Reckitt Benckiser INDIA Private Limited C/O Carry Fast Agencies Through Its Authorized Signatory vs. The State Of Madhya Pradesh

Held

The Court allowed the writ petition, quashing the impugned show cause notice. The Court noted that the issue involved had already been decided by the Supreme Court in the case of State of Telangana and Ors Vs. Trimula Constructions. The Supreme Court, in its judgment, held that Section 19 of the Constitution (101st Amendment) Act, 2016, and Article 246-A formed part of a transitional arrangement, allowing for the continuation and amendment of inconsistent laws for specified periods. However, the amendments made to the Telangana VAT Act and Gujarat VAT Act after 01.07.2017 were correctly held void for want of legislative competence. Based on this precedent, the High Court found that the MP VAT Act stood repealed and no penalty proceedings could be initiated under it after the repeal. The Court granted liberty to the respondent to proceed in accordance with law if so advised.

Facts

The petitioner, Reckitt Benckiser India Private Limited, challenged a show cause notice issued by Respondent No. 3 under Section 52 of the MP Value Added Tax Act, 2002 (MP VAT Act) for imposition of penalty for Assessment Year 2008-09. The petitioner argued that the MP VAT Act and the MP Entry Tax Act stood repealed with the introduction of GST laws. Specifically, the petitioner contended that the MP VAT Act was repealed on 12.06.2017, when the Madhya Pradesh Goods and Service Tax Act (MPGST) came into force, and therefore, no penalty proceedings could be initiated under the repealed MP VAT Act. The show cause notice was issued on 26.06.2020, nine years after the assessment order and nearly three years after the MP VAT Act was repealed.

Key Issues

1. Whether penalty proceedings can be initiated under the MP VAT Act, 2002, after it stood repealed and replaced by the MP GST Act, 2017? The petitioner argued that the MP VAT Act, along with the MP Entry Tax Act, stood repealed with the introduction of GST laws. They contended that the MP VAT Act was repealed on 12.06.2017, as per Section 19 of the Constitution (101st Amendment) Act, 2016, and the MP GST Act came into force on 12.06.2017. Therefore, the respondent lacked the jurisdiction to issue a show cause notice for penalty under the repealed MP VAT Act on 26.06.2020. The petitioner relied on the Supreme Court judgment in State of Telangana and Ors Vs. Trimula Constructions (2023 SC Online SC 1376). The respondent/state, after examining the Apex Court judgment, fairly submitted that the legal issue had already been answered in the cited case.