt in Reliance Industries Limited (2 supra) u,ould also hrrvr: aggrieved person cannot claim any vested right in procedure; that he should be governed by the old provision relating to the pcriod of limitation. Procedural law is retrospective, meaning thereb-r,, that it may apply even to acts or transactions under the repealcd Act. Time and again it has been held and clarified by the Supreme Court that every litigant has a vested right in substantive law but no such right exists in procedural law. According to Mr. Prasad, ., ii,law of limitation is generally regarded as procedural and its object L Er"is not to create any right but to prescribe periods within which 1egal proceedings be instituted for enforcement of rights which exists under the substantive law. Statutes of limitation are retrospective insofar those apply to all legal proceedings brought after their opcration for enforcing cause of action accrued earlier, 1r l2o1l) 6 scc 739

52 but thcl,are prospcctive in thc sense that they neither have the effect of rcviving the right of action nor do the1, l-rave the effect of extinguishing a right of action subsisting on that day 66 Learned Advocate General has also placecl reliance on a Supremt' Court <iccision in Fuerst Day Lawson Lirnited Vs. Jindal Exports Limitedl2 in support of the proposition that when there is an Ordinance r,r.hich is followed by an Act on the same .,' il subject matter, tl'rc Act will come into force in continual-ion of the Ordinance. In that casc, a gaz,eLLe notilication was issued on 22.04.1996 which appointed 22rxt day of August, 1996 as the date on which the Act in question would come into force. The said gazette uotihcation 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 r.r'as held that while the Act came into force on 22.08.1996, for all practical and Iegal purposes, it would be deemed to have been effective from 25.0l.1996, when the ': .' Ordinance was promulgated, particularly, when the provisions of " the Ordinance and the Act are similar there being nothing in the Act so as to make the Ordinance ineffective. The A,:t being a continuation of the Ordinance, would be deemed to have been 1' (2OO 1) 6 SCC 356 the legislature capriciously, irrationally and / or without adequate determining principle. He submits that wide latitude is allowed to the legislature in enacting a law. The freedom to experiment must be conceded to the legislature, particularly in economic laws. If problems emerge in the working of laws ald which require legislative intervention, the Court cannot be oblivious of the power of the legislature to respond by stepping in with necessary amendments. Since the 1aw, 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 (2O211 5 SCC 1

5{ wider latitude is given to the law makers, which is based on sound principte. Mr. Prasad asserts that even a vested right cal fe thb '.ft subjccl matter of retrospective law. No doubt, such a law must .ri pass master Articles 14, 19, 21 and 3O0A of the Constjtution of India. Therefore, the issuc really boils down to impugncd enactment is manifestil, arbitrary or not. If it is not, question of interlerence by the Court would not adse. 68 Learned Advocate General has referred to and relied upon the dccision ol the [ierala High Court in Sheen Golden Jewels (India) Pvt. Limited (7 supra) in great detail. 69 Mr. Prasad has also referred to an article titled 'Tran-sitional ' i: ii Prouisions In Commercial Legislations: An AnalAsfs' lry Priyal Parikh according to which the view taken by a majoritSr of Courts is that the revenue authorities retain the power to lery appropriate taxes under 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 that the State has not addressed the followir.g crucial whether the aspccts raised by the petitioners: i. Effect of amendment of Entry 54 by Sect-ion Constitution Ame ndment Act, 17 o1 thc .i I I I I

ii. Elfect of repeal of VAT Act for all other goods except the goods mentioned in the amended Entry 54 of List II as per Section 174 of the TGST Act, iii. Competence of the State as on 02.12.2017 to pass the Second Amendment Act, given the requirements of the present legislative competence as on that date; iv. Requirement of simultaneous lery by Parliament and State Legislature for legislative compctence under Article 246A, v. Objective and effect of Section 19 of the Constitution Amendment Act, vi. State did not at all make any endeavour to show any distinguishing feature in the judgment rendered by the Guj arat High Court in Reliance Industries Limited (2 supra) and why the same should not be appliecl to the present case. 71 Mr. Ravi contends that it is not the stand of the petitioners that the State has no competence whatsoever to promulgate the Ordinance or to enact the Second Amendment Act. State does have the power and competence in respect of the goods specifically 'l mentioned in the amended trntry 54 but not goods in general. It ,.:f is the contention of the petitioners that other than the goods mentioned in amended trntry 54, the State does not possess legislative competence. This crucial aspect was not countered by the State. I 72 Mr. Ravi submits that it is not the argument of the petitioners that the Ordinance or the Second Amendment Act are manifestly arbitrary or that those cannot be given retrospective effect. Thercfore, the argllment advanced by the learned Advocate

5(l (ieneral based on the principles of manifest arbitra:iness or retrospcctivity are not at all germane to adjr-rdicate on the issues raiscd by the petitioners. 7 3 Besides reiterating reliance on Reliance Industries Limited (2 supraf and Hindalco Industries Limited (3 supra), Mr.Ravi has also pressed into service a decision of the Aliahabad High Court in Jain Distillery Private Limited (4 supra). 74 lnsofar extension of time limit in tax matters is concerned, Mr.Ravi submits that time limits are a fetter on the juri iction of the departmental authorities. Enlargement of time under the Second Amendment Act in extending the limitation period amounts to conferring juri iction on departmental aur-horities that did not exist earlier. Therefore, such an amendment is not merel-v for securing old liabilities but impacts the rights of asscssees, t.hus being a fresh iegislation which is devoid of legislative competence. 75 Insofar reliance placed by learned Advocate General in Tirumalai Chemicals Limited (lL supraf it is submitted that the said decision is of no application to the present batch of cases. He submits that the question for determination in that case was n,hether the limitation to hle appeal against order for viol:ition of I I

,s7 provisions of Foreign Exchange Regulation Act, 1973 (FERA) l: 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) rclied upon by the ,;. learned Advocate General, Mr. Ravi submits that in the present ar. ' batch of cases petitioners are primarily concerned '.r,ith the validity of the Second Amendment Act and not the Ordinance. Even if it is assumed that the State had the competence to promulgate the Ordinance in June, 2077 before onset of GST with effect from O1.O7.2017, by the time the Second Amendment Act was passed, the State had lost its competence for legislating on goods in general, except for petroleum products and liquor for human consumption as mentioned in the amended Entry 54 of List II. . Hos.ever, he submits that though the Ordinalce has not been specifically challenged, nonetheless, it is clear that on and lrom 16.09.2016 when the Constitution Amendment Act came into sr-liitainc(l atlt:r I fr.09.2O16. Again il this judgment qr-restion of lt'gis1:rtir'i'COn]l)CtCnc-CoftheStzrtetopromu1gatean()rdinancc 5lr tbrce, the Ordinancc could not have been promulgated. Thus, bol h t he Orclinance and the Second Amendment Act cannot be follor.l,ed by an Act on the same subject matter was not in issue. He submits that an Ordinance as well as an Act are twc, pieces of legislation. Legislative competence of each has to be separately determined in the light of the Constitution and the point of time r,r'hen those wcre enacted. lnsofar 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, while there can be no dispute to the proposition that a wider latitude should be allou.ecl to the legislature while legislating economic laws, it is also equally clear that while making such law, the Legisiature or the Parliament cannot transgress the constitutional limits. In the instant case, the challenge to the Second Amendment Act is pr.rrely on the ground of legislative competence; rather lack of legislative competence. Petilioners are not queslioning the legislativc wi om in extending the limitation for making irssessments, reassessments, revisions etc-, from four years to six -vt:ars, but have questioned the Second Amendment Act on the 59 ground that the State did not have the legislative competence to enact the same. 77 Insofar Sheen Golden Jewels (India) Pvt. Limited (7 supral 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. [n Sheen Golden Jewels (India) Pvt. Limited (7 supra) pctitioners had challenged validity of Section 174 of the Kerala Goods and Services Tax Act, 2O17 which is pari mateia to Section L74 ctf thLe 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 174 ol the TGST Act only .,.. supports what is being contended by the petitioners. 7a The article, 'Transitional Prouisions in Commercial Legislation: An Analysis'follows the same logic given by the Kerala High Court in Sheen Golden Jewels (India) Pvt. Limited (7 supra). That apart, the article also relied upon the decision of the Gauhati High Court in Lakshminarayan Sahu Vs. Union of Indiat+ which dealt with validity of show cause noticcs for service tax after Section I 14 2018 SCC Online Gau 1457

50 174 of thc State GST Act was brought in. Mr. Ravi submits that accorcling to the aforesaid article, Section 19 of the Constitution Amendment Act has elements of both transitional as well as savings clause. However, he contends that Section 19 of the Constitution Amendment Act oniy suspends invalidity of the inconsistent legisiation for a period of one year or tiil the inconsistent legislations are amended or repealed. He asserts that Section 19 is neither a source of power nor a savings provision. It is only a transitionaI provision. 79 Mr.S. R.R.Viswanath, learned counsel for some of the petitioners also made submissions replying to the s rguments advanced bv the learned Advocate General. While adm:.tting that learned Advocate General was only partly correct in submitting that time limitations are procedural and not substantive, he, hou,ever, submits that in tax jurisprudence time limitations prescribed for making assessments, reassessments, revisions etc are juri ictional in nature and are thus fetters on the taxing ar-rthorities. In this connection, he has placed relirLnce on a dc'cision of the Supreme Court in S.S.Gadgil Vs. ITOts, Referring to Tirumalai Chemicals Limited (11 supra) relied upon by the i'l I I , ,l J .) ts 53 ITR 231 I

6t rlearned Advocate General, he submits that in the said case Supreme Court was dealing with the limitation prescribed for hling appeals, which is of entirely different nature. B0 Mr. Viswanath submits that two dates are extremely crucial. Firstly, 16.09.2016 when the Constitution Amendment Act came into force. Secondly, 27.O5.2OI7 when the TGST Act was enacted. Thc Ordinance as well as the Second Amcndment Act were made -. subsequent to the enactment of thc TGST Act. Therefore, learned ,-,'Advocate General is not right in saying that the Ordinance was : promulgated prior to coming into force of thc TGST Act. Thus, he would submit that neither the Governor nor the State Lcgislature had legislative competence to promulgate the Ordinancc or to make thc Second Amendment Act after 16.09.2016 and also after 27.05.2017. 81 Referring to Section 19 of the Constitution Amendment Act, :li Mr. Viswanath submits that the window provided by Section 19 'o-r:, was completely exhausted on 27.O5.2OI7 when the TGST Act was ,i, Sj enacted and Section 174 thereof partially repealed the VAT Act. There is no merit in the argument of the learned Advocate Ceneral that Section 19 of the Constitution Amendment Act could bc invoked even after 27.05.2017 and that the Ordinance ernd thc i

(rl Second Amendment Act owe their genesis to Sectirtn 19. He iurthcr submits that neither the Ordinernce nor the Second Amendment Act can be traced to Article 246A of the Constitution. _rl ., 82 Insolerr decision of the Kerala High Court in Sheen Golden : : 'i:' l' Jewels (Indial Pvt. Limited (7 supra) is concerned, Ire submits that in the said case the challenge was made to Section 174 of th.e Kerala Goods and Services Tax Act, 2017 which is pai matena to Section 174 of the TGST Act. Petitioners herein are not challcngir-rg valiclity of Section 174 of the TGST Act. He. thereforc, submits that there is no merit in the arguments advanced by the learned Advocate General, 83 Submissions made by learned counsel for the pa"rties have received thc duc consideration of the Court. ,,i 84 Wc shall first deal with the issue relating to Iegislative competence. Heading of Article 246 of th.e Constitution of India is subject matter of laws made by Parliament and by the k'gislatures of States. Clause (I) says that notwithstanding anything in clauscs (2) and (3), Parliament has exclusive power to rnake laws '*'ith respcct to any of the matters enumerated in Lisr I (Union List) of the VII Scheduie to the Constitution of India. As per Clause (2), notwithstanding anything in Clausc (3), t,arliament I I I

6-1 and subject to Clause (l), the Legislature of any State also have povr.'cr to make larvs u,ith respect to any of the matters enumerated in List III (Concurrent List) in the VII Schedule. In terms of Clause (3), subject to Clauses (1) and (2) the Legislature of an1. State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II (State List) in thc VII Schedule. Clause (4) clarifies that Parliament has power to make laws with respect to any matter for any part of the territory of India not included in any State notwithstanding that such matter is a matter enumerated in the State List. B5 the Constitution of India. The Lists in the VII Schedule defines and limit the respective competence of the Union and the States. The various entries in the three lists of the VII Schedule are not sources of legislative power. These are legislative heads demarcating the field of legislation; of course, being the lield of legislation, the entries should be given the widest possible amplitude. 86 Prior to the Constitution Amendment Act i.c., prior to 16.09.2016, Entry 54 of List II was as follo',r,s: Thus, the power to make laws either by the Parliament or by State Legislatures is traceable to Article 246 of the I I I

8r,.1 (;.1 "54: T axes on the sale or purchase of goods other thant neuspLtpers, subject to the prouisions of entry 92 A of List 1". It vr,as on ttre strength of Entry 54 of List II as it then existed, that the VAT Act was enacted 87 Aftc'r the Constitution Amendmcnt Act came into force with effect from 16.09.2016, Entry' 54 of List ll now reads as h>llows:

"

()5 alcoholic iiquor for human consumption as mentioned in thc substituted Entry 54 of List II. Therefore, State Legislature of Telangana did not have the competence post 16.09.2016 to legislate the Second Amendment Act which could be traccable to Article 246 read with Entry 54 of List II of the VII Schedulc to the ,Constitution. The Constitution Amendment Act also inserted a new, errticle ediately alter Article 246 with. effect from 16.09.2O16. As per new Article 246-A, it providcs for special provision r,r,ith respect to goods and services tax. Article 246 A is extracted hereunder: "246A. Special prouision uith respect to goods and seruices tax: (1) NotLuithstanding angthing contained in Articles 246 arvl 254, Parliament, and, subject to clause (2), the l-egislature of euery State, ltaue pouter to make IaLUS tDith respect to goods and serutces tax imposed bg the Union or bA such State. (2) Parliamen.t has exclusiue power to make latus rtttlt respect to goods and seruices tax uhere the supptA of goods, or of seruices, or both takes place in the course of inter-State trade or commerce- Dxplanation---The prouisions of this article, shall, ln respect of goods and serutces tax rekffed to in clause (5) of Arttcle 279A, take effect from the date recomntended by the Goods and Seruices Tax Counctl.' '. 91 Clause (l) ol Article 246-4 starts witl:. a non-obsfonfe clause. It says that notwithstanding anything contained in Article 246 (distribution of legislative pon ers) and Article 254 (dealing '"vith I

66 inconsistenc,y, betr,r,ecn larvs made by Parliament and lrlnt,s made by Legislatures of State), Parliament and subject to clause (2), the Legislature of every State have power to make laws with respect to goods and services ta.x (GST) imposed by the Union ol by such State. As per clause (2) Parliament has exclusive power to lau,s wlth respect to GST where the supply of goods or of se or both takes place in the course of inter-State trade or commerce. The Explanation clari[ics that provisions of Article 246A in respect of GST shail take effect from the date recommended by the GST Council in terms of Clause (5) of Article 279-A. 92 Thus what Arlicle 246A provides is that both Parliarnent and the Legislature of every State have power to make laws with respect to GST imposed by the Union or by such State exceptin rnake n ices the case of GST where the supply of goods or of services or both takes place in the course of inter-State trade or comnrerce in which case Parliament has the exclusive competence. Of course, such enactment will take effect from the date of recommendation by the GST Council. 93 Article 366 of thc Constitution of India dclines various expressions which finds place in the Constitution. Clattsc (12) : I 1 1 I I

67 , dellnes "goods" to include all materials, commodities and articles. Clause (12A) which was inserted by the Constitution Amendment Act with effect from 16.09.2016 dchnes "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 lor Footsteps India (i) Firstlg, Article 2464 defines the source of pouter as ute as the jleld of legtslation (LL[th respect to goods and serutces tctx) obuiattng the need to trauel to the Seuenth Schedu[e; (ii) Secondlll, tlte proutsions of Article 246A are auatlable both to Parliament and the State Legislatures, saue and except for the exchtsiue power of Parlioment to enact on inter-State trode or ammerce; and (tii) Thirdly, Arlicle 246A embodies ' tlrc constitutiotnl pinciple of stmultaneous leug as distinct frorn the pinciple of concurrence. Concurrence, which operated uithin the fotd of the Concurrent List, uas regulated by Arlicle 254". 95 Thus, according to the Supreme Court, Article 2464 dcfincs the source of power as ',r,ell as the fie1d of legislation '"vith respect . , . analysis before the Supreme Courl in VKC 1, frivate Limited (5 supra), Supremc Court has . . l? ''1 "

(r9 97 In Baiju A.A. (10 supral the challenge before a single bench of the [(erala High Court was to the legality of the notices and assessment orders issued in connection r,l,ith the assessments under the Kerala Value Added Tax Act, 20O3 for the assessment a 'years 2O7O-2O11 and 2Ol1-2O12. The challenge was made on the ground that the concerned authorities did not have the uri iction to issue the notices and assessment orders since the amendments introduced to Section 2 5 ( 1 ) of the Kerala Value Added Tax Act, 2003 through the Iierala Finance Acts of 2Ol7 and ,..1 '2018 notified on 19.06.2017 and 31.03.2018 respectiveiy did not contemplate a retrospective operation of the amended provisions. Section 25 of the Kerala Value Adcled Tax Act, 2003 deals rvith assessment of escaped turnovcr. In case of escaped turnover for any reason the assessing authoritt'could dctermine to tl're bcst ol his judgment the turnovcr rvhich had escaped assessment to tax t any ch comple Kerala time within.Iive years from the last date of the year to the return relates. As per the last proviso the period for tion of assessment was extended up to 31.03.2016. By the Finance Act of 2Ol7 , the period of limitation under Section 25 (1) for proceeding to cletermine escaped turnovcr u,as enhanced from hve years to six years and in thc last proviso the extcnsion .' lvas made up to 31.03.2O18. Thereafter, bv the Kerala Finance I i I

70 Ar:t, 20 18, in the last proviso, the extension u,as made up to 31 .03.20 19 98 One of the questions framed by Lhe Kerala High Court was r.r,hether after the Constitution Amendment Act and repeai of the Kerirla Value Added Tax Acl on 22.06.2017, tlne State Legislature retained any residual power of legislation so as to a.:nend the provisions of Section 25 (1) through the Kcrala l.'inance ./\ct, 20 18. After due consideration Kerala High Court held as follou.s

7l legislate on the subject of taxes on salc or purchasc of goods, cxcept to the limited extent.etained under the Constitution. The porvcr to alnend a statute bcing a facet of the legislative porver itself, the State l-cgislature could not have exercised a polvcr to amend thc KVAT Act, savc to the extent permitted, whcn it did not retain irn_v residual right to furthcr legislate on the subject of taxes on sale or purchase of goods. 99 According to the Kerala High Court, after the Constitution Amendment Act, the State Legislatures stood denuded of their power to legislate in respect of taxes on sale or purchase of goods covered under Entry 54 of List tI of the VII Schedule; rather they were conferred with legislative powcrs to be exercised simultaneousiy with the Parliament in respect of taxes on supply :, While the nc',r, legislative por.r,er could stify the inclusion of a savings clause in the new legislatior-r of goods or services or both. etc., un .! in respect of the new levy of tax to save accrued rights r der the erstwhile enactment, the truncation of Entry 54 of List II automatically denuded the State Legislatures of the power to further legislate on the subject of taxes on sale or purchase of goods, except to the limited extent retained under the Constitution. It has been held that the power to amend a statute 'being a facet of the legislative power itself, the State Legislature i, could not have exercised a power to amend the I(erala Value ) Added Tax Act, 2003 except to the extent permissible r.r,hen it did not retain any residual right to further legislate on the subject of ,::' .taxes on sale or purchase of goods.

71 100 An identicai issue came up befbre another sirLgle bench of tl.re Kerala High Court in HINDALCO INDUSTRIES LIMITED (3 ,.i supra). Foilowing the same line of reasoning adopted by th9 previous bench in BAIJU A.A. (1O supra) it has been freld that after the Constitution Amendment Act, State Legislatures stood dcnuded of their power to legislate in respect of taxes cn sale or purchase of goods that was covered under Entry 54 of List II of the Vll Schedule; they have instead been conferred with legislative pourers to be exercised simultaneously with the Parlizrment in respect oi taxes on supply of goods or services or both. It has been held as follows: iII It,t { I I I I I I l , ............After the CAA 2016, the State Legislotures stood denuded of their power to legislate it respect of taxes on sale or purchase of goods, thnt uas couered under EntrA 54 of List I of the Seuenth Sctredule to the Constttution, antd theg were itl^stead conferred ulith legislatiue pou)ers, to be exercised simultaneously ustth the Parliament, in respect of taxes on xtpptg of goods or seruices or botlt While the neu legislatiue power could justifg the inclusron of a sauings clause in the neLU legislcttion enacted tn respect of the neu leug of tax, to saue dccnled iethts, pr[uileges, immurittes, etc., under the erstwhilcz enectment, the de[etiort of Entry 54 of Lbt A automatically denuded the Stote Legislatures of the pouer to further tegislate on the subject of ttxes ort sale or purchase of goods, except to the limite'd extent retonrcd under the Constttution. Ttre pouter to am.end a stahtte being a facet oJ the legislatiue power itse$ the State Legislature could rrot l,aue exercised o pouer to a m.end the KVAT Act, soue to the exlent pennitted, uthen it did not retatn any residual right to fur.'her legislate on the subject of taxes on sale or purchase of goods". I I

73 101 A division bench of the Allahabacl F{igh Courr in M/s. ir Pankaj Advertising Vs. State of U.P16 was examining ch:rller-rge . to the legislative competence to the imposition, collection and realization of advertisement tax under the U.P. Municipalilies Act, 1916 on the ground that '*,hen there is no provision to imposc S1-1ch tax there can be no porver to frame an1' b1' las-s in th:rt gard. The power to levy advertisement tax \\.as traceable to Entry 55 of List II. Allahabad High Court noted that the ;.. Constitution Amendment Act came into effect from 16.09.2O i6. U.P. Goods and Services Tax Act, 2O17 came into operation lr,ith effect from Ol.O7.2Ol7. The by-laws by which the municipalitics intended to levy and collect taxes on advertisement were framed on 12.01.2O17 but published on 19.08.2017 i.e., after 01,.O7.2017 when the U.P.Goods and Services Tax Act, 2077 came into effect. ahabad H dment context that Allahabad High Court held that after omission of Entry 55 of List II of the VII Schedule to the Constitution of India by the Constitution Amendment Act with effect from 16.09.2016, even the State Legislature did not have the lcgisleitive compe tence igh Court also noted that byl virtue of thc Constilution Act, Entry 55 of List II u'as omittcd. It ri'as in that to ler,y or collect taxes on advertisement rvhich rvas carlier '6 (zo2o) tl Gstn z:5 (eI) l' I

11 available under Entry 55. Further, the bench notec that the power to lax earlier vested with the municipalities und,:r Section 128 (2) (VII) of the U.P. Municipalities Act, 1916. Having been on-ritted bv virtue of Section 173 of the U.P.Goods ancl Services Tax Act, 2Ol7 , tl,e municipalities did not have the statutory competence to levy, impose or collect adverlisement tax. Further clarifying the position Allahabad High Court heid tJlat the State,t Legisiature was invested with the power to,make laws in respect of taxes on advertisement vide Entry 55 of List II to the VII Schcdule but the said entry was deleted by the Constitution Amendment Act with effect from 16.09.2016. The Constitution Amendment Act vide Section 17 amended the VII Sche,lule and omitted Entry 55 of List II, thus deleting the power of the State to make laws in respect of taxes on advertisement. Therefore, when the State was denuded of the power to make Iaws in rt:spect of taxes on advertisement, obviously the municipalities were also divcsted of the porx,er to impose any tax on advertisement. lO2 This line of reasoning has also been followed by a later division bench of the Allahabad High Court in Jain Distillery Private Limited (4 supral. In this case, the Allahabrrd High Court examined the position as to the competence of the I I I I I

75 Parliament and State Legislatures to cnact lau,s to imposc duties on excise and to levy tax on sale of alcoholic liquor not lor human consumption post the Constitution Amendment Act. It u,as 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 la.,r.s onl1,. Services Tax Act, 2O17 reads as follows: " 174. (1) Saue as othenLise prouided [tL this Ac1 on artd .fronr the date of commencement of this Act: (rl The Uttar Pradesh Value Added Tax Ac\ 2008, except itr respect of goods included in Dntry 54 of the State List of t.he. Se-uent.lr Schedule to the Constitution, ,, According to the Allahabad High Court this intent h:rs becrr 1; expressed through Section 174 (l) (i) ol the U.P.(ioocis anrl : Scrvices Tax Act, 2O17. Section 174 lll (i) ot thc U.P.(ioocls ancl are herebg repealed. " . lO2.l It was in that context Allahabad High Court hclcl :, ,i{;, 25 follow,s: :. "

'7 (t corl-surrp,ior1". Herrce, in anA cese, o.fter the enachnent of llrc UPOST Act, 2017 and in absence of anA amenLlnrent to Section 174 (1) (i) af tlnt Act, tllere nettlrcr suruiues nor eists cu'Ly del,zgated pt>u,er ruith the State GouernmetTt, to issue th,e impugned Nolification, to impose UPVAT on ENA.

77 the ground that Section 84 A was manifestly arbitran and un reasonable and, therefore, violative of Article 14 o[ the Constitution of India. In the present proceeding, learned counsel :for the petitioners had made it very clear that their challenge to the Second Amendment Act is not on the ground of arbitrarincss or manifest arbitrariness; it is on the ground of lack of legislative competence. Section 84 A of the Gujarat Value Added Ta-x Act, 2003 is extracted as under: "84A. Exclusion of peiod in some cases.-/.ll NotwitLlstenditlq anAthing contained in this Act, an issue on which the A1>pellate Authot'itA or the Appellate Tlibunal or the High Courl has giuen its cieosion ruhich i-s prejudiciql to the intelest of reuenue in some ottrcr proceedings and an appeal to tlTe Appellate Tibunal or the High Court or the Supretne Coufl against such decision of the appellate outhoitA or the AppeLlate Tibunal or the Htgh Court ts pending, the peiod spent between the dote of tle decisiott of the appellate authoitA and thqt oj the Appellote Tibunql or the dale of deciston of the Appellate Tibunal and that of the High Coutl or the date of the decision of the Htgh Couft and that ol the Supreme Court shall be excluded in computing the peiod refeffed to in section 34 or section 35. (2) Notwithstanding anAthing contained in tlus Act, tf enu decision or order under section 73 or section 75 inuotues an rssue on u.,hi./r the Reuision Authoitg or appelLate authoitA or the Htgh Courl has beerr giuen its decision uhich i.s preludicial to the interest of reuenue in some other proceedings and an appeal to the High Coutt or the Supreme Court alloitlst such dedsion of the Appellate Iiburutl or the High Court is pending, tlte peiod spent betueen the date of the decision of the Appetlate TiburLal and the ddte of the decision of tle High Court or the date of the decision of the High Coun and the ddte of the dectsion of the Supreme Court shell be excluded in &mputing the peiod of limtlation rekrred to in section 73 or Section 75". 1O4 Gujarat High Court an alyzed the provisions of Article 246-A of the Constitution of India and the change in Entry 54 of List II, post the Constitution Amendment Act. It may be mentioned that Section 84 A came to be added to the Gujarat

78 .;* Value Added Tax Act, 2O03 by virtue of the Gujarat Value Added, Tax (Amr:ndment) Act, 2O18 enacted on O3.O4.2O ta givingi retrospective operation lrom 01.O4.2006. Section 84 A provided for exclusion of the period spent between the date of thr: decision of the Appellate Tribunal and that of the High Court as v,ell as the Supreme Court in computing the period of limitation referred to in Section 75 of the said Act. Therefore, one of the questic,ns which feli for consideration was whether Section 84 A of thr: Gujarat- . $'j Value Added Tax Act, 2OO3 was ultra uires and beyond the: - 'i legislative competence of the State under Entry 54 of the List II of , .1"i thc V[[ Schedule. After due analysis Gujarat High Court held as follor,r,s "

79 uas to replace number of itdirect taxes be[ng leuied by tlt<, Union and the State Gouerntnents and to remoue the cascadirt.tl effect of taxes and prouide for a common natiotlal market for goods and senices. This is apparent from the staternenl of objects and reasons rekrced to bg tle Suprerne Court in llohit Mineral Put. Ltd. [2o18] 58 GSIR 1 (SC) : [2019] 2 SCC 599. 92. F\riher secttotl 18 to the Constttution Amendment Act prouides for compensation to the States for the loss of reue.rtue aising on account of the tnplementation of tltp. goods rutcl seruices tox for a peiod of fue years. Thus the entire scheme of the Constitution Amendment Act recognizes impositiott of onlg "goods and sentices tax" under article 246A of the ConslitLttiotL of India. The phrase the "goods and seruices tax" is delined under arlicle 366 (29A) to mean anA tax on supptg of goods or seruice or both except taxes on the supplg of alcoholic liquor for human consumption. Such "supply" cannot be fragmentecl itTto different con4)onents bU the State Legislature and cr-ssume poluer to impose independent tax on the sale of goods without reference to the Goods and Seruices Tax Council. Such interpretation uould be contrary to the entire scheme as uell as tlrc object and purpose of the Constitution Amendment Act. In fact the prouiston prouiding for conq)ensation to tlte States for rhe loss of reuenue due to the goods and seruices tcLx tuould also be ireleuant if the State Legislatures are independenllg empouered to enact sales tax/ ualue added tax tegislations bg taking recourse to arttcle 246A of the Constitution of India. 93. h't fact if the State Legislature has the power to enact tlte ualue added tax lau.ts under article 246A of tlrc Cot'tstitution of Indta as argued on behalf of the State, then Entry 54 of List II of the Seuenth Schedute to the Constitution tuhich was retatned to the ertent of six products tuhich are outside the GST regime wtll be rendered redundant. The uery fact that Entry 54 of List II of the Seuenth Schedule uas retained in so far as the six products are concerned indicates that the sales tax/ ualue added tax enactment is rtot penn{ssible under article 246A of tfLe Constitution of lruTia. The uociferous argument of the State that arlicle 246A of the Constitutton catl support the enactment or prouision under the VAT Act falls flat in the face of the eistence of Entry 54 of List II of the Se.uetltlt Schedule to the Constitutiort of India uhich suruiued the 101 Constttut ton A mend me nt Act'. : 1O5 We are in respectful agreement with the vieu's expre sse d by the single benches of the Kerala High Court in Baiju AA (10 supra), Hindalco Industries Limited (3 supraf , division

l,l0 bt:nchcs of Allaherbad High Court in M/s. Pankaj Advertising (16 supra), Jain Distillery Private Limited (4 supra) and the division bench of Gujarat High Court in Reliance Industries Limited (2 supra). Not only thc Second Amendment Act cannot 0,, ,.6ced $;.. Artit'le 24o of the Constitution read with Entry 54 of List ff of tfrE;14 '#i'I VII Schedule, the same cannot also be sustained as a stand alone legislation of the Statc under Article 246A of the Constitution in thc absence of simultaneous legislation by the Parliamen,. 1O(r Lct us now dcal ',vith Seclion 19 ol the Corrstitution Amendment Act, u.hich reads as under:

ttI ' commencement, whichever is earlier. 108 windorv or legislations existing immediately before commencement o[ the , Constitution Amendment Act for a period of one year or till such ' legislations are amended or repealed, whichever is earlier. The objective appears to be for a transition to the GST regime brought ' into force by the Constitution Amendment Act. A11 that Section i' 19 does is to provide a period so as to eliminate or remove all laws linconsistent with the GST regime within an outer limit of one year d. Section 19 does not and cannot be construed to eclipse the amendments carried out in Entry 54 of List II to the VII or confer legislative competence upon the State Legislatures for making amendments to the VAT Act in respect of ' goods other than the five petroleum products and alcohol for human consumption covered by the amended (substituted) Entry :- 54 of List II. 109 As already discussed above, consequence of amendment of Entry 54 of List II is denuding the State Legislature competent authority or until expiration of one year lrom such Thus, the purpose of this provision is to provide for a transition by suspending invalidity of inconsistent Schedu C I of the po'"ver to levy tax on sale of goods other than those as T

82 providccl in amended Entry 54; invalidation of State legislatio exrsting as on 16.O9.2016 lerying tax on sa-le of goods other those finding place in amended Entry 54. Section 19 doe save or postpones deprivation or denuding of legis s not lativr: VA'l' Act ri hich is inconsistcnt u.ith the GST regimc for a 1>eriod of one vcar or until the VAT Act is repealed or amended, rv;richever. .1 " is cariier. 'l'his would mean that the State couid continuo to levy..... :; ,.S tax under the VAT Act for thc s'indorv period oi one vear or- till the compctence of State Legislature for lerying tax on sale of goods other than those mentioned in amended (substituted) Entry 54 of List [1. Section 19 only allows operation and levy of tax under the VAT Act was amended or repealed to align it with the GST regime, whichever was earlier. This transitional provision does not enable the State Legislature to make amendments to the VAT Act in contravention of the amended Entry 54 of List Il' 1 10 At this stage' we may refer to Article 2432F of t}re Constitution. Part IXA dealing with municipalities was inserted in the Constitution by the Constitutton (Seventy-fourth Amen<lm Act, lgg2u,itheffectfromOl-06'1993'Articles243PtoArticlg';', 243 ZG comprises of Part IXA, ail dealing with municipalities' By the aforesaid provisions municipalities and mur-ricipal I

De Vclcrprnerrt Authoriq,- Act, 1976. It u,as in that context Supreme . ii: Courl cor-Lsidr:rcd the cluestion as to u,hether prc,\Tisions of the ,i Barrgirlorc Development Authority Acl, 7976. nrore parlicularly, 8{ 112 ln Bondu Ramaswamy (6 supraf , Supreme Court was considering challenge to acquisition of land for forrnation of Arkarvzrthi Layout on the outskirts of Bangalore ci[, by the Bangalorc Development Authority undcr the Bangalore th:rt of Section 15 dealing with the power of the :ruthority to draw up schemes for development of Bangaiore 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 continualce of any provision of law relating to municipalities in spite of such provision being inconsistent with the provisions of Part IXA of the Constitution for a specihed period of one year or until amended or repealed;i t'i u,hichever is earlier. It was held as foiiows: l! i I I'I I I i I I I I I I i i ,'t ., jl ril : jl I ! I i I 'Any statute or provision thereoi which is inconsistcnt r"ith 1ny constitutional provision wilt be struck down by courts. Conscquentl) ' if BDA Act c,r any provision of the BDA Act is found to bc inconsistent $'ith zLnl provision ;f' Part IXA of the Constitution, it will b(: struck down by .,,u.t" ^" violative of the Constitution. In rega-rd to any provision of 'my law relating to municipalities, Article 2432F suspends such invalidity or postpones ihe invatidity for a period of one year from 1 6'1993 to enable ih" aur,lpatant kgislaiurc to remove the inconsistency bJ arnreudinq or reoealins such law relating to municipatities tI) bring it iI1 cousonance u ith ii,'"'or"titi"." "r Part Ix'A;f the constitution " 1 I

85 As has been held by the Supreme Court, Article 243 suspends suchi invalidity or postpones the invalidity for a od of one year to enable the competent Legislature to remove ,: inconsistency by amending or repealing such law relating to municipalities to bring it in consonance with the provisions of Part IXA of thc Constitution. r14 On the abovc analysis lr,e have no hesitation in holcling that Section 19 of the Constilution Amendment Act cannot be understood or cannot be construed as a source of legislative respect of suspending 113 It is also not a saving pro\.1slon ln tive competence to amend the VAT Act. This aspect u,as into by the .Gujarat High Court in Reliance Industries ted (2 supra) wherein it has becn he Id as follorvs:

lJ(r la$,s Lo brirg thcm in harmony ivith the CA Act. C)thenvise, th(i States rnusl rcpeal tltem. And they lvere given one year for achicving thi:i. If thc Slar('s do neilher, those inconsistent acts stand repcaled.

87 tt7 Therefore, from the abor.c anah,sis \\,e can salcll. conclude that Section 19 ol the Constitution Amendment Act is 'not a source of power to enable the State Legislature to enact the ; ;i Second Amendment Act, which is ciearly inconsistent with the Constitution Amendment Act. have 118 We Amendment Act, more particularly Seclions 1 to 11 and 13 to 20, 'l 'came into force on and from 16.09.2O16. Thereafter Parliament enacted the CGST Act and other related enactments, most provisions of such enactments having come into force on and from O1.07.2017. State of Telangana also enacted the TGST Act. While majority of the sections came into force on 22.06.2017, 'Section 174 of the TGST Act which provides lor repeal and saving 'icame into force on and from O7.O7.2OL7. Section 174 of the TGST ct reads as under; , "174. Repeal And Sauing:- (1) Saue as otLenuise prouided in this Act, on and from the date of commencement of this Act, The Telangana Value Added Tax Act, 2OO5 (Act 5 of 2O05); except in respect of goods included in the Dntry 54 of the State List of the Seuenth Schedule to the Constttution, (ii) The Telangana Entertainments Tox Act, 1939 (Act X of 1939); (iit) The Telangana Tox on Entry of Motor Vehicles into Local Areas Act, 1996 (Act 26 of 1996); already noted that the Constitution 1- : (, I

t t (iu) The Telangana Tox on Dntry of Goods into Local Areas Act, 2OO1 (Act 39 of 2OO1); The Telartga na Tax on Lurties Act, 1987 (Act 24 af 1987); (2) The repeol of the said Acts and the amendment of th( Acts . j; spectJied tn section 173 (hereafter rekrred to os 'such ,i.;] cnnendrnent" or "amended Act", as the case mag be) t't the ,l- : extctlt nlentioned in sub-section (7) or section 773 shall not lui) 7'L1s Telangana Horse Racing and Betting Tctsc Regulations, 13SnF (Regulation XLN of 1358F); (uii) The T'elangana Rural Deuelopment Cess Act, 1996 (Act 11 of 1996); (hereafier referred to as the repealed Act:;) are Iterel;u repealed (a) reuiue angthing not in force or eisting at the time of such ctntendrnent or repeal; or (b) affect the preuious operation of the amended Acts or repealed Acts and orders or angthing dulg done or suffered thereunder; or (c) a.lfect ong ight, piuilege, obligation, or liabilitl4 acquired, accntcd or incun'ed under the amended Acts or repealed. Acts or orders under such repealed or amended. Acts: Prouided tlTat anA tax exemption granted as an incentiue ctgctirtst inuestment through a notification shall not continue as piuilege if the said notification is rescinded or or after the appoitted dag; or (d) a.ffect anA tax, surchnrge, penalty, fine, interest as are due or mag become due or ang forfeiture or punishment inctnred or irLJTicted in respect of ang offence or uiolation committed agoinst the prouisions of the amended Acts or repealed Acts; or (e) affect any inuestigotion, inquiry, ueification (incluclirtg scruting and oudit[ ossessment proceedings, adjudication and cLng other Legal proceedings or recouery of arrears or remedg in respect of any such tax, surcharge, penaltV, frne, interest, ight, piuilege, obligation, liability, forfeiture or punishment, as aforesaid , and ang such inuestigation, ittquiry, ueifica;.ion [irtcluditg sctutinA and audit), cssessrnent proceedir:.9s, odjrtdicati.ort end other legal proceedings or recouet! of arcears or rernedg may be instituted, cotltinued or enforced, and rtrtg I I

ll9 such tox, surcharge, penaltA, fine, interest, .forfeiture or punishment mag be leuied or imposed as tf these Acts had not been so amended or repealed; (f1 affect ang proceedings including that relating to ctrt ctppeal, reuiston, reuieu or reference, instituted before, on or afi.er the appointed day under the said amended Acts or repealed Acts and such proceedings shall be continued under the said amended Acts or repeoled Acts as if this Act had not come into force ctnd the said Acts had not been amended or repectled. (3) The mention of the partia. ar matters refered to in section 173 and sub-sectiorl (1) shall not be held to pre,Ttdice or a,ffect the generol opplication of section I, BA, 9 and 19 of the Telangana General Clauses Act, 1 891 (Act 1 oJ' 189 1 ) Luith regctrd to the effect of repeal". ' 119 Thus, as per Section 174 ( I ) (i) with effect from 07.O7.2017 except the VAT Act stood IIl included in Entry 54 of the State List in the Seventh Schedule. When we refer to Entry 54 of the State List i.e., List II it means :r.., the entry as it stood on O1.O7.2O17. We have already noticed that 1 -- '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 fucl and alcoholic liquor for human consumption; furthcr repealed in respect of goods clarifying that this would 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, : :terms of Section 174 (1) (i) of the TGST Act, the VAT Act stood : l

9{) r('pcaled with effcct liom 4t.o7.20t7 excepl in respect of the goods covered ,by the amende (e stablished) Entrv 54 of List II. 120 As a matter of fact, we may obse rve that the very presencc of Section 174 (1) (i) in the TGST Act buttresses the stand taken by the petitioners. 721 In Sheen Golden Jewels (Indiaf Pvt. Limited (7 supra) the question before the single bench of the Kelala High Court was ',vhether the State had the legislative compr:tence to enact Section 174 ol the Keraia Goods and Services Tax Act, 2O17. ancl save the past taxation events when Entry 54 List II stood :, : omitted permanently with effect from 16.09.2016. We may.. : mention that Section 174 of tLLe Kerala Goods and Senices Tax Act. 2017 rs pai ntateia to Section 174 of the TGST Act. The Court r,r,as called upon to examine constitutional validity of Section 174 of the Kerala Goods and Services Tax Act, '2017 on thc anvil of Section 19 of the Constitution Amendment Act. It was contended that State had no legislative power to over ride Section 19. I(erala High Court took the view that while Section 19 is a transitionai provision; the job of saving is done by Secti,rn 174- :-i Though Section 174 has repealed the Kerala Vaiue Added Tax Act,

9t 2003, the repeal has not affected the previous operation ol the i :repealed act. In other words, the repeal has not aflected anv ai'.rright, privilege, obligation or liability acquired, accrued or .incurred under the repealed act. In the above back drop, single bench of the Kerala High Court rejected the contention that the State lacked the competence to engraft Section 174 into the Kerala Goods and Services Tax Act, 2Ol7 and accordingly upheld constitutional validitv of Section 174 ).22 We see no conflict or contradiction between Section 19 of the Constitution Amendment Act and Section 174 ol thc TGST 'Act. While Section 19 has deferred invalidity of inconsistent ,legislations tili such time those are amended or repealed or for a period of one year whichever is earlier, Section 174 of the TGST t has repealed amongst other enactments the VAT Act u,ith ffect from O1.O7.2017 except in respect of goods covercd by the iubstituted Entry 54 of List II.' Thus Section 174 ot lirc 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 u,as denuded of its competence to legislale on GST : .i. afte r 16.09.20 16 and certainly after 01 .O7 .2017 . J l . : i.

92 123 Repeal of an enactment rvould mean thar such an enactmcnt is erased from the statute book; it lvould nc, longer be in existence. This aspect was gone into b5r the Gujarat }Jigh Court in Reliance Industries Limited (2 supraf . It has been held as follou s:

"

9l . MANU/SC/OO2O/ 1951 : AIR 1951 SC 128 rekrred to a passage from the Cratuford's book on Statutory Construction which reads as under: "[t is tuell-settled that if a statute giuing a spectal remedA is repealed uithout a sauing clause in fauour of pending suits all sLits must stop uhere the repeal fi.nds them. If fi.nal relief has not been granted before the repeal went into effect, it cannot be after, if a case is appealed, and pending the appeal the lau is changed, the appellate court must dispose of the cctse under the Laut in force tuhen its decision tuas rendered. The elfect of the repecLL is to obliterate the stalfie repealed as completely as if tt had neuer eisted, except for the purposes of those actions or suits tuhich utere commenced, prosecuted and concluded uthile it LUas on existing latu. Pending judicial proceedings based upon a statute cannot proceed afi.er its repeal. This t-ule holds true until the proceedings haue reached a final judgment in the court of last resort, for that courl, when it comes to arlnounce its decision, conforms it to the law then eisting, and mag therefore, reuerse a judgment u.;hich utas correct when pronounced in the subordinate tibunal from uhich tuhence the appeal tuas token, if it appears that pending the appeal a statute uhich u)as necessary to support the judgnrcnt of the lower court has been tuithdratun bg an absolute repeaL." (p.601) (emphasis supplied)

()-l ''23. lt is nou.t u.telt settled that such Repealing Act shall be constn-ted to haue not taken auaA the ctccrued right of a persoti.. In C.P.Singh's Pinciples of Statutory Interpretation, (iOth Edn.) 2OO6 at page 631, it ts stated: "Under the conlmon lau.t rule the consequences of repeal of a statute ere ueru drctstic. Except os to trotTsoctions pasf. and closed, a statute after lts repeal is as completelg oltliterat'zd as if it hcLd neuer been enacted. The elfect is to destrc'g ctll . inchoate rights ctrtd ctll causes of ctction th.tt DL.IA haue isen under the repealed stetute. Therefore, leauing aside fhe cases tuhere proceed tg1s uere comrnenced, prosecuted and brought to a jl.nality beJbre the repeol, no proceeding under the repealed statute can be con'tmenced or contitued aJter lhe repeal'."

95 any other enactment, then the repeal shall not effect an_t.thing done or any offence committed or an,v hne or penaltv incurred or any proceeding taken before commencement of the repealing Act; reviving anything not in force or existing at the time u'hen the al takes effect; or affect the previous operation of any enactment so repealed or anything duly done or suffered under any cnactment so repealcd; or affect an]. right, privilege, . obligation or liability acquircd, accrued or incurrcd under any enactment so rcpealed; or aflcct an1, fine, penaltll, forleiture etc, incurrcd in respect of any offence committed under any or affect any investigation, legal respect of any such right, privilege, enalty, forfeiture or punishment and enactment so r tion, liability, fine, p such investigation, legal proceeding or remedy may be . ted, continued or enforced and any such fine, penalty, forfeiture or punishment rnay be imposed as if the repealing Act had not been passed. 126 Section 8 of the Telangana General Clauses Act, 1891 is similar to Section 6 of the General Clauses Act, 1897. 27 Section B A of the Telangana General Clauses Act, 1891 says that where any act rcpeals any enactmcnt by u,irich the aled stitu i

96 cxpress onrlssi()n, insertion or st.rbstitution of anv malttcr thcr unless a different intention appears, the repeal shall not aflect continuance of any such amendment made bv the cnactment so repealed and in operation at the time ol such repeal. 128 Article 367 of the Constitutior-r of India speaks about the interpretation of the Constitution of Ir-rdi:r. Clause (l) of Article 367 is relevant. lt says that unless the context otherwise , r,.: requires, the General Clauses Act, 1497, subjec- to any adaptations and modifications that may be made therein under Article 372, shal1 apply for the interpretation of the Cc,nstitution as it applies for the interpretation of an Act of the Legislature. l2g Gujarat High Court in Reliance Industries Limited (2 supraf examined this aspect as well and held that General Clauses Act, la97 applies only for interpretalion of the Constitution but in respect of other matters, such as, savings in . the case of repeal etc which are unrelated to interpretation may,. ,...: not apply by virtue of Article 367- Section 6 of the General Clauses Act, 1897 or Sections B/BA oi the Telalgana General Clauses Act, 1891 would apply only to repeal of an enactment. A text of any previous cnacLment u,as amended b.z Constitution Amendment Act is not or cannot be ternred as an 97 nt. Therefore, beyond what is statecl in Clausc (l) of rticle 367 of thc Constitution, provisions of the General Clauscs ct, elther the Central Act or the State Act, rvould not appl1u 16 thg Constitution, including the Constitution Amendment Act since a Constitution Amendment Act is made bv the Parliament in exerclse of its sovereign powers under Articlc 368 of the Constitution. It has been hcld as follorvs:

99 the repealed act in respcct of those goods by virtue of thc Second ndment Act would not :irise. Though ., there theless '"ve may also ls no challengc to the Ordinance , examine the same since it is the contention of the State that the Ordinance u,as promulgate d during the window period and thc. subsequent Sccond , Amendment Act is given cffccl to from thc rlate of promulgztmation of the Ordinance, thereby making it a vzrlid piece of legislation. It was strongly argued bv learned Advocate Cleneral t when the Ordinance \4/as promulgated, State of Telangana the legislative competence to so promulgate the Ordinance Amendment Act which was made subsequently continuation of the lali. as promulgated by way ce it was given effect to from the date of promulgamation of the Ordinance. 133 To appreciate the above contention, we may note that the Constitution Amendment Act came into force on and from 76.O9.2016. Section 19 of the Constitution Amendment Act provided for a window period to the States to remove any nsistent enactments by way of arnendment or repcal or until rationo from such commencement whichcver rr,'as I t|0 earlicr. Telalgar-ra Ordinance No.2 of 2017 u'as promulgated the Govcmor of Telangana on 17 .06.2017 to further arnend the VAT Act. Though the Ordinance was prornulgated !rl't lr coming into force of the Constitution Amendment Act on 16.09.2016, it was so promulgated within the window period of o.r. y"r. ^i provided by Section 19 of the Constitution Amcndment Act. At this stage we may mention that following the Ccnstitution Arnendment Act, State of Telangana enactcd thc TGS1' Act with eflect lrom Ol.O7 .2017 . :. 134 Before we deal with the Telangana Ordinanr:e No.2 of. i 11' 2017 , u,e may note that power of the Governor to promulgate ordinance is traceable to Article 2 13 of the Constitution of India. lrrticle 2 l3 provides as follows '273. Pouer of Ggoerno" to pror ulgdtc Ordina^ces duting recess of Legisl.rture.-( 1 ) If at ang time, except when the Legi.slatiue Assemblll of a State is in session, or where there is a Legislatiue Council irt a State, except uLhen both l'louses of the Legislature cre in session, tlu Gouentor is : attsfed tllot circurnsfdnces eist which render lt necessory for him to take immedtate action, he may promulgate such Ordinances as th.e ctrcl,tmstances appear to him tc require: Provided that the Govemor shall not, without instructions frorn th,e President, prottutgate anA such Ordinance if* (a) a BilI containing the same p,"ouisions would uttd.er lhiri Conshtuhon haue required th.e previous sanction of the Presidertt Jor the introduction thereof into the legislature; or (b) he would. haue deemed it necessary to reserue a Bill <ontainiry tltc sctme prouisions for th.e consideration of the President; ar (c) an Act of the Legislq.ture of the State rr.ntaining tle sa ne prouisions ruould under this Constitutton haue been inualid unless, hauing been reserued for the consideration of the President, it hqd receiued the assent of the Prestdent. (2) An Otdinance promulgated under this drticle slrull ltaue tlle sarne force antd. effecl as an Act of tte legislature of the Srate @ssenfed to bA the Couer:tor, but every sucl.. OrdiLance- i I J II Ii I i I i i :

, 10t (a) shall be laiil before the t egislatitle AssemblA oJ t/r State, or LL'here tllere is a l,egislatiue Council in the State, belore both the Houses, aicl slvll cease to operate ot thc epiratton of sLr ueeks from the reassetnbllJ of tl'Le Leqislature, or {f before the expiration of that peiod a resolution disapprouinll it is pessed bV the Legislatiue AssembtV and agreed to by the Legislatiue Council, if artg, upon the passing of the resolutton or, as tlrc case mall be, on the resolut@n beitq agreed to bg the Council; and (b) mag be u.lithrlrawt at anll time by the Gouernor. Explanation--Whdre the Houses of tle Legislature of a State houing a Legislative Council are summoned to reassemble on differett dales, the peiod of six weeks shall be reckoned from the later of those dates for the purposes o,f lhis clause. (3) If and so .far cs an Ordinance under this article makes any proursiott ruhich uould not be ualid if enacted in an Act of tl'Le Legislature oJ the State assetted to by the Gouenor, it shalt be void: Prouided that, for the purposes of the provisions o/ this Consliliitiort relating to the efJect of of the Legistature of a State which is repugnattt to an Act oJ Parltament law uith respect to a matter enunterated in the a:oncunent List, an under this atticle in pursuance of tnstructtorts from the President s to be on Act of tlle Legislature of the State uhich has been reserued on of the President and assented to br1 lunr." use (1) provides that if the Govcrnor is satisfied when the Legislative Assembly of a State is not in session r where there is a .iigislative Council in a State, the same is not session, that circumstances exist which call for immediate action, he may promulgate such Ordinance. Clausc (2) clarifie s that an Ordinance so promulgated under Article 2 1 3 of the onstitution shall have the same force and effect as an Act of the slature of the State assented to by the Governor. Horvever, thc Lcgislature and six \\,eeks from the reas 3) says thzrt if an Ordinance makes any provision u,l-rich ri'oulcl not bc \,alid if I I i,il

enacted as an Act of the Legislature assented to by the Governor, t0l it shall l-.c void. 136 As noticed above, the Ordinance ll.as promtrlgated by. r.... the Govcrnor on 77.06.2017. As per preamble to the C)rdinan it is stated that Government of India had enacted the CGST ancl Government of Telangana had enacted the TGST Act. Bu ; 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 levy tax on alcoholic liquor for human consumption and on petroleum products. According to the Constitution Amendment Act, levy of tax on those petroleum products and alcoholic liquor for human consumption is within the competence of the State Legislature. It further s-ated th1-l ,,| repeal of the VAT Act except in respect ot,f", good" irrcluded in: ,xs r: : trntry 54 of List II of the VII Schedule by the TGST Act, rvhich ,It?; ;l, , ]'et to be brought into force, would not affect any inv,:stigationf ' inquiry, verihcation (including scrutiny and audit), a,rsessment. . , , l1i procecdings, adjudication and any other legal proceedings or recoverj, of arrears or remedy in respect of any such tax; surcharge, penalty, fine, interest, right, privilege, obligation, liabilit1,, lorfeiture or punishment and any such inve stigation etc., I

l, v been any l t03 or enforccd and an1, such tax, r imposed as if those Acts had not Such repcal would not also alfect proceedings including those relating to appeal, revision, review or reference instituted before, on or aftcr the appointed dav under the said amended Acts or repealed Acts and such aled trength Acts. en certain proceedings shall be continued under the amended Acts or Therefore, it was considered necesszlryto provisions of the VAT Act to overcome any tations ded certain tive revenue realization. Therefore, it u,as immediately arrd as the Legislature of Tclangana sion, therefore, the Governor, in cxercisc of pou'ers s not in ses conferred by Clause (1) of Article 213 of the Constitution promulgated Ordinance provisions of the VAT Act by which basically extended the years in respect of assessments, S tion. Since it was decided to give effect to uch decision the mlta to srx C. sary for us to go into the aspect as to rvas laid before the Asscmbly or not and ther it AS to whe d ceased to operate after sk seeks from l0{ reasselnllh,i ol the Legislature. It may also to labour on the aspect that the Seco published in the Tclangana Gazette on 02 to have come into force wittr effect from 1 r.t hr.n thc Ordinance was promulga competence cannot flow from an ea,rlier legislation, be it an '., ordinance or an enactment. Legislative competence must be traccable to the Constitution. Therefore, no reliance c placed on the Ordinance in support of the contention tha Sccond Amcndment Act had Orclinance since it was a continuatio into force from the date of promul Such a line of reasoning, in our considered challengcd in Court. 138 as could bc discerned the Amcndment Act which rs perfectly But that does not mean that limi not IlCCCSSrrry fo t 7.06.2O77 i.e l,he ted. This is because legislati tence f:om an be e derived had vrew, has no I That ap:rrt, the ostensible objective of the Or dinarce preamble. to s€Lve le: an,1 board could tation across the substancc. Therefore, it is immaterial that the Ordinance was_nbt I inr-cstig:rtior.r, assessment, recovery of dues, legal proceedillgs etc., pen<ling or1 thc date of coming into force of i the Cons,titution .-;'

I ended b1' of amendment to initiatc fresh proccedings, such 105 ceedings, which othenr.ise had becomc tirne wa fresh :I : amended by virtue of the Constitution Amendment A<:1. Wl-rilc 1 Arltcle 246A rrras inserted immediatclv after Articlc 2-+6, thc 139 ; effect from 76.09.2016 the Constitution rr'as ezrrlie ,l r Entry 54 of List II was substituted by thc nes' Dntrv 54, in i.l rocess denuding the St:rtes from making anv las' ('xcept on the p Amendment Act,-which can be construed to be a sunset clause, : provided for a windorv of one year to remove the lau.s inconsistent with the Amendment Act either by ',r.ay of amendment I f repeal. Theiwindow period was given to with Constitiition j -l or by way o .l c incbnsi'stenciesi not to prolong thc inconsistenr'ics. ,'ll of Telanganar did by promulgating thc :l remove the inconsistencics in the VA'l'Acl. the Ordinance, in fact, introducc<l ccrtain th Iat i ove I I [lirred, ii i , i I I t I I I sale , (pctrol), r,,:1, ,.t ,{,iJ- crude, hishl speed dicscl, motor spirit natura-l gas, aviation turbine fuel and irk--ol-roiic liquor lor ' 'i, ,,! : : :i consumption. Thus the States di.l not hirve thc fht-t.' ffiompet..r.e to l'#at'er lalv to lery VAT or such tax on anv goocls :?fa As mentioncrl

106 provision s extcnding llmitation to enable initiation of fres Constitution as well. Therefore. the Second Amendment Act ' t- 1' on 02.12.2017 though given retrospe ctive effect from 17.06. .l( cannot be sustained as the same is ,devoid of legis , ,rJ, competence. On rhis gr'ound itself, the Ordinance can be,said to have no i consequcnce. I l4O However, by the Second Amendment Ac lr parlicularly, by Section 7 thereof, the Ordinance was repe aln':rdv sl atcd .rbove, the Sccond Amendment Act cannot derive legislativc conrpetenct: from the Ordinance. 1t must derive legi slativc compctencc lrom the Constitution. Unfortunat,:ly, i: substitution of trntry 54 of List II, Statelwas.idenuded of t. con rpete n(:e traceablc to Article 246. As a stand aione,leg;i i it i annot dcrive lcgitimac)' traceable to l Article 2464 I 141 Needless to say, way back in 1964, Supreme ,lourt in A.Hajee Abdul Shukoor (1 supra) was categorical,in holding t, . ',vhile thc State Legislature is free to enact'laws iwhichlcould Li; retrospective operation, its competence to make: h; law for a c t. I such proceedings, such as, revisional proceedings'which are ccmplete.lj .i ::ct incr)nsisl('nl wilh the scheme of the Constitution Amendnr.", Afi! li i'11

t 07 \\'ou 1d however, depend on its present legislative past period I r and no on vocate se . lr'ould hallenge mad I c r.na.lmcnt woulh be in olrr'r;rl inn. it por"."""J at the period of time when .ti,: lied r upon by the learned decisions re cern€d,, we ihave already discussed why Ii {' ) t ally ri,e cable to the facts and grounds of bunch of r.l,rit petitions. may also look into the intention of the Fin Parliament in enacting the Constitution Amendment Act. This is because it uro us a clear idea as to why the Constitution ,l mendment brought about and why the Second mendment cannot be sLlStained being completely consisten OsuPra),' 1 C ve com S eme of the onstitution Amendment Act ts legislati petence. In Baiju A.A. Court held a follows: yet another aspect of the matter. It is trite that 20 Cou ju the constitutionality of a legislative enactment it should try,to sustain the validity of,the enacLment to the extent possible and:itrihould strike down the law only when it is impossible to . sustain it, State of Bihar v. Bihar Distillery - IMANU/SC/0354 /.L997 ; JT (i996) 10 SC 854i. At the same time, the Court must i proceed to determine the intention of the Parliament, not oiily from the lalgrage used in the statute but also from surounding circumstances and an understanding ol thc mischief that waslsought to be remedied by the statute. When one applies the said test to the events that took place after the CAA, 2016, iL cannot br.it be noticed that the very purpose of the CAA rvas to bring about a change in the system of indirect taxation in olrr I t43

t 0lt country through lhe introduction of a Goods And Service Ta<, and the phasing out of the mullitude of indirectitax levies, including value added taxcs, that were levied and collected by the Cent-e and thc States. Section 19 of the CAA 2O16, whic\ is the sunset :lause in the said enactment, envisaged the continuation of the erstwhile system of t .ation for a period of one year from the date of enactmenl of the CAA or till such time as the State Legislatures amended or repealed their respective VAT legislations, whi:hever w':rs earlier. When the State Legislature repealed the KVAI Act, ' while simultareously bringing into force the !new State GST Act, i with a savings clause of limited operation, it effectively ackrorvledged the absence of any power to legislate thereaJter on , the subject of tax on sa-le or purchase of goods, except in respect of * the limited commodities for which the said power was retained . under the Constitution- In respect of all other. commoditi€s, the lcgislative power oI the State was only in respect of taxes on supply of goods or services or both, a power that had to be exr:rcised simultareously rvith the Parliament and lnot ! unilaterally or cxclusively. Thus, al the Lime of repeal of , the .KVAT Ac -, and simultaneous enactment of the State GST Act with a savings clause cx:)rcssr:rl b1. thc Iierala High Court in Baiju A.A (1'C supra)., .,. l.itr't, i Intr:r-rtion oI Parli:rment in ushering in the GST regime through the, , . t(l therein, the san,ings clausc opcrated only to save rights, prir ileges, immunities, action taken ete under the erstwhile enactment as it stood at the time of its repeal, which includedi tJle anenciments broullht in through the Kerala Finance Act, 2017. lThere cou ld not have been arry further legislative exercise by the State legislat.ure in relation to the repealed KVAT Act. 144 We are in respectful Constitution Amendment Act arld enactment of the CGSI Act Vieu,ed thus the amcndments brought,l, in,olby Amendmer-rt Act, as discussed above, are wholly inconsistent wi ', 1r agreement $.ith the \'lCWS l, , l th<: Secon I ffi*i'd*fit**ffi il4{rc

I09 ugh consideration of all aspects of itation in holding that the Second tutional being devoid of legislative declared as such. Consequently, the ed andrArders passed under Section 32 (3) of the VAT .-. I hav'e:bden impugned inl the present batch of writ e sche GST Ac notices issu t which titions a 146 ere shall me of the 'Constitution Amendment Act rc:rcl u'ith the l I t ancl the TGST Act. 7 S n i re herebyiset aside and quashed. i ,i All the vrit petition s are accordingly allou,ed. Hon'eve r, be nb order as to costs. I . . 1': Miscellarleous petitions, if any, pending in all the w'rit shall stand c1osecl. I l i KasnNrks/P UJJAL BHI,IYAN, CJ SMT. JUSTICE P.MADHAVI DEVI Date:O5- 07-2022 ln Note: LR copy be ma,rked (By ordcr) p1n I I { I