M/S. S. K. Retail vs. The Deputy Commissioner (CT) And 3 Others

The Court m:rde the following: ORDER

THE HON'BLE THE CHIEF JUSTICE UJJAL BHUYAN THE HON'BLE MRS JUSTICE SUREPAILI NANDA ORDER: Fer ttte Hon'bte the Chief Justicc Ujjal Btu)gonl Heard Mr. B. Srinivas, learned counsel for the petitioner and Mr. K. Raji Reddy, learncd counsel lor the respondents.

.l i i ; i I I ;; I I i I I : HIGH COURT DATED:0810712022 ORDER W.P.No.21974 of 2022 ALLOWING THE WRIT PETITION WITHOUT COSTS r$1. STA 14- 24 SEP 2rl2 .4. e)o (r: \L l1 lI \ t c \ o

3 THE HON'BLE THE CHIEF JUSTICE UJJAL BHTIYAN AND THE HON'BLE SMT. JUSTICE P.MADHAVT DEVI WRIT PETITION Nos.7893, 9550. 16527. 16853. 16896. 16903 0F 2020, 494, 7 L28, 7054, 9622, 1()046, LL4t4, 17095, L7LO2 . t73t4.17988. 18258. 20744,21s42.2266L. 22940.23336. 23346.242a2- 2556L, 27294,27533,28797, 29743, 32L29, 3237 3, 32653 32697 and 34O54 OF 2O2L COMMON JUDGMENT & ORDER: (Per l{onble the Chief Justice Ujjat Bhuyan) Issue raised in a,ll the writ petitions being identical, those were heard together and are being disposed of by this common judgment and order.

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

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l2 Act, aftcr Article 246 of the Constitution of lndia a new Article 246-A :arne to be inserted. Article 246-A reads as under: "246A. Special Prouision u.tith respect to goods and seruices l{Lx - (1) Notuithstanding angthing antained in arTicles 246 and 2,'t4, Parliamenl, ond, subject to clause (2), the Legi-slature of euery Slate, haue pouLer to make laus ulith respect to goods and serur-ces tax intposed bg the Union or by such State. (2) Parliament has exclusiue power to make htus uith ft:spect to goods and seruices tax uh.ere the supply of goods, or of scn,ice.s, or both takes place in the nurse o.f inter-State trade or at)nlrnerce E-rpLanation---The prouision-s of this article, in respect of cyntls ottd seruices ta,sc referred to in clause (5) of the article 279A, trtke effect from the d.ate reomm.ended bg the Goods and Seruices 7\u Counr-i|." 12 As per Section 7, Article 268-A of the Constiturion has l;et'n orn ittcd l'2 2. Afrer Article 269, Article 269-4 has been inserterl Artrt:k' 2,19 A is as under: "2()9A. Leug and allection of good.s (tnd serurces tox rrt {\)Lt.:..: (rl' inter state trade or comterce-* (l ) Goods and Seruices tax on supplies in thc courst: of rrt( r.slfl[(' trede or commerce shall be leuied and colle<:tacl lt1 tlrc t;ot)..tttntetLt of India and such tax shall be apportionad beuuccn tltr' {lnutrt tutd the S'tates irr tlte manner as maA be prctuiclt,cl ltq l\ulionu:nt ltq lau.t on the recommendations of the Goods arrcT s{,rr',( cs 'l ctx Courtcil_ Ii.rplonation,- For lhe purposes of this clause, suy:1tly of qtxtd:,. or rtf seruices, or both in th.e course of import inl<t tlrc It,rnl()t1t ol' hrdia shall be deemed to be suppty of gc.tocls, or t{' s('r 14( ir.s. or bolh tt the course of inter-State trade or cornnerc<,. ()l llt<: amount apportioned to a State untlr;r cktus<: ( I ) :;lrttll rtot li>t tr part of the Consolidated Fund of tndict. (,]) ll4rcr<: an atnount collected os tax leuied trrr<.k,r r'/arr-st- ll1 lrt ; lr','rt used for peArnent of the tax leuied l.tq (r .St(.I(, rlr(1(.r

l-1 article 246A, such amount shall not fonn part of the Consolideted Fund of India. (4) Where o.n amount collected as tasc leuied bg a State under article 246A has been used. for panlment of the tax leuied under clause (1), sttch amount shall not form part of tlrc Consolidated Fund of the State. (5) Parliament may, bg latu, formulate the pnnciples for detennining the place of supplg, and when a supplg of goods, or of seruices, or both takes place in the cours<z of inter Stak: lrode or commerce."

l4 It11 eaclr State GouerrTment ..-..Members (3, Tha Members of the Goods and Seruices Tax Council refened to "? -sub clause ( c ) of th-e clause (2) shall" as soon a-s may be, <:htrts<: orte amongst th.emselues to be the Vice-Chairperson of the Cottnc:il for such period cts theA maA decide. (4 ) 'f hc C,oods and Seruices Tox Council shall make recotntnendalions to the Union and the State on-- (ol tlrc toxes, cesses and surcttarges leuied bg the tJnion, the Src'es crrr rl the local bodies u-thich mag be subsunEd in the goods en\ scrTu'cs lox; (b1 tht: qoods and seruices that mog be subjected to, or exempted front Lltc: qrncls and seruices tax; ( r ) rttodel Goods and Seruices Tox Lau1 pinciples of leuA, ap?)r1i(r1t\ent of Goods and Seruicys Tax leuied on supplies in the c:our se' of' mter stale lrade or comftLerce under anticle 269-A and llu ltnrtciples tttot gouern the place of supplg; {t1) llu, t hreshold limil of turnouer belout tlhich goods and .scn, c(,.s trtrtq be exempted from goods and seruies tax; (e) th<: ntt<:s including floor rates with band"s of goods and s(,r1./r(--(,.s l(l L: (ll trrrl sot'cial rate or rates for a specifted period, to raise rrlcltittrrtrl (r.sources duing ang natural a_lamitg or disaster; lq) srx'tto[ ltntuistctrt ruith respect to the States of Arunachal Pra(/(r-s/r. 11-s.sarn. ./amrnu ond. Kashmir, Manipur, Meghalaga, Mtz.orant. t\urlalartd, Sikkirn, Tipura, Himachal Pradesh and I illu r tklttrrrtl. rtrrd (ltl r trrl r ltr.r ntett..r ralatinq to the goods and seruices tox, as the ( ottrt tl rttrtrl tl<:ciclt,. (.-l ',"ltt. ( )xrls ortd Saruice s Tax Council shnll recommend the rlol<' rtrr tL,lriclr the: qoocls attd seruices tax be leuied on petroleum trutle lutllr ,,1tccrl cliesel, notor spirit (commonly knoun as petrol), nrttrtrrtl <1rts rttrd <uiatiort turbine fuel. ((:) l.lltth rlrscharclutg the functions confened bg this articte, the otxrl:. rtntl -s(,rt.,rce.s 7](t-r Courtcil shall be gutded bg the need for o It<trntt rrrz,.1 :ilrticlrtrc of g<sods and seruices tax and for thc tlt:u.'k ltrrrt ttt ol rt |rc-nttonised national market for qoocls oncl (i I ( ),t, lttll ol rl1<' totel tutmhcr of Members of the Coods ond .s(,r'r,rr1 \ 'l ttr (-rtttttt:rl -s,lrrrll corr-stitrrte tlLe quonlm at its meettrcls.

125 l5 (8) The Goods and kruices Tax Council shall determine the procedure in the perfonnance of its functions. (9) Euery decision of the Goods and Seruices Tax Council shall be taken at a meeling, by a majoitg of not less than threeJourtls of the LDeighted uotes of the members present and uotirtg, in accordance u-tith the follouing principles, namelg:-- (a) tlrc uote of tle Centrol Gouemment shall be a weightage of one-third of the total uotes cost, and (b) the uotes of all tle State Gouernments taken toqether shall haue a ueightage of tun-thirds of the total uoles cast, in that meeling. (10) No act or proceedings of the Gwds and Seruices Tax Councrl shall be inualid m.erelg bg reason of-- (a) any uacancA in, or ang defect in, the constitutbn of tlrc Council: or (b) any defect in th.e oppointment of a person as a Member ctf the Council; or (c) ary1 procedural inegularity of the Council not effectin(t tlrc merits of the case. (l I ) The Goods ond Seruices Tax Council shall c.stcD/is| ri mechanism to adjudicate ang dispute-- (a) belueen the Gouernment of India and one or ttl()re.S/rtlt's. or ( c ) belwaen tu)o or more sx,ates, aris g out of the recommendations of thtt ('tntrtctl <,r i m p I c rnc n t a tio n t he re of. " Section 14 says that after Clausc ( I 2) of Alt it'lc 3(16 a nc\\, claLlse beir-rg Clause (12-A) shall be inscrted. I-ilit,'u'ist' :t[tt'r Cl:rusc 26, Clauses (26-A) and (26-B) shall tre inscrtt'<l (b) lrctu.teen the Gouernment of India and any Slale or '\'a({l('s ./ri one side and one or more other States on the other stde: or I6

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l7 competent authority or until expiration o[ one year from such commencement whichever is earlier.

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t9 and collection o[ tax on inter-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. Like the CGST Act, Central Government notified various dates as the date for coming into force of relevzrnt provisions of the IGST Act, such as,22.06.2017 and Ol.O7 .2017 . Further, two mor€ Acts were enacted by the Parliamcnt post thc Constitution (lOlst Amendment) Act, 20 16. 16. Legislaturc o[ the State of Telangala enacted the Telangana Goods and Se rvices Tax Act, 2017 ("IGST Act' hereinafter) to make provision lor levv and collection of tax on intra-State supply ol goods or scn'iccs or both by the State of Telangana. TGST Act received thc irsscnt of the Governor on 25.05.2017 and u,as lirst published in tlrc Tt-lerngana Gazette on 27.O5.2O 17- Various provisions of ttrt' 'l'CiST Act came into force on various dates While Scctiorrs I ;rnrl 2 (definition clause) came into lorce or-r 22.06.20 17, Scction 174 "vhich provides for repeal and saving came into lcrrcc orr Ol.O7.2O17. 17. As rrotict'cl :rbovt', Section 174 provides for repeal and saving As per Sub Scction (l), savc as otherwise provided in the 1'GST Act, on and frorn tlrc d:rtc of commencement of the TGST Acl , llre VAT Act .rnlonllst othcr- Acts cxcept in respect of goods inclr"rcl<'rl in 20 Entry li4 of the State List ol the VII Schedule to the Constitution were rr:pealcd. Sub-Section (2) clarifies that such repeal would not revive anything not in lorce or existing at the time of such repeal or affcct the previous opcration of the repealed Act etc.

2t and audit assessment proceedings etc, which may be instituted, continued or enforced, whereafter tax, surcharge, penalt5l, fine, interest, forfeiture or punistrment may be levied or imposed as if those Acts had not been so amended or repealed. That apart, such repeal would not aflect any proceedings, such as, appeal, revision, revier.r, or refcrence which shall be continued under the amended Acts or repealed Acts. It was also mentioned that it was considered necessarv to strengthen certain provisions of the VAT Act to overcome .rr)v limilations to help effective revenue realization besidcs preventing leakages. Accordingly, it was decided to amend thc relcvant provisions of the VAT Act by undertaking legislatron. Sir-rce it was decided to give effect to the above decision irnmt:cli:rtclv and since the [,egislature was not in session, and as tht' (lor.crnor of Telangana was satisfied that circumstanccs exist rvhic'lr rerrdercd it necessaqr for him to take immediatc action, t lr t' r't: lir r-r: , in cxcrcisc of the powers conferred by Clause (l ) of Articlc 2 I 3 of the Constitution of India, the Governor promulg:rtccl 'l't'lirngzrtra Ordinance No.2 of 2OL7 called the Telangana Vzrlut: Aclclecl Tarx (Amcndment) Ordinance, 2O 17, whiclr camc into lbrt'c u'itlr irnrnt:di:rte cflect i.e., 17.06.2O17 - B1t the saicl amt:nrlrncnt, ( cr-t:Iin provisions of thc VAT Act, such as, in Section 20 (-ll. Sct:tron 2l (l)1, (4), (6), (7) and (B), Section 32 (3),

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

25 Section 2l (7): Where any assessmcnt has lre cn dcferred by the Commissioner under sub-section (5J of Sect ion 32 or as thc case may be, the Appellate Tribunal under thc proviso to sub-section (4) of Section 33 on account of any stay ord<'r granled by the Appellate Tribunal or as the case may be, thc l{igh Court or the Suprcme Court respectively, or whereas appcal or olher proceedings is pending before the Appeltate Tribunal or lhe High Court or Supreme Court involving a question of law having a dircct bearing on the . assessment in question, the period during u,hich the stay order was in force or such appeal or proceeclings was pcncling shall be excluded in computing the pe riod o[ six years .rs the case may be for the purpose of making thc assessmcnt. Section 21 (8): Where an assessment mzrdc hzrs bcen set aside by any Court or as the case may be the Appellate Tribunal, the period between the date of such assessment and tlre datc on which it has been set aside shall be excluded in corrrptrtinli the period of six years as the case may be, for merking arry lrcslr irssessment, Section 31 (1): Any VAT dealer or T()'l- rlc;rlcr or irny other dealer objecting to any order passed or procceding rccorded by any authority under the provisions of the VAT Act, ottrcr than the order passed or proceeding recordcd by any authority under the provisions of the VAT Act, othcr th?rn tlrc order passed or proceeding recorded by an Additiorr:rl Cornrnrssioner or Joint Commissioner or Deputy Commissionr:r, nrurv r.'"'tthitr 3O days from t]le date on which the order or pt o<'ce<lirrg ,ur,;ts scned on him, appeal to such authority in the tnannt:r prcs< rrbt'd. Provided that an appeal so pre fer r(]d slr:rll rrot l)e admitted by the appellate authority concerncd unlcss lhc rlt-rtltr proclttces proof of paFnent of tax, penalty, interest or iur\ ()llt( r itrn()ttnt admitted to be due, or of such installments as h:rlc l)(('n grillltc(I, and the proof of palment of twelve and half perccr)t o[ tht <lilfert'n<'c o[ thc tax, penalty, interest or any othcr itm()Lult, :tsst ssttl lrv thc authority prescribed and the tzl-x, penalt!', inl( r( sl ()r ,rn\ ()(ller amount admitted by the appellant, for tlre rclt'r'arrt lrrx lx riod. in respcct of which the appeal is prefcrrccl. Section 32 (31: In relation to alt or(ler oI itsscssttrt:rtt passcd under the Act, the powers confcrrt:d l;y su tr scr ttotts ( l ) rrncl (2) sh.rll be exercisable only within a pertod oI six years It otrt tht' d:ttt: on which the order was served on tlre (lcalcr. Section 32 (6): Where trn orrlcr pitsst'tl ltnrlt r tlrrs Scctiotr has been set-aside by any court ()r ()ther t'olnl)('t('tlt ittttltori(v t-tnclcr the Act for aly reason, thc pt:tio<l betrvcctr tlr( (litt(- ,rf su<'lt order:rtrd the date on which it [r:rs b<:cn so stl itsr(t( slt;rll lre <:xcludcd in computing the periocl o[ six years spt t ilit'tl ttr sttlr s<'r'tiotr (31, for the purpose of making a ll-cslr rt'r,isi<;n. il-iur\. tttttlt-t tlrts Scctiott.

Scction 32 (7): Where any proceeding under this Section has been defr:rretl on account of any stay order granted by tl.e Appellatc 'l'rilrunal or the High Court or Supreme Court in any case, or by rcar;on of the fact that an appeal or other proceeding is pending beftrre thc Appellatc Tribunal or the High Court of the Suprcmc Cou rt involving a question of law having a direct bearing on tlrt-- ordr:r or procceding in question, the period during which the stay ord<:r was in force or such appeal or proceeding was pending shall be cxcludr:d in computing the period of six years spccified in sub seclion (3), for the purposes of exercising the powcr undcr this Scction. Scction 57 (5): No order for the fiorfeiture under this section, shall lx' nradc after the expiration of six years from the date of collection o[ the amount referred to in sub-section (4]-

?7 this connection, show cause notice was issued on 30.11.2019 stating that on scrutiny of assessment records it was found that petitioner had imported 7l metric tons ol Basmathi Rice va-lued at Rs.6O,35,0OO.OO which was neither reported by the petitioner in the returns nor subjected to assessment. Therefore, the assessment order dated 31.03.20 15 was found to be prejudicial to the interest of revenue. Accordingly a view was takcn that revision under Seclion 32 (21 of the VAT Act was warranted.

28 four yezrs i.e., on or before 30.03.2019, in terms of Section 32 (2) of the ',/AT Act. However, the revisional order was passed on 14.09.21)20 which is beyond four years but within six years. In so far the liecond Amendment Act is concerned, it is contended that the said amendment is not valid in the eye of law as it was made after th,: GST regime had come into effect. Therefore, the extendei period of limitation of six years instead of four years was not avail,rblc to the Deputy Commissioner.

3l 36. [t is contended that under Sub-section (3) of Section 32 of the VAT Act, limitation prescribed for passing revisional order was lour 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 oo 24.O3.2O 14, as per the four years limitation period the last date for passing order of revision was 23.03.2O 18 but the impugned order was passed on O5.O3.2O2O. Referring to thc amended provision extending limitation to six years, it is st;rted that the last date as per the amended provision was 23.O3.2020 lf thc Sccond Amendment Act is held to be un-con st itut ion.rl, thc ad<litional two years of limitation would not be available to thc respondcnt s and consequently the revisional ordcr dtrtcrl 05.03.2020 u,ould be beyond limitation. It is in that context th:rt uires of thc Second Amendment Act has been put to challcnge 37 I'hcrcforc, petitioner seeks a declaration that the Scconrl Arrrcrrdrnent Act is un -constitutional and consequcntly to rleclitrt:

i2 the revisional order dated 05.O3.2O2O aS being barrcd by limitatic,n and thereafter to quash the same as well as the consequential order dated O7.03.202O-

33 the VAT Act except for the goods listed in Entry 54 of List I[ of the VI[ Schedule. Ordinance No.2 of 2OI7 was promulgated by the Governor of Telangana under Article 213 of the Constitution of India on 17.06.20 17 whereby limitation was extended from four yea-rs to six years. Ol.O7 .2017 is the date on and from which TGST Act became enforceable. Section 174 of the TGST Act repealed the VAT Act in respect ol all goods except those mentioned in the substituted Entry 54 of the State List. On 29 - I I .2O I 7 tl-re Second Amendment Act received the assent of the Governor whcreafter it was published in the Telangana Gazette on 02.12.2O l7 giving retrospective effect from 17.06.2OI7

34 enlargirrg the period of limitation more particularly under Sections 2l and 32 of the VAT Act from four years to six years. He submits that after the Constitution Amendment Act, State of Telangana did not ha're the legislative competence to enact the Second Amendnrent Act for all goods either on the basis of the erstwhile legislati',e scheme prior to the Constitution Amendment Act or on the basir; of Article 246 read with Entry 54 of List I[, as amended, or under Article 246 A or in terms of Section 19 of the Constitur-ion Amendment Act or on the principle of pooled sovereign ty or on the basis of Ordinance No.2 of 2Ol7 or in terms of Section 174 of the TGST Act. t AIR 1964 S(t 1729

35 he submits that though the State kgislature is competent to enact laws having retrospective operation, its competence to make a law for a certain past period depends on its present legislative power and not on what it possessed at the period of time when its enactment is to have operation. On 02.12.2017 Statc of Telangana did not have the legislative competence to enact the Second Amendment Act.

36 to the <:oming into iorce oi GST. Thus, Section 6 of the General Clauses Act, 1897 cannot be pressed into service to save the pre- amendeC Entry 54 of List II.

37 Constitution Amendment Act would become otiose. Thus, the Second Amendment Act could not have been enacted for a-Il goods. Limited 12 supraf. According to him, Article 246A rcqr-riring simultaneous legislation by both Parliament and Statc legislatures is based on the principle of pooled sovereigntl' / cooperative fecleralism. Further, he submits that all such legislations must be based on recommendations of the GST Council. Therelore, he contends that legislative competence of 38 Telangana State kgislature for enacting the Second Amendment Act cannot flow from Article 246A.

39 competence upon the State for making amendments to the VAT Act qua goods other than alcohol for human consumption and the five petroleum products. Therefore, what Section 19 provides is that the State can continue to levy tax under the VAT Act for the window period of one year or till the VAT Act is amended or repealed whichever is earlier. This transitional provision does not enable the States to make amendments to the VAT Act in contravention of the amended Entry 54 of List II. He submits that Section l9 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 C ujn rat High Court in Reliance Industries Limited (2 supra|. According to him, even the single bench of decision is relied r-rpo r-r b,y the respondent. 47 . Even assuming but not admitting that Section 19 empowers the State [rgislaturcs to make amendments to the VAT Act in respect o[ assessmcnt timitation for all goods in gencral as if Bntry ? 2019 SCC Online Ker 973

40 54 had not yet been amended, even then also the Second Amendnrent Act having been passed on O2-I2.2O17 was beyond the one year period in terms of Section 19 of the Constitution Amendnrent Act and therefore invalid.

4t of the one year window period. On the day of enacting the Second Amendment Act, the State Legislature had lost its competence for making law in respect ol other goods barring the goods mentioned in the amended Entry 54 of List II. State tegislature must have the competence both on the date of enactment i.e. 02.12.2O17 aod also on the day when it was brought into force retrospectively i-e. t7.o6.20t7. 50. Referring to Article 213 (3) of the Constitution of India he submits that the Ordinance would be ultra uires for the very sarne reason for which the Second Amendment Act is ultra uires. He further submits that life of the Ordinance was only six weeks from date of convening of the State kgislature. This period, he submits, u,as till Oa.l2.20l7. Even assuming that the State Legislature was competent to enact and apply the Ordinance qua the goods not mcntiorted in amended Entry 54, such operation could not have continued bc_vond 08.12.2017 as per Article 213 of the Constitution. Clarilying the position, he submits that the Ordinance \\ras not challenged because the Ordinance rvas repealed by the Sccond Amendment Act ancl is no longer tn existence. Besidcs, the Sc<:ortd Amendment Act "vas brought into lorce with clfect fr'orrr l7 .06.2O l7 w,hich r.tas the datc of the 12 Ordinance. Thus, even for the period when the Ordinance was in existence it was the Second Amendment Act which occupied the legislative field and not the Ordinance. Therefore, any reliance placed on the Ordinance would be misplaced and the fact that the Ordinanr:e was not challenged would have no legal bearing.

43 Amendment Act can only be in respect of the VAT Act as existing on 02-12.2O17, even if given retrospective effect from 17.06.2077

44 senior oounsel, submits that the State kgislature passed the Telangarra Goods and Services Tax Bill, 2Ol7 on L6.O4.2O17. It received the assent of the Governor on 25.05.2017 whereafter the Telangarra Goods and Services Tax Act, 2017 (already referred to as 'the 'I'GST Act') was published in the Telangala Extraordinar5r Gazette <>n 27.O5.2O17. He thereafter submits that the Ordinance was pronrulgated on 17.06.2017 whereas the Second Amendment Act was made on O2.L2-2O17 giving retrospective effect from 17.O6.2OL7. He submits that the Second Amendment Act is unconstitutional as the State Legislature had lost its competence to make sruch amendments after the Constitution Amendment Act came intc, florce from 16.09.2016. On and from 16.09.2016 onty concurren.t juri iction could be excrcised simultaneously by the Central Government as well as by the State Government insofar GST is concerned; that apart, cxercise of porver under Article 246 also places rcliance on Hindalco Industries Limited (3 supra| and Reliance Industries Limited (2 supraf . 8 AIR 1957 SC 699 e (2ot7l 3 scc I 45

46

47 make laws for saving the repealed Acts under Section 19 of the Constitution Amendment Act. Accordingly, Section 174 was included in the TGST Act as a measure to save the repealed Acts, including the VAT Act. He submits that Section 174 saves operation of the VAT Act in respect o[ transactions made prior to OL.O7.2OL7. lnsofar the VAT Act is concerned, the same was amended by the Second Amendment Act prior to the effective date of repeal by way of an Ordinance dated 17.06.2017. Article 13 (3) of the Constitution of India states that law includes Ordinance as well. Section 6 (b) of the General Clauses Act, 1897 also makes it clear that repeal of an Act shall not effect the previous operation of any enactment so repealed or anything done thereunder. According to him, reliance placed by the petitioners on the decision of the Kerala High Court in Hindalco lndustries Limited (3 supraf and on the Gujarat l{igh Court decision in Reliance Industries Limited (2 supraf r.r'ould be of no assistance to the petitioners as in those cases therc was no Ordinance or legislative enactment pertaining to the Statc VAT Acts prior to introduction of GST. 59 Elaborating further Mr. 13.S.Prasad submits that the Ordinance r.t,as prom ulgarrl.rt(r(l l>y tlte (iovcrnor of Telangana on 4tt 17.O6.2C77 whereby the time limit for assessments and revisions was extended from lour years to six years before annulment of VAT A<:t. The Ordinance became an Act i.e. the Second Amendnrent Act on O2.12.2OI7. Prior to that, the Ordinance was approverl by the legislative assembly of the State oi Telangana within six months from the date of the Ordinance. Referring to Article 213 (21 of the Constitution of India, he submits that an Ordinan<:e promulgated by the Governor would have the same force and effect as an Act of the tegislature unless such an Ordinance is not placed before the legislative assembly or rejected by the legislative assembly when placed before it within the stipulatecl time. Insofar the present case is concerned, the Ordinanc,: was placed before the legislative assembly and the assembly approved the sarne. Therefore, in the light of the above constituti,rnal provision, the limitation to make an asscssment or reassessrrrent or revision is six years and not [our -vears. According to him, tLLe Ordinance issued and the subsequent tegislative Act lor prolonging the limitation made such extension of limitation valid. Thr:refore, the proceedings initiated under thc VAT Act in respect of the petitioners are valid, being withir-r limitatiorr. Insofar decision of tl.re Kerala High Court in Baiju AA (1O supraf is concerned, thc same would not be applic:rblc to I lrt, fa<.ts of thc

49 present case inasmuch as amendment to the Kera,la VAT Act was made long after annulment of the Kerala VAT Act. Insofar the present case is concerned, the Ordinance was promulgated prior to Ol.O7.2Ol7 when the VAT Act was still in force. 60 Mr. Prasad, 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 b1, amended Entry 54 of List II. Power and competence o[ the State in this regard is traceable to Article 246 of the Constitution read with Section 19 of the Constitution Amendment Act; thc savings provision in Section 174 of the TGST Act; Article 246A of the Constitution; and Sections 8 and BA of the Telangana Gcncr:rl Clauses Act, 189 I . 61 Mr. Prasad submits that Stal(' is only securing and protecting the revenue due to it b-y cnl:rrging the duration by which the dealers can be assessed ctcr., l)Ltt rrot inrposing any ncw tax or levy. Legislation being a sovercign function of the State, thus, the Second Amendment Act cann()t bc questioned as being without competence. 62 State has the power to enforcc tl-rc St:cond Ametrdment Act v,.ith retrospective effect. State has tlrt' l>orvcr to evcn take au':ry

50 vested rights of the assessees i.e. even where assessments become barred by time under the pre-amended provision. State can enlarge the limitation even for such time barred assessments and take away vested rights. t ooked at from this perspective, the Second Amendment Act cannot be said to be arbitrary, not to speak of being manifestly arbitraqr. 63 Prc,visions for enlarging time limitation on assessments etc., are only procedural aspects of levy and assessment of tax. These are not s;ubstantive provisions. Assessing Officers are competent to adjudicate on limitation since it is a mixed question of fact and la,'l'. 64 Ref,:rring to Hindalco Industries Limited (3 supraf , he submits that decision of the Kerala High Court, as expressed rn the said <:ase, is distinguishable. In the said decision, Kerala High (lor-rrt did not deal with the effect of Section lg o[ the Constitution Arnendmt:nt Act and the savings provision under thc State GST Act. As a matter of fact, State of Kerala l-rad enactcd the impugnecl law after the permissible window period of one )/ear- :rlloq,cd lrndcr Section 19 of the Constitution Amcndment Act Likervisc, Mr.Prasad submits that decision of the (-ir-darat High

5l Court in Reliance Industries Limited (2 supra| would also have aggrieved person cannot claim any vested right in procedure; that he should be governed by the old provision relating to the period of limitation. Procedural law is retrospective, meaning thereby, that it may apply even to acts or transactions under the repealed Act. Time and again it has been held and clari[ied by tl-re Supreme Court that every litigant has a vested right in substantive law but no such right exists in procedural law. According to Mr. Prasad, law of limitation is generally regarded as procedural and its object is not to create any right but to prescribe periocls within which legal proceedings be instituted for cnforcement of rights which exists under the substantive law. Statutcs o[ limitation are retrospective insofar those apply to all lcgal procccdings brought aftcr their operation for enforcing causc ol act ion zrccrued earlier, 11 (2O11) 6 SCC 739

5Z but thel'arc prospective in the sense that they neither have the effect of reviving the right of action nor do they have the effect of extingui:;hing a right of action subsisting on that day. 66 lrzrrned Advocate General has also placed reliance on a 22.08.19')6 which appointed 22"a day of August, 1996 as the date on u,hich the Act in question would come into force. The said gazeLLe ^,ttific.tion was issued in exercise of the powers conferred by Scction I (3) of the Arbitration and Conciliation Act, 1996. In thc lacts of that case, it was held that while the Act came into fon:<: on :l2,OB. 1996, for all practical and legal purposes, it would be dcernt.cl ro have been effective from 2S.O 1. 1996, wherr the C)rdi.a.c. *:rs promulgated, particularly, when the provisions o[ the ()rdinarrr:c and thc Act are similar there being nothing in thc Act so as to lnake the Ordinance ineffective. The Act being a contiltll:rtro. of the Ordinance, would be deemed to lrave bcen '2 (2OOll 6 scc 356

53 the legislature capriciously, irrationally and / or without adcquate determining principle. He submits that wide latitude is allowed to the legislature in enacting a law. The lreedom to experiment must be conceded to the legislature, particularly in economic lar.r,s. If problems emerge in the working of laws and which require legislative intervention, the Court cannot be oblivious ol thc pou,er oI the lcgislature to respond by stepping in r.t,itlr nccesszrry amendments. Since the law, in this case, the Second Arnctrdmcnt Act has bcen enacted to augment the revenue of thc Slate, the constitutional Court will lean heavily in favour of such a lar"'. T'hc law under scrutiny is arl economic measure- [tr economic matters, '3 (2021! S SCC I

54 wider latitude is given to the law makers, which is based on sound principle . Mr. Prasad asserts that even a vested right can be the subject rnatter of retrospective law. No doubt, such a law must pass master Articles 14, 19, 2l and 3OOA of the Constitution of India. Thercfore, tl-re issue really boils down to whether the impugne,l enactment is manifestly arbitrary or not. If it is not, question of rntcrfr:rcnce by the Court would not arise. 68 Learned Advocate General has referred to and relied upon the decision of thc Kerala High Court in Sheen Golden Jewels (Indiaf hrt. Limited (7 supral in great detail. 69 Mr. Prasad has also referred to an article titled 'Transitional Prouision:; Itt ()ontntercial Legislations: An Analgsis' by Priyal Parikh accorciing to u,hich the vrew taken by a majority of Courts is that th,-- rcvt'r'rrrr. authorities retain the power to levy appropriate taxes un<lcr thc crstrt,hile indirect tax laws for events prior to the introductron ol (iST. 7O Mr.li.Rzu i, lt'itrned senior counsel lor the petitioners in reply submits I hat t hc Statc has not addressed the following crucial aspects r;riscd b-r t hc petitioners: i. l'lllt','t ()t irnrcr)drncnt of Entry 54 by Scction 17 of the Constlt u I i(,rt,\ru(,n(lmcnt A(:t.

55 ii. Eflect of repea.l of VAT Act for all other goods except the goods mentioned in the amended Entry 54 of List I[ as per Section L74 of the TGST Act, iii. Competence of the State as on O2-12.2O 17 to pass rhe Sccond Amendment Act, given the requirements of the present legislative competence as on that date; iv- Requirement of simultaneous levy by Parliament and State kgislature for legislative competence under Article 2464, v. Objective and effect of Section 19 of the Constitution Amendment Act, vi. State did not at all make any endeavour to show any distinguishing feature in the judgment rendered by the Gujarat High Court in Reliance Industries Limited (2 supral and why the same should not be applied to the present case. 7 I Mr. Ravi contends that it is not the stand of the petitioners that the State has no competence whatsoever to promulgate thc Ordinance or to enact the Second Amendment Act. State does have the power and competence in respect of the goods specifically mentioned in the amended Entry 54 but not goods in general. It is the contention of the petitioners that other than the goods mcntioned in amended Entry 54, the State does not posscss legislative competence. This crucial aspect was not countered b_v t l-rc State. petitioners that the Ordinance or the Second Amendment Act arc nr.rnifcstly arbitrary or that those cannot be given retrospcct ive 7 2 M r. Ravi submits that it is not the argument ol t hc r'ffcct. 'l'l'rcrelore, the argr-lment advanced by the lc;rrncd Advot'atc

56 General based on the principles of manifest arbitrariness or retrospeotivity are not at all germale to adjudicate on the issues raised b1' the petitioners. 73 Besides reiterating reliance on Reliance Industries Limited (2 supraf and Hindalco Industries Limited (3 supral, Mr.Ravi has also pressed into service a decision of the Allahabad High Court in Jain Distillery Private Lirnited (4 supral. 74 Insofar extension of time limit in tax matters is concerned, Mr.Ravi srubmits that time limits are a fetter on the juri iction of the departmental authorities. Enlargement of time under the Second .Amendme nt Act in extending the limitation period arnounts to conferring juri iction on departmental authorities that did not exist etrrlit.r. Tirerefore, such an amendment is not merely f<rr securing old liabilities but impacts the rights ot assessees, thus bcirle :t frcsh legislation which is devoid of legislative com petenc(,. 75 Insofar reliance placc<l by learned Advocate General in Tirumalai Chemicals Limited (11 supraf it is submitted that the said decision is ol no irltplir-atiotr to the present batch of cases. He submits I hat the clut'sr iorr for determination in that case was w,hether thc Iirtrit:rtiorr lo l'ilc aippcal agairrst order for violation ol

57 provisions of Foreign Exchange Regulation Act, 1973 (FERA) would be governed by the appellate mechanism under the Foreign Exchange Regulation Act, 1973 or under the Foreign Exchalge 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 supraf relied upon by the learned Advocate General, Mr. Ravi submits that in the present batch ol cases petitioners are primarily concerned with the validity of the Sccond Amendment Act and not the Ordinance. Even if it is assumed tl'rat the State I'rad the competence to promulgate the Ordinance in June, 2O 17 before onset of GST with effect from Ol.O7.2O 17, b_'" the timc the Second Amendment Act was passcd, the State had lost its competence for legislating on goods ln general, cxccpt for pctroleum products and liquor for human consumption as mentioned in the amended Entry 54 of List II. Ilou,evcr, he submits that though the Ordinance has not been specilical[,r' t:h:r[[cnged, nonetheless, it is clear that on and fro rn 16.09,20 l(r rt'hcn the Constitution Amendment Act camc into 58 force, the Ordinance could not have been promulgated. Thus, both the Ordinalce and the Second Amendment Act calnot be sustaine,l after 16.09.20 16- Again in this judgment question of legislativ,: competence of the State to promulgate an Ordinance followed by an Act on the same subject matter was not in issue. He submits that an Ordinance as well as an Act are two pieces of legislatio;r. Legislative competence of each has to be separately determined in the light of the Constitution and the point of time when those were enacted. lnsofar Manish Kumar (13 supraf is concerne,C, he submits that it is not the case of the petitioners that the Second Amendmerrt Act should be struck down on the ground of being manifestly arbitrary. That apart, while there can be no dis;pute to the proposition that a wider latitude should be allowed to the legislature while legislating economic laws, it is also equally ctear that u,hile makirrg such [aw, the Legislature or the Parliament cannot transgress thc constitutional limits. In the instant case, the challe nge to the Second Amendment Act is purely on the ground of legislativc competence; rather lack of legislativc competence. Petitioncrs arc not questioning the legislative '"r,i om in cxtcrrcling thc limitation for making assessments, reassessments, rcvisior-ts etc., from four years to six -\,cars, llut havc questi<lncd thc Sccond Amendment Act on the 59 ground that the State did not have the legislative competence to enact the same- 77 Insofar Sheen Golden Jewels (Indiaf Pvt. Limited (7 supral 1S concerned, lc:rrrred senior counsel submits that a division bench of the Gujarat High Court in Reliance Industries Limited (2 supra| has clistinguished the said decision. In Sheen Golden Jewels (Indiaf Pvt. Lirnited (7 supra| petitioners had challenged validit.y of Scction 174 of the Kerala Goods and Services Tax Act, 2O l7 rvlrich is pai materia to Section 174 of tll,e TGST Act, on the an vil of Section 19 of the Constitution Amendment Act. Accorcling to Mr.Ravi, petitioners herein are not questioning validit_v ol S<'ction 174 of the TGST Act. Rather, according to thc pctrtion('rs, Section 174 of the TGST Act only supports what is being contendcd by the petitroners. 78 The articlc, ''l'rar tsLtiortal Prouisions in Commercial lcgiskttion: An Analysis' follow,s thc s:irnc logic given by the Kerala High Court in Sheen Golden Jewels (Indiaf Pst. Limited (7 supraf. That apa-rt, the articlc also reliecl upon the decision of the Gauhati High Court in Lakshminarayan Sahu Vs. Union of Indiar+ which dealt with validity of shou' czruse notices for service tax after Section 14 2018 SCC Onlide Gau I4S7

60 174 of ttre State GST Act was brought in. Mr. Ravi submits that according to the aforesaid article, Section 19 of the Constitution Amendment Act has elements of both transitional as well as savings clause. However, he contends that Section 19 of the Constitu':ion Amendment Act only suspends invalidify of the inconsistent legislation for a period o[ one year or till the inconsistent legislations are amended or repealed. He asserts that Section 19 is neither a source of power nor a savings provision. It is only a transitiona-l provision. 79 Mr. S.R.R.Viswanath, learned counsel for some of the petitioners also made submissions replying to the arguments advanced by the learned Advocate Gencral. While admitting that learned l\dvocate General was only partll' correct in submitting that timt: limitations are procedural antl no( substantive, he, however, submits that in tax jurisprtrrlencc tirne limitations prescribe,l for making assessments, rczrsscssmcnts, revisions etc are juris<lictional in nature and are thus lctters on the taxing authoritie,s. In this connection, he h:rs placcd reliance on a 15 53 ITR 2:;I

6t learned Advocate General, he submits that in the said case Supreme Court was dealing with the limitation prescribed for filing appeals, which is of entirely diflerent nature. 80 Mr. Viswanath submits that two dates are extremely crucial. Firstly, 16.09.2016 when thc Constitution Amendment Act came into force. Secondly, 27.O5.2O17 rvhen the TGST Act was enacted. The Ordinance as well as the Sccond Amendment 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 the TGST Act. Thus, he would submit that neither the (lovernor nor the State kgislature had legislative compctcnce to promulgerte the Ordinance or to make the Second Amenclmcnt Act aftcr 16.O9.2016 and also after 27.05.2017. 81 Referring to Section I9 ol'tlrc Constitution Amendment Act, Mr. Viswanath submits that t lrr rvindor.t, provided by Section 19 was completely exhausted on 27,05.2Ol7 u'hcn the TGST Act was enacted and Section 174 thcrcof partially rcpealed the VAT Act. There is no merit in the argumt:nt o[ the learned Advocate General that Section 19 of thc Corrstitrrtiorr Arncndrnent Act could be invoked even aftcr '27.O5.2O l7 ancl thirt tlrc C)rdit'rance and the 62 Second Amendment Act owe their genesis to Section 19. He further submits that neither the Ordinance nor the Second Amendment Act can be traced to Article 246A of the Constitution. 82 lns,rfar decision of the Kerala High Court in Sheen Golden Jewels (l:ndia) Pvt. Limited (7 supra) is conccrnccl, hc submits that in tt.e said case the challenge was made to Section 174 of the Ke rala Goods and Services Tax Act, 2O 17 which is pai materia to Section 17 4 of the TGST Act. Petitioners hcrcin are not challenging validity of Section 174 of the TGST Act. Hc, therefore, submits that there is no merit in the arguments advanced by the lcarned Advocate General. U3 Submissions made by learned counsel for thc parties have rcce ived thc ciue consideration of the Court {i.1 We shall first deal with the issue relating to lcgislative cornpetence. Heading of Article 246 of the Constitutiorr of India is subject matter of laws made by Parliament and b-r. thc Lcgislatures of States. Clause (l) says that notwithstanding arr,vthing in clauses (2') and (3), Parliament has exclusive po\\,cr to make laws n''ith resp:ct to any of the matters enumcrated in l-rst I (Union List) of the VII Schedule to the Constitution of lncli:r. As pcr Clausc (2), notr,r,ithstanding anything in Clausc (lif. [)arli:rrncnt

61 "54: Taxes on tte sale or purclu-se of goods otler than neu:;papers, subjEdt to tte proUiSions of entry 92 A of List 1". B6.1 It was on the strength of Entry 54 of List II as it then existed, that the VAT Act was enacted. 87 Aftr:r thc Constitution Amendment Act came into lorce u,ith eflcct frorn 16.O9.2016, Entry 54 of List II now reads as follou,s:

"

(r\ alcoholic liquor for human consumption as mentioned in the substituted Entry 54 of List II. Therefore, State L-egislature o[ Telangana did not have the competence post 16.09.2016 to legislate the Second Amendment Act which could be traceable to Article 246 read with trntry 54 of List II of thc VII Scl.rcdule to the 90 The Constitution Amendment Act also inscrted a nerv article immediately after Article 246 with. effect from 16.09.20 16. As per the new Article 246-A, it provides for special provision with respect to goods and serrices tax. Articlc '246 A is cxtracted h ereunder: "246A. Special prouision uith respect to qoods and seruices tax: (1) NotrDithstanding anything containecl irr Atlk:les 246 and 254, Parliament, and, subject to clause (2), thc l,t't 1r sl<tttt rt (rf euery State, haue power to make lanDs witlt respecl to tlcxxls arul sentices tax imposed bg the Union or by such State- Dxplanation---Th.e prouisions of lhis ttrticlt'. slrull. in r<'spect of goods and seruices tax referrecl to it clausr' l.:t1 rtf Artick: 279A, take effect from the date recommenrled bq tlu' ( )Lxxls rtrtrt St'ruk:es Tax Council." 9l Clause (l) of Article 246-A starts s'ith :t rt<tn ctbslante clause . lt says that notwithstanding an-vthing cottt:tittccl in Article 246 (clistribution of legislative powers) :rrt<l Arli<'lr' 25-1 (clcilling rvitlr Constitution, (2) Parliament has exclusiut: pou)er l() rrtttkt' ltrLus tuith resryct to goods and seruices tax uhere tlre: sLtltltlrl rtl'qxxls, or of seraices, or both takes place in the: course t)l utl<'r stQlc lrQde or commerce.

66 inconsislency between laws made by Parliament and laws 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 ard services tax (GST) imposed by the Union or by such State. As per clause (2) Parliament has exclusive power to make laws witlr respect to GST where the supply of goods or of services or both takes place in the course of inter-State trade or commerc3. The Explanation clarifies that provisions of Article 246A in respect of GST shall take effect from the date recommerded by the GST Council in terms of Clause (5) of Article 279 A. 92 Thrrs rvhat Article 246A provides is that both Parliament and the [cgislarture of every State have power to make laws with rcspcct to GST im;:osed by the Union or by such State except in the casc rrl- (l ST rvhcre the supply of goods or of serviccs or botlr takes pl:rr:c rn thc course of inter-State trade or commerce irr r.vhich cas;c Parliarncnt has the exclusive competence. Of course, such ena<:tment rvill take effect from the date of recommendation bv the CSl'Corrr-rcil- 93 Artrclr 3rr(r of tl-rc Constitution of India delines various t:xprcssiorrs ulrich lincls place in thc Constitution. Clausc (12)

6'7 defines "goods" to include all materials, commodities and articles. Clause (12A) which was inserted by the Constitution Amendment Act with effect from 16.O9.2OL6 defines "goods and services tax" (GST) to mean zuly tax on supply of goods or services or both except taxes on the supply of alcoholic liquor for h uman 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 [ndia camc up lor

analysis before the Supreme Court in VKC Footsteps India Private Limited (5 supraf, Supreme Court has held as follows "

6ll power is; available both to Parliament as well as to the State kgislatuLres except in the course of supply of goods or services or both in the course of inter-State trade or commerce. What Article 2464 embodies is the principle of simultaneous levy by both the Parliament ald by the concerned State Legislature, distinct from the principle of concurrence. 96 The nattrre of Article 246A of the Constitution of India was examinec b1, thc division bench of the Gujarat High Court in Reliance Industries Lirnited (2 suprat whereafter it has been held as lc llou,s "

69 97 In Baiju A.A. (10 supraf the challenge before a single bench of the Kerala High Court was to the legality of the notices and assessment orders issued in connection with the assessments under the Ke rala Value Added Tax Act, 2OO3 for the assessment years 2OlO-2O1 I and 2OLl-2O12. The challenge was made on the ground that the concerned authorities did not have the juri iction to issue the notices and assessment orders since the amendments introduced to Section 25 (11 of the Kerala Valuc Added Tax Act, 2OO3 through the Kerala Finance Acts of 2Ol7 and 2OlB notified on 19.O6.2O17 and 31.03.2O18 respectively did not contemplatc a retrospective operation of the amended provisions Section 25 of tl-re Kerala Value Added Tax Act, 2O03 deals it'ith assessmcnt of cscaped turnover. In case of escaped turnover for any reason the assessing authority could determinc to the best of [-ris jtrclgmcnt the turnover which had escaped asscssment to tit\ at an,v tirne n,ithin five years from the last date of the ,tt-etI [() rvhicl'r the retLlrn relates. As per the last proviso the perioci ftrr completion of ;rsscssment was extended up to 31.03.2O16. ts-r' thc Kerala l.-inance Act of 2Ol7 , the period of limitation under Section 25 ( I I lor Jrroccccling to determine escaped turnover u'as enhanccd I-rom fivc J'cirrs t() six years and in the last proviso t he cxtctrsiort u'as m:rclc u[) to 3 l .03.20 18. Thereafter, by thc [(cr:tla Fitr:,rttt t'

70 Act, 20 18, in the last proviso, the extension was made up to 31.03.2C 19. 98 One of the questions framed by the Kerala High Cou.rt was whether after the Constitution Amendment Act ald repeal of the Kerala Value Added Tax Act on 22.06.2017, the State kgislature retained any residual power of legislation so as to amend the provisions of Section 25 ( I ) through the Kerala Finance Act, 2018. After due consideration Kerala High Court held as follows: [9. As alrcadv notrccd above, the amcndments effected to Section 25 (l) of the KVAT Act. tllrough the Kerala Finance Act 2O17, were before the ref,eal of the KVAT Acr \,,'irh effect from 22.06.2012. The provision as it stood then,.rnd in partrculitr the third proviso thereto, authorised the re- opening of past asscssrncnts rill 31.03,2018. The amendment effected throuSlh the Kerala F'irrarrcc Act, 2018, with etfect from 01.04.2O1g, enlargcd ttte period for rc opcnrng past asscssments from 31.O3.201g to 31.03.2019. Under ordrrr;rrr circurnstances, and based on my lindings above as reUards thc cfltx-i of lhe amendments brought into the third provisr) to Scction 25 (ll lrr, thc kcrala F-inance Acl,2OlT, the legislative measures should [r:r!c sul'lr{.c(l lo.;trstif1. a reopcning of past assessments up to .ll.O3.20l9, nor\rrllrsliut(lr g that the amendrnent itself was effective only frorn O I 04.20 l8 llorrtvcr. tlrc interventiorr of the CAA 2016, and the consec uent |epeal of rhe KVn.l' Act with cffect from 22.O6.2OL2, lras a bearing on the legalit! of tlrr. 20tu .t[lcndment. n distinction does exist betwecn the sat,ing ol rrshls. l)rrvrlcs(:s, irnmurritics and liabilities under a repeak:d enirctrlcnt. ltrr()u!tlr .r sat.irrgs clarrsc inserted in the new enactnlent ttace.rl)l(' t() llr(. s. (' legislallve porver, and an amendment brougtrt in to a rcpt:aI'ri (.rr;r(.1rllcnt aftcr thc lcgistative power itself is taken ;Ivar \t/hrlc tllc lcr',rsl.rlrrr' l)()\(e.Justifytnla [)oth actions, prior to the CAA 2l) 16, could havt. lx.r'n tr ,r, (.rl rr) n rtrcle 246 of our Constitution, read with tLre rcle\.int enrr\ in tlr(. Vllllr S(.lreduic thcrcto, the position changed when lherc r|as a {rIr.rrIarrrr.rII.tI sllilt in ttrc naturc of the tax levy and a fresh confcrnrent of lcgrsl.tlr\(. lx)!!er to le€irslate in respect of the nlw levy. After tlle CAn 20 16. the Slirlc Lcerslatures stood <lenudcd of their power [o legislatc tn .csl)cct ol lit\('s on salt.or purchasc of goods, that was covered under Entn, 5.1 of t,isr II ()l I lr. VIIth Schcdulc to the Constitution, and they r,'crc instca(l c()rrl( rrr.(l t\llh legislatitc poq.ers, to bc exercised simult;rneoush \r'tllr tl)(. I '. r I I I . I I I I ( ' r I I , in rcspcct oI taxcs on supply ofgoods or scn'ir:<:s ol botlr Wlrrlr. rlrr rx.s lcgislattvc 1>owcr could justity the inclrrsi,rtr oI ir sar..r.qs <-l,rrrsr. rrr lltr: ^cr. leglsl:rliot.l enacted in respect of the nc.v l('\,\' ol ta\. l() sl\ (. ir.(.r Lr.(l I ights. pr.rvilcges, immunitics etc. undt:r lltt' cist1\lul(, r.Ir,|(.IIrIIr)r. tlr(, dclcti() ()l- Etrtra 54 of List autorni ti(_atll! rlcnrrrlt.rl tll(. Sl.rr,. 1,.,{rsl.ttrrrcs .)l tllc power to furtlter

7l legislatc on the subject of taxes on sale or purchase of goods, except to the limited extent retaincd under the Constitution. The power to amend a statute being a facet of the legislative power itselt the State trgislature could not have exercised a power to amend the KVAT Act, save to the extent permitted, u,hen it did not retain any residual right to further legislatc on the sub_iect of taxes on sale or purchase of goods. 99 According to the Kerala High Court, after the Constitution Amendment Act, the State t egislatures stood denuded of their power to legislate in respect of taxes on sale or purchase of goods covered under Entry 54 of List II of the VII Schedule; rather they were conferred with legislative powers to be exercised simultaneously with the Parliament in respect of taxes on supply of goods or services or both. While the new legislative power could justify the inclusion of a savings clause in the new legislation enacted in respect of the new levy of tax to save accrued rights etc. , under t he ersftvhile enactment, the truncation of Entrv 54 of List II automaticalty denuded the State l,egislatures of the power to further legislatc on the subject of taxes on sale or purchase of goods, cxcept to tl-rc limited extent retained under tl-re Constitution. [t tras bccn held that the power to amend a statute being a lircct of thc legislative power itself, the State Legislaturc could not have exercised a power to amend the Kerala Valuc Addcd Tzrx Act, 2003 exccpt to the extent permissible when it dicl not retain any residual right to further legislate on the subject of taxes or1 salr,' or purchasc of goods.

72 lOO An identical issue came up before another single bench of the Kr:rala High Court in HINDALCO TNDUSTRIES LIMITED (3 supraf. Following the same line of reasoning adopted by the previous bench in BAIJU A.A. (1O suprat it has been held that after the Constitution Amendment Act, State Legislatures stood denuded ol their power to legislate in respect of taxes on sale or purchasr: ofgoods that was covered under Entry 54 of List II of the VI I Schedule; they have instead been confe rred with legislative powers t o be exercised simultaneously with the parliament in respect c,f taxes on supply of goods or services or both. It has been hekl as follows: resi,,ot',",'stiiiiai,.a;itf 7;".'f;1*.:,ff ,.n?,!,'"?;,,'y..o:::'; loxes on sale or purchnse of goods, that uJas couered under Entry 54 of List II of the Seuenth Schedute to the Constitution, and they were insteci.d confered utitlt legiskttiue powers, to be exercised simult.aneouslg with the Parliament, in respect of taxes on supplg of goods or seruices or both- While the new legislatiue power coutd justifyt the inclusion of a sauings clause in the neLu legislation enacted in respect of the neu leuy of tax, to saue tu,cnted righls, priuileges, immunilies, etc., under the erstuhilc enactment, the deletion of Entry 54 of List II automatically denutlccj the Stete Leqisletures of the power to fuflher legklate on the subject of taxes on sale or purchase of gootls, except to the limited extent relained under the Constitution. The pouer to amend c -statul(, being a lacet of tlrc legislatiue poLuer i-tsetf, the State Legislalure <:oukl not hauc <:xerci.;ed o power to amend thc KVAT Act, soue to the extett pennited, wh.en it did not retTitt ttny residual ight to Iurther legislote on the subject oJ'taxes on sale or purchase tl ,1ct<>ds".

73 1O1 A division bench of the Allahabad High Court in M/s. Pankaj Advertising Vs. State of U.Pr6 was exa:rrining challenge to the legislative competence to the imposition, collection and realization of advertisement tax under the U.P. Municipalities Act, 1916 on the ground that when there is no provision to impose such tax there can be no power to frame any by-laws in that regard. The power to lely advertisement tax was traceable to Entry 55 of List II. Allahabad High Court noted that the Constitution Amendmcnt Act came into effect from 16.09.2016. U.P. Goods and Services Tax Act, 2Ol7 catoe into operation with effect from O1.O7.2017. The by-laws by which the municipalities intended to lev-v and collect taxes on advertisement were framed on 12.Ol.2O 17 but purblisl.rcd on 19.O8.2017 i.e., after O1.O7.2017 when the U.P.Goods ;rnd Se rvices Tax Act, 2Ol7 casre into effect. Allahabad t{igh Court also troted that by virtue of the Constitution Amendment Act, Entr\, 55 ol List [l was omitted. It was in that context that Allah:rbacl l-{ igh Court held that after omission of Entry 55 ol List tt of the VlI Schedule to the Constitution of India by the Constitution Amcndtncnt Act rvith effect from 16.09.2016, even the Sterte [,cgisl:rt r-r rc did not have the legislative competence to tery or collect tiLX('s ()n advertiscment which was earlier '6 (:(t:o) tt (;s I R l ti ( \ltr

74 available under Entry 55. Further, the bench noted that the power to tax earlier vested with the municipalities under Section 128 (21 IVII) of the U.P. Municipalities Act, 1916. Having been omitted by virtue of Section 173 of the U.P.Goods and Services Tax Act, 2O17, tlr,e municipalities did not have the statutory competence to levy, impose or collect advertisement tax. Further clarifying the position Allahabad High Court held that the State legislature was invested with the power to make laws in respect of taxes on advertisement vide Entry 55 of List II to the VII Schedule but the said entry was deleted by the Constitution Amendmr:nt Act with effect from 16.09.2016. The Constitution Amendmr:nt Act vide Section 17 amended the VII Schedule and omitted F)ntry 55 of List II, thus deleting the power of thc State to make l;rws in respect of taxes on advertisement. Therefore, when thc Statc u,zrs denuded of the power to make laws in respect of ta-xc s on adve rtisement, obviously the municipalities u,ere also dive ste<l <,f tlre power to impose any tax on advertisemenL. LO2 This line of reasoning has also been folloned by a later division lrcrrt:h of the Allahabad High Court in Jain Distillery Private t,imited (4 supraf . [r-r rhis case, the Allahabad High Corrrt cx:rmincd the position as to tllc competence t>f the Parliament and State l,egislatures to enact laws to impose duties on excise and to levy tax on sale of alcoholic liquor not lor human consumption post the Constitution Amendment Act. It was noted that the express intent of the constitutional change made vide the Constitution Amendment Act was to t:rx alcohol under the GST regime except alcoholic liquor for human consumption. Thus, a-lcoholic liquor not for human consumption or industria-l alcohol or non potable alcohol would be subject to GST laws only. According to the Allahabad High Court this intent has been expressed through Section 174 (l) (i) of the U.P.Goods and Services Tax Act, 2017. Section 174 (l) (i) ol the U.P.Goods and Serrices Tax Act, 2O17 reads as lollows "174. (1) Saue as otherurise pntuitl<l irt lhi.s Act, on and from the dote of ammencement of this Act: (i) TlLe Uttar Pradesh Value Arldetl 'l'ur; Ad, 2oO8, except in respect of goods included [n Dntn1 51 tt] tht' .sl(rl(' I.t.sr ol tlte Seuenth Schedule to the Constitution, are herebg repealed." lO2.L It was in that context Atlal.rab:rcl l'{igh Court held as follows:

"

76 consumplion". Hence, in ang co.se, afier tlLe enactment of the UP<)ST Act, 2017 and in absence of any amendment to Section 174 (1) (4 of that Act, there neither suruiues nor exists anA delegated pouer uith the State Gouemment, to issue the impugned. Not,ficatiorr, to impose UPVAT on ENA.

77 the ground that Section 84 A was manifestly arbitrary and un- reasonable and, therefore, violative of Articlc 14 of 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 arbitrariness or manilest arbitrariness; it is on the ground of lack of legislative competence. Section 84 A of the Gujarat Value Added Tax Act, 2OO3 is extracted as under: "84A. Exclusion of period in some cases.y'l) Notu,ithstanding anAlhing contained in this Act, an issue on which the Appettote AuthoritA or the Appellate Tribunal or th.e High Court hd.s giuen its decision uhich is prejurlicial to the interest of reuenue in some other proceedings and an appeal to the Appellate Tribunal or the High Cauri or the Supreme Courl aqainst such dectsion of the appellate aulhoritg or the Appellate Tnbunal or tle High Court is pending, the period spent betueen the dote of the decision of the appellate authoritg and that of the Appellate Tiburtal or the dote of decision of the Appellate Tibunal and that of the High Couft or the dote of tlp decision of the High C-ourt and thal of the Supreme Court shall be excluded in cemputing the pe,riod reft:red to in section 34 or se<lior 35. {2) Notwithstanding anythitrg corttqined in tl s Act, if ang decrsion or order und.er section 73 or sectiort 75 inuolues an issue on uhtclt lhe Reuision Authoitg or appellate authoritg or tlae Higlt Courl ltrrs beert giuett its decision which is prejudiciaL lo lle irrtercst of revenue in sortte ollter proceedings and an appeaL to tle Itigh CoLtfl or tlrc Suprettv'Courl against .srrcft rlecision of the Appellate Tribunal or lle High Courl ts pc ditlg, tlc penod spent between the date of the decisiort of tlrc Appellot<: TnbuttoL attl tlc date of tlrc decision of the Hiqh Courl or tlrc date of tlrc decisrort of the I |KJIL Caud atd the date of llrc decisiotr oI llrc Suprenrc, ()ourl shall be excluded in computing lhe peiod of limilotio,t referred to or secliotr 73 or Section 75". 104 Gujarat High Court analyzed the provisions of Articlc 246 A ol the Constitution of lndia and the changc in Entry 54 ol l,ist II, post the Constitutiorr Amcndment Act. It may bc nr('ntioncd that Sectiorr 84 A came to be addcd to thc Gujar.rt

78 Value Added Tax Act, 2OO3 by virtue o[ the Gujarat Value Added Tax (Anrendrnent) Act, 20lA enacted on O3.04.2O18 giving retrospe<:tive operation from O 1.04.2006. Section 84 A provided for exclusion of the period spent between the date of the decision of the Appellate Tribunal and that of the High Court as well as the Supreme Court in computing the period of limitation referred to in Section ?'5 of the said Act. Therefore, one of the questions which fell for consid eration was whether Section 84 A of the Gujarat Value A<lded Tax Act, 2OO3 was ultra uires and beyond the legislativr: competence of the State under Entry 54 of the List II of the VII Schedr.rle. After due analysis Cujarat High Court held as follows: "9O 7'1rc Entry 54 in List II in ScheduLe VII of the Coilslitulton of lndia w,.ls amended to extinguish the pouer of Sto tes to leuq toxes on sale or purchase of goods excepl taxes on the sale <tf petroleunt products and alcoholic liquor for hutnan cortsurnptiort. 'l'herefore, the power to amend ang law tuith rcspt:ct to leull o.l'ta-{ on the sale or purcltase oJ'goods such as "Gu1<tral VA'I- Act" could be said to haue been abolished uith the aforesutd arnerrclmcrtt ut Entry 54 in Lbt II in Schedule VII of tLE (bnstitlttiort oJ' httlitt. 9 I - Hrtuitq gi)cn our eemest consideratiort to all the releuanl e.spect-s of tl tc ilatter, ue haue reached to the corrclu.srorr llutt arttcle 246A of the Constitution of lnclia does not sare s(,cliorr 84A oJ'tlt<: VA'I- Act from being declared inualid or ultra utres. As rrote:ri t touc, article 246A of the Constiution tua.; rrrscrl<:rl by the I O l. ()otrstitution Amendment Act Luith the sol<: or nttlu:r tLre prccrs<: ol:.ject of subsuming mullipla itdirect taxes <rtul l<t cLtttfe:r con<ltrrent pouer to the Parlianrcttt artd StoLe l.ctltslutttt(. to ull)ose 'goods and seruiccs lttx" in <tt:c.trdrttt t, rurllt tht' rccornmendations of the Coods otrd Scr yrce-s Iii-r ( irrrrrr.i/ :;tetute under arlicle 279A <tf lhe (lor -stitrrlrrrr rl ludut 7lt( t'L.r!! object of such larqe s<:ole reJbnn

79 was to replace number of indirect toxes being leuied by the Union and the State Gouernments and to remoue the cascading effect of laxes and prouide for a common national market for goods and seruices. Th.is is apparent from the statement of objects and reasons referred to bA the Supreme Courl in Mohit Mineral Put. Ltd. [20181 58 GSIR ] fSC/ : l2o19l 2 SCC 599. 92. Further section 18 to the Constitution Amendment Act prouides for compen-sation to the States for lhe loss of reuenue arising on account of the implementation of lhe goods and seruices ku for a peiod of fiue gears. Thus the entire scheme oJ the Constitution Amendment Act recognizes imposition of only "goods and seruices tax" under article 246A of tte Constitution of India. TLe phrase the 'goods and seruices tax" is defined under arTicle 366 (29A) to mean anA tox on supplg of goods or seruice or both except taxes on the supply of alcoholic liquor for htman consumption. Such "supply" cannot be fragmented into different contponents bA the State Legislature and assume pou.)er to tmpose independent tax on the sole of goods u.tithout reference to the Goods and Seruices Tax Council. Such interpretation u.tould be contrary to the entire schem.e as u.tell as the object and purpose of the Con-slitution Amendment Act. In fact lhe prouision prouding for ampensation to the States for the loss of reuenue due to the goods and serui<:es tax uould also be i'releuant if the State Legislatures are independently empotuered to eruact sales tax/ ualue added tax legislations bg taktng re(nurse to orticle 246A of the Constitution of India.

8(l benches of Allahabad High Court in M/s. Pankaj Advertising (16 supraf , .Iain Distillery Private Limited (4 supraf and the division bench o:: Gujarat High Court in Reliance lndustries Limited (2 supraf . Not only the Second Amendment Act cannot be traced to Article 246 of the Constitution read with Entry 54 of List II of the VII Sche,iule, the same cannot also be sustained as a stand alone legislation of the State under Article 246A of the Constitution in the absence of simultaneous legislation by the Parliament. 106 Let us now deal with Section 19 of the Constitution Amendment Act, which reads as under: t07 Scction l9 starts u,ith a non- obstante clause. It says tl-rat notr,. ithstanding anyrhir-rg in the Constitution Amendment Act, an-v lrrovision of an,y law relating to tax on goods or services

8l competent authority or until expiration of one year from such commencement, whichever is earlier. 108 'lhus, the purpose of this provision is to provide for a window or transition by suspending invalidity of inconsistent legislations existing immediately before commencement of the Constitution Amendment Act for a period of one year or till such legislations are amended or repealed, whichever is earlier. The objective appcars to be for a transition to the CST regime brought into force by the Constitution Amendment Act. All that Section 19 does is to provide a period so as to eliminate or remove all laws inconsistent with the GST regime within an outer limit of one yea,r period. Section 19 does not and cannot be construed to eclipse the amendmcnts carried out in Entry 54 of List II to the VII Schedule or confcr legislative competence upon the State kgislaturcs lor making amendments to the VAT Act in respect of goods othcr than the five petroleum products and alcohol for human consumption covered by the amended (substituted) Dntry 54 o[ List II. l09 amendmcnt o[ Entn' 54 ol List II is denuding thc State Legislature As alrt--adt' discussed aborre, conscquencc of of the port,r'r to lcrt tax on sale of goods othcr than those as u2 provided in amended Entry 54; invalidation of State legislations existing as on 16.09.2O16 levying tax on sale of goods other than those fir.ding place in amended Entry 54. Section 19 does not save or postpones deprivation or denuding of legislative competerlce of State l,egislature for levying tax on sale of goods other them those mentioned in amended (substituted) Entry 54 ot List II. Section 19 only allows operation and levy of tax under the VAT Act ',vhicl'r is inconsistent with the GST regime for a period of one ye€rr or until the VAT Act is repealed or amended, whichever is earlier. This would mean that the State could continue to 1evy tax under the VAT Act lor the window period of one year or till the VAT Act rvas amended or repealed to align it with the GST regime, whicheve r was earlier. This transitiona-l provision does not enable the State Legislature to make amendments to the VAT Act in contrave rrtior-r of the amended Entry 54 ol List II. 110 At this stage, we m a-y reler ro Article 2432F of the Constitution. [,art IXA dealing with municipalities was inserted in the Constitution by the Constitution (Seventy fourth Amendment) Act, 1992 u,itlr cffect from O 1 .06. 1993. Arriclcs 243 p to Article 243 ZG c()rnl)rrses of Part IXA, all dcaling rr.ith municipalities. By the afor-cs:ti<i provisions rnunicipalitics and municipal

administration were brought under the umbrella of the Constitution. Article 243 Ztr provides for continuance of existing laws and municipalities. This provision is pai materia to Section 19 of the Constitution Amendment Act. Article 243 ZF reads as under: 243 ZF. Continuance of existtng laus and Municipalities: - Nottuithstanding anything in this Part, ang prouision of any laut relating to Municipalities in force in a State immediately before the commencement of the Constitution (Seuentg-fourth Amendment) Act, 1992, tuhich is inansistent with the prouisions oI this Part, shcill continue to be in force until amended or repealed bA a competent Legi.slature or other competent authoritg or until the expiration of one year from such commen(pment, uhicheuer i-s earlier: Prouided that all tle Municipalities exi.sting immediately before such c-ommencement shall continue till the expiration of their duration, unless sooner dissolued by a resolution passed to that effect bg the l,egislatiue Assembly of that State or, in tLLe case of a State hauing a Legislatiue Council, by each house of the lcgislature of thal Sta(e. I 1 L As per this Article, notwithstanding anything in Part IXA of the Constitution, any provision of law relating to municipalities in force in a State immediately before commencement of the Constitution (Seventy-fourth Amendment) Act, 1992, which is inconsistent u,ith Part IXA, shall continue to be in force until amended or repealed by a competent Legislature or other competent authorit-y or until expiration of one year from such commencement, whit:hcvcr is earlier. 8l

84 ll2 In Bondu Ramaswamy (6 supral, Supreme Court was considering challenge to acquisition of land for formation of Arkavattri Layout on the outskirts of Bangalore city by the Bangalore Development Authority under the Bangalore Developrnent Authority Act, 1976. It was in that context Supreme Court considered the question as to whether provisions ol the Bangalore Development Authority Act, 1926, more particularly, that of S.ection 15 dealing with the power of the authority to draw up sche mes for development of Bangalore Metropolitan area became inoperative, void or was impliedly repealed by virtue of Part IXA of thc Constitution. Supreme Court held that Article 243 ZF is a provision enabling continuance of any provision of law relating to municipalities in spite of such provision being inconsist,:nt with the provisions of part IXA ol thc Constitution for specifit:d pt.riod of onc year or until amcnclcd or repealed, a whicheve.: is e:rrlier. It u,as held as follorvs 'Arry statutc or provisiorr thcreof $,hich is incotrstsl(,nt rvith any constitutiotral 1>rovision rvill tr struck down br, courts. ( l()n seqrrentt_v, if t A Act or anv provisron of tlte EIDA Act rs [ouirtl to bc lnc()nststctrt wtth an_\, provisron of [,art IXA o[ the Constitution, rt \r.lll bc strtr<.k clorvn by courts as violattvc oI th(: Constitution, In regard lo an\ l)i,o|rsion of an-v law re atinB ro tnunicipalit ies, Article 2432F suspcnds sur:lr rnvalirlity o-r postpones th(: rnvalidity for a period o[ one vcar from 1.6 l(]<)..1 to enable the coxlpclcnt Lcgislatute to rcmove the incotrslstencv lrr .rnrcnding or repcali:rg sucll law rclatitrg to nrunrcrpalitrcs (o lrr.rrrg tr rrr t.orrsclrr:rnce u,itlt llrc prcvrsr,rrr: ol I'irl IX o, tlt(.(.onstilulton -

85 ZF suspends such invalidity or postpones the invalidity for a period of one year- to enable the compe tcnt [egislature to remove the inconsistency by amending or repealing such law relating to municipalities to bring it in consonance with the provisions of Part IXA of the Constitution. tt4 On the above analysis we have no hesitation in holding that Section 19 of the Constitution Amendment Act cannot be understood or cannot be construed as a source of legislative power. It is also not a saving provision in respect of suspending legislative competence to amend the VAT Act. This aspect was gone into by the Gujarat High Court in Reliance Industries Limited (2 supraf wherein it has bccn helcl as follows: 79.5, Section l9 of the Constitution (One Hundred and First) Amendme nt Act, 2O 16r c:rn also not be a sourcc of poufer to amend the Statc VAT lnrvs. First, the power to amend under Section [ 9 is only frrr :r period of one year from thc commenccment of thc Amendrncnt n ct. l is Evcn in Sheen Golden Jewels (Indiaf Pvt. Limited (7 supraf rcliccl upon by thc Stertc, lcarnecl single judge of the l(crala High Cotrrt held as follou's: l4l. Noq., Ict us cxiinllne l)otll S('('tlon l9 of the CA Act arrd Sectron 174 ofthe KSGS'l A(-t Secti()n l() llliln(lates that any irlcorrsisl(l]t lau, rcla(ing to tax on go<><ls :rnrl senit-t's ttt force in any State l;cfort' 16.(X).20lCr (the commen(('rI( nl ol tlrc CA Al ll slrall continue to bc in for(e "ur)lrl illncrr(lcd or repcal<'<l l)\ ii ( o ll)r'l('r]l I-('qlsl.lture or other comp(:l('nl autll()rrl\". So thc States \r'('t(. llrsl, tt:<ltrttttl (() amend the inconsisleirt 1 13 As has been held by the Supreme Court, Article 243

ri6 la\a,s to bring them in harmony with the CA Act. Otherwise, the Statcs must repeal them, And they were given one year for achieving this. If the State:r do neither, those inconsistent acts stand repealed-

117 tt7 Therefore, lrom the above analysis we can safely conclude that Section 19 oi the Constitution Amendment Act is not a source of power to enable the State Legislature to enact the Second Amendment Act, which is clearly inconsistent with the Constitution Amendment Act. 118 We have already noted that the Constitution Amendment Act, more particularly Sections I to I I and 13 to 20, came into force on and from 16.09.20 16. The reafter Parliament enacted the CGST Act and other related enactments, most provisions of such enactments having come into force on and from O1.O7.2017. State of Telangana also enacted the TGST Act. While majority of the sections came into forcc on 22.06.2017, Section 174 of the TGST Act which provides lor repeal and saving came into force on and from Ol.O7.2Ol7 . Section 174 of the TGST Act reads as undcr "174- Repeal And Sauing:- (1) Saue as <ttlrcrtuise prouided in this Act, on artd from the date of comrLencerrk'ttt of this Ac| 0 The Telartgana Value Added Ta< Act, 2OO5 (Act 5 of 2OO5); except it respect of goocls included ut the Entry 54 of the State List of the Seuer lt Schedule to the Constitttti<trt, (it The Telarrg1ttrta Enterlainnrent.s ? n-r Acl, 1939 (Act X of r939); (iiil Tle Teluryarta Tax ort Entry o.f lvlcttctr Velucles into Local Areas Act. 1996 (Act 26 of l9c)61:

88 (iu) The Telangana Tax on Entry of Goods into Local Areas Act, 2OOl (Act 39 of 2OO1); (") TLLe Telangana Tax on Lunties Act, 1987); 1987 (Act 24 of (u4 The'I-elangana Horse Racing and Betting Tax Regulations, 1358F (Regulation XLIX of 1358F); ("i4 The 'I'elangana Rural Deuelopment Cess Act, 1996 (Act 11 of 1996); (hereafter refered to as the repealed Acts) are herebu repealed. (2) 'f,tae repeal of tLe said Acts and the amendment of the Acts spectfied in section 173 (lrcreaJter referred to as "such amertdmert" or "amended Act", as th.e case mag be) to the exter.I mentioned in sub-section (1) or sectiort 173 shall not- (a) rcuiue anything not in force or existing at the time of such amer,-dment or repeol; or (b) affect the preuious operation of the amended Acts or repec,.Ied Acts and orders or angthing duly done or suffered thereunder: or (c) cffect any igh| priuilege, obligation, or liabilitg acquired, arcnted or incured under tle amended Acts or repealed Acts or orclers urtder such repealed or omended Acts: Prot,ided that ang tax exemption granted as an incentiue against irtuestment through a notiJicatiort shall nol conl tue as priuikzge if the said notification is rescinded on or afte.r the appouted <lag; or (d) a ffe<l (utA taa surcharge, penaltg, fitrc, interest as are due or tnelJ l:ecorne due or ang forfeiture or punishmert( irtatned or irJTtct=d irt respect of ang offence or uiolatiort comnitted agc.inst the prouisions of the amended Acts or repealed Acts; or (e) aJfect atty ittuestigatiort, inquiry. ueifrcatiott (itclucltry scn{t|ry and audit), assessmenf proceedirtgs, adjudication and anlJ other kgal proceedings or recouery of ttrrears or rernedg in respect of atty such tax, surcharge, penalt11, fine, inlerest, ight, ltriuik ga. obligation, Iiabilitg, forfeiture or punislunent, as ttforu:::tticl, attd any sucLr inuestiqatiort, inquiry. ueificotion (ittchulutcl scrutiny and audit). a.s.sessrnenf proceeclings, tuljurlicattorr artd other Leqal prutceerlituJs or recouety of aneors or rerrrc:rlr1 rnay be instituted, t:ontitrtt<<l or ertforced, arl arrry

89 such tax, surcharge, penaltA, fine, interest, forfeiture or punishment mag be leuied or imposed as if these Acts had not been so amended or repealed; (fl affect ang proceedings including that relating to an appeal, reuision, reuieu or reference, instituted before, on or after the appointed day uruler the said amended Acts or repealed Acts and such protnedings slull be continued under the said ameruled Acts or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed. @ 'fhe mention of tlrc parti<ttlar matters referred to in section 173 ond sub-section (1) shall not be held to prejudice or affect tLe general application of section I, BA, 9 and 19 of the Telangona General Clauses Act, 189 1 (Act 1 of 1 891 ) with regard to the effect of repeal". 119 Thus, as per Section I74 (ll (i) the VAT Act stood repealed with effect from O 1 .O7 .2017 except in respect of goods included in Entry 54 of the State List in the Seventh Schedule. When we refer to Entry 54 of the State List i.e., List II it means the entry as it stood on O 1.07.2O 17. We have already noticed that post the Constitution Amendment Act, Entry 54 of List [[ has been substituted whereafter thc field of legislation undcr the said entry is conlined only to taxes on the sale of petroleum crude, high speed diesel, motor spirit (petrou, natural gas, aviation turbine fuel and alcoholic liquor lor human consumption; further ctarifying that this would rlot include sale of such goods in the course of inter-State trade or commerce or sa[(] irr the ctlurse of international tradc or cotnmerce of such goocls. Therelore, in tcrms ol Section 174 (l | (i) ol ttre TGST Act, thc VAT Act stood

90 repealed with e ffect from o1.o7.2017 except 1n rr:spect of the goods covered by the amended (established) trntry 54 of List II. r20 As a matter of fact, we may observe that the very presence of Section 174 (ll (i) in the TGST Act buttresses the stand tal.en b-y the petitioners. l2l ln Sheen Golden Jewels (Indial Rrt. Limited (7 supra| ttre question before the single bench of the Kerala High Court wa s whether the State had the legislative competence to enact Section 174 of the Kerala Goods and Services Tax Act,2OL7 and save the past taxation events when Entry 54 List II stood omittcd perrnanentl-y with effect from 16.O9.20 16. We may mention t.hart Section 174 of the Kerala Goods and Services Tax Act, 2O I i is pai materia to Section 174 ol the TGST Act. The Cour[ u,rrs czrlled upon to examine constitutional validity of Section 174 of the Kerala Goods and Services Ta-x Act, 2OlZ on the anvil of Section l9 ol the Constitution Amendment Act. It was conte ndcrl thar State had no legislative power to over ride Section 19. Keral:r tligh Court took the view that u,hile Scction 19 is a transitional provision; the job ol saving is done bv Section 174. Tl'rough S(-( trorr 174 has repealed the Kcral:r Valrre Added Tax Act,

91 2003, the repeal has not affected the previous operation of the repealed act. In other words, the repeal has not affected any right, privilege, 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 validity of Section 174. t22 We see no conflict or contradiction between Section 19 of the Constitution Amendment Act and Section 174 of the TGST Act. While Section 19 has deferred invalidity of inconsistent legislations till such time those are amended or repealed or lor a period of one year vvhichever is earlier, Section 174 ol the TGST Act has repealed amongst other enactments the VAT Act rvith eflcct from OI.O7 -2O 17 except in rcspect of goods covered bv tl're substituted Entry 54 ol List I[. 'lhus Section 174 ol the TGST Act is in consonance with Section l9 of the Constitution Amendmcnt Act. The above position only supports the casc of thc petitiorrcrs tl-rat the State r.r,as derruded of its compctcnce to lcgislate orl (]ST afte r 16.09.2O16 and ccrtainly aftcr O 1.O7.2O 17. 92 123 Rcpeal of an enactment would mean that such an enactment is erased from the statute book; it would no longer be in existerce. 'lhis aspect was gone into by the Gujarat High Court in Relia:nce Industries Limited (2 supraf. It has been held as follows: "68.Effect of repeal at common lanu-Repeol obliterates the statute as if it has neuer been enacted:

9l MANU/SC/OO2O/1951 : AIR 1951 SC 128 rekned to a passage from the Cranuford's book on Statutory Construction uthich reads as under: 'It is utell-settled that if a statute giuing a special remedg is repealed utithout a sauing clause in fauour of pending suits all suirs mlrsl stop uhere tLe repeal f.nds them. If ftnal relief has not been granted before the repeal uent 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 case under the lanu in force when its decision uas rendered- TLrc effect of tte repeal is to obliterate tLrc statute repealed as completely as if it had neuer eisted, except for the purposes of those octions or suits uhich were commenced, proseanted and concluded uthile it u)as an existing laut. Pending judicial proceedings based upon a statute cannot proceed after its repeal. This rule holds true until tLe proceedings Ltaue reached a fi.nal judgment in the court of last resort, for that court, u.then it comes to announce its decision, confonns it to the latu then existing, and mag therefore, reuerse a judgment which uas correct uhen pronounced in the subordinate tibunal from uhich utherue the appeal utas taken, if it appears that pending the appeal a statute uhich u.tas necEssory to support the judgment of tlrc lotuer courl has been utithdranan bg an absolute repeal." (p.60t) (emphasis suppliecl)

94 '2i'. It is nout uell settled thot such Repealing Act shall be constn)ed to haue not taken auay tlE accrued right of a person- ln G.P.Singh's Principles of Statutory Interpretation, (1 Oth Edn.) 2OO6 at page 631 , it is stated: "Ur..der tlTe common laut ntle the consequences of repeal of a statl, te ar(2 uery drastic- Except as to transactions past and closed, a statute after its repeal is as completelg obliterated as if it had neuer been enacted- The effect is to destrog all inchoate rights and all causes of oction thot mag haue risen under the repealed statute. Therefore, leauing aside tLE coses uthete proceedings uere commenced, prosecuted and brought to a JinaLittl before the repeal, no proceeding under the repealed statute cant be commenced or antinued after the repeal'." 68..7 Th<: aforesaid pinciple k reiterated in thc Constitution Bench decision of the Supreme Court in the case of Kolhapur Canesugar Works Ltd. u. Union of India MANU/ SC/ 0060/ 2OOO : [2o{to] 119 ELT (SC) 68.t1 Thtts, at common law, a statute become non-exi.stent on its repeal, rtnless saued bg some sauing proui,sion." 124 Question which therefore follows is whether a repealed act can be amended? Or to put it a little differently, can a repealed ilct bc saved by the General Clauses Act, 1897 or by the Telangana General Clauses Act, 189 I ? 125 Much reliance has been placed by the learned Advocate General on Sections 8 and BA of the Telangana General Clauses Act, l89 I in support of his contention that despite repeal of thc VAT Act, the Statc had the compete nce, firstly, to promulgate the Ordinance and secondly, to enact the Sccond Amcndrnent Ar-t. Accordirrg to Section 8, where any Act repeals

95 any other enacrrnent, then the repeal shall not effect anything done or any olfence committed or any line or penalty incurred or any proceeding taken before commencement of the repealing Act; or reviving anything not in force or existing at the time when the repeal takes effect; or affect the previous operation of any enactment so repealed or anything duly done or suffered under any enactment so repealed; or affect arly right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or affect any fine, penalty, forfeiture etc, incurred in respect of any offence committed under any enactment so repealed; or aflect any investigation, legai proceeding or remedy ln respect of any such right, privilege, obligation, Iiability, fine, penalty, forfeiture or punishment and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such fine, penaltv, forfeiture or punishmcnt may be imposcd as if the repealil-rg Act had not been passed. r26 Scctior-r B ol thc Telangana Gene ral Clauses Act, 189 1 is similar to Scction 6 o[ the General Clauses Act, 1897. 127 Section B A ol the Telarrgana Gcneral Clauscs Act, 189 I says thtrt rvherc- :Itt,\' itct repeals all-\' ell.lctrncnt l;-i \\'hicll tl-rc

96 text of any previous enactment was amended by express omission, insertion or substitution of any matter then unless a differer-rt intention appears, the repea-l shall not affect continuance of any srrch amendment made by the enactment so repealed and in operation at the time of such repeal. 128 Article 367 of the Constitution of India speaks about the interl;retation of the Constitution of India. Clause (I) of Article 367 is r-elevant. It says that unless the context otherwise requires, the General Clauses Act, 1a97, subject to any adaptatic ns and modifications that may be made therein under Article 3i'z2, sl.rall apply for the interpretation of the Constitution as it applies lor the interpretation o[ an Act ol the Legislature. 129 Gujarat High Court in Reliance Industries Limited (2 supraf e.<amined this aspect as well and held that General Clauses Act, la97 applies or-rly for interpretation of the Constitution but in respect of other mattcrs, such as, savings in the case of repeal etc which arc unrelated to interpretation may not appll' b-v virtuc of Article 367. Section 6 of the General Clauses r\ct, iB97 or Sections 8/8A ol the Telangana General Clauses A.ct, 189 i rvould apply onl,v to repcal of an enactment. A Constitutron Arncndment Act is not or c:rrlnot be termed as an 97 enactment. Therefore, beyond what is stated in Clause (l) of Article 367 of the Constitution, provisions of the General Clauses Act, either the Central Act or the State Act, would not apply to the Constitution, including the Constitution Amendment Act since a Constitution Amendment Act is made by the Parliament in exercise of its sovereign powers under Article 368 of the Constitution. It has been held as follows: 7 I. Applicability of the General Clauses Act, 1897 for the interpretation of the Constitution: 71.i Article 367(ll ot the Constitution states that the General Clauses Act, 1897 (subject to the adaptations and modification made under article 3721 shatl apply for the "interpretation" of the Constitution. The relcvant extract is as under- "367. Interprctation. -( I ) Unlcss the context otherwise requires, the General Clauses Act, 1897, shall, subject to any adaptations and modifications that may be made thcrcin under article 372, apply for the interpretation of this Constitution as it applics for the interpretation of an Act of the t egislaturc of the Dominion of India."

" 1. 30. Effect of section 8 on article 367.-Will section 8 of the General Clauses Act, which provides that when a'rr enactment is repea-lcd and re-enacted, references to the old enactment will be constmed as references to that, re-enacted one, make an'r difference? We do not think so. It should be noted that the words 'u nless the context otherwise requires' (in article 367) mean that the General Clauscs Act, section 8. is to be exr:luded. Even by its terms, section 8 of the Gencral Clauses Act will not apply to the Constitution, becausc expression 'enactment' (which occurs in section 8) would not take in ttre Corlstitution, which is not an 'enactment'. The Constitution is sul)reme and is, in fact, the foundation of all enactments."

99 the repealed act in respect of those goods by virtue of the Second Amendment Act would not arise. 13 1 Though there is no challenge to the Ordinance, nonetheless we may also examine the same since it is the contention of the State that the Ordinance was promulgated during the window period and the subsequent Second Amendment Act is given effect to from the date of promulgamation of the Ordinance, thereby making it a valid piece of legislation. 132 It was strongly argued by learned Advocate General that when the Ordinance was promulgated, State of Telangana had the legislative competence to so promulgate the Ordinance and the Second Amendment Act which was made subsequently was nothing but a continuation of the law as promulgated by way of Ordinance since it was given eflect 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 16.09.2016- Section 19 of the Constitution Amendment Act provided for a rvindow pcriod to the States to removc zrnY inconsistent enactments by rvay o[ amcndment or repeal or urltil expir:rtiotr of one year frorn sttch comrnencemcnt rvhichevcr rv:ts

I00 earlier. Telangana Ordinance No.2 of 2Ol7 was promulgated by the Gov,:rnor of Telangan a on 17 .06.20 17 to further amend the VAT Act. Though the Ordinance was promulgated after coming into force of the Constitution Amendment Act on 16.09.20 16, it WAS SO promulgated within the window period of one year as provided by Section 19 of the Constitution Amendment Act. At this stage we may mention that following the Constitution Amendment Act, State of Telangana enacted the TGST Act with effect fro rn O l.O7 .2O 17 134 Before we deal with the Telangana Ordinance No.2 of 2017, w<t may note that power of the Governor to promulgate ordinanc,: is traceable to Article 213 of the Constitution of India. Article 2l 3 provides as follows: <27:r. Power ol Gouernor to promulgdte Ord.lnances durttg recess of l,egislqt:ure. -(l I f at ang tinte, except ruhen the_ Iagislatiue Assembtg of a State i trt.s<,s^sirrn, or where lltere is o l,elltslettue Cnuncil itr o Stete. except ruhen bolh //<.ru.s<,s o/ the Legislature cre rrr -session, the Gouentor r-s iatr-s7icd thcf .rrcrrrfr.sl2nces exlsl tuluch render it rrccessary for litn lo tek<. rrnrnediate actton, l7e utatl pro,nu[gote suclt Ordinances os Ilre crrcl,{rnsro nces appc,dr lo ltinr lo rctynre: F'rouiclecl that llrc Gouentor.slrnll rrot, tt,ilhout ittsltltcttorts front lte presidett, prontulgote qtlg suclt Ordinonce if--. (a) a Bill contoirun{l tfte -sorrr<, prouisions woulc! under lrli-s Cbn,slirutrorr Itaue required the preuious sorrcllon of tILe presidc t /or tlp o roductio,t tlTereof ulto the legislature; or (b) he would ltaue deented ttecessanJ to rescrt)( ct Bill contatting the satne proursiorts for te consid<,raton of tlae l>resrdctrl; ot (c) on Act of tlte Legislr ur<, oI thc Stote contaiirrq tlu: sQrrt.. ltrouisrorts tL'outd ruvle.r this C.ntslttuttott ltoue been rrrrrolrrl rrnle-s-s, lninng been rt'serue<l for lhe co\siderott()tl of ttrc I'resident, tl lrrrT r<,cetuecl tlr- essent of tle Presidetlt - ()l Att Orditance pronutlqate<l rrrrrjr,r l/us arttcle slrdl lutle rll. satte ktrcc r'tcL cfli'<'l tts arl Act of ltv leqislature of llt(. Stete a.ssenle./ to l\l !lt(, (iou<:rror. l tt euenJ srtt lr ( )rdirLancr,

l0l (a) shall be laid before the, l,egtsLatiue Assemblg of the Stote, or uhere there is a l,eqislatiue Council in the State, before both the Houses, and shall cease to operate at the expiration of six weeks from the reassemblg of the legislature, or tf before the expiration of tluat peiod a resolution disapproving it is passed bg tLrc Legislatiue Assembly and agreed to bg the Le.gtslatiue Council, if aty, upon tle passing of the resolution or, as the case mag be, otl the resolution being agreed to bg the Council; and (b) mag be withdrawn at any time bg the Gouentor. Explanation--where tlte Houses of the Legislature of a State having a lagislatiue Council are summoned to reqssemble on different dates, the peiod of six ueeks shall be reckoned from the later of those dates for the purposes o.f lhis clause- (31 If and so far as an Ordinance under this article makes ang prouision which uould not be ualid if enacted in an Act of the lEgislature of the State assented to bA tfle Gouernor, it shall be rcid: Prouided that, for th.e purposes of the prouisions of this Constitution retating to tlle effect of an Act of the Legislature of a State which is rePugnant to an Act of Parliament or an eisting ktw tt-tith respect to o matter enumerated in the Concurrent List, an Ordinance prontulgated under this arttcle in pursuonce of instftictions from the President shall be deemed to be an Act of the Legislature of the State which hos been reserued for the consideration of the President and assented to by him." 135 While clause (1) provides that if the Governor is satisfied when the Legislative Assembly of a State is not in session or where there is a l,egislative Council in a State, the same is not in session, that circumstances exist which call for immediate action, he may promulgate such Ordinance- Clause (2) clarilies that an Ordinance so promulgated under Article 2 13 of the Constitution shall have the same force and eflect as an Act of the Legislature of the State assented to by the Governor. Holr'ever, every such Ordinance shall be laid before the Legislature and shall cease to operate at the expiration of six weeks from the reassembly of the Legislature. Ciause (3) says that if an Ordinance makes any provision u'hich $'ould not be valid il