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TMI Blog2019 (2) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ity, and human rights apart, the nations are guided by naked economic compulsions. The latter part of the last century dedicated itself to dismantling walls around the nations; this century has begun, it seems, determined to raise a few. At the national level, this clamour for economic hegemony is felt acutely, at least, institutionally. 2. Granted, federalism is the pinnacle of a democracy's political maturity; sharing the power signifies its wisdom. But there, too, fiscal discipline demands a watertight division. Our Constitution has, as a case in point, kept the fiscal legislative powers in water-tight divisions-either in List I or in List II. None in List III. In a federal polity, good legislative fences make good political neighbours. A vigilant policeman always guards a thief's virtue, anywhere; as the constitution prevents federal fiscal turf wars. 3. To be explicit, constitutionally, fiscal powers between the Centre and the States stand demarcated. The legislative scheme admits of almost no overlap between the respective domains. The Centre has the powers to levy a tax on the manufacture of goods (except alcoholic liquor for human consumption, opium, narcotics, and so on) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Seventh Schedule- there has been a realignment of legislative powers of the Union and the States. Now, Entry 54 stands modified. In its attenuated form, it denudes, according to the petitioners, from 16.09.2016, the State's legislative power to tax on those items now removed from that Entry. They insist that Section 19 of the CA Act allows "interim or temporary continuation" of all the Acts made earlier under the unamended Entry 54 only up to 16.09.2017. As a Case in point, the petitioners assert that the Kerala Value Added Tax Act has become a dead letter from 16.09.2017. 8. Section 174 of the Kerala Goods and Services Act, 2017, is a saving provision brought about by the State Legislature to save the transactions under the State's various pre-GST enactments, including the KVAT Act. About that provision, the petitioners, first, maintain that Section 19 of the CA Act has repealed all the State laws inconsistent with the GST Laws. And they also, second, insist that the States have been denuded of the legislative power to enact Section 174 because of the amendment to Entry 54 of List II. 9. So the question, the Core Question, as the petitioners put it, is does the State have the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er contends, is a composite one; it proposes to cancel the compounding, besides undertaking a best judgment assessment-simultaneously. The composite notice, the petitioner asserts, is a fait accompli. 13. So the petitioner has filed this writ petition questioning the notices under Section 25, read with Section 42(3) and Section of the KVAT Act. WP (C) No. 11335 of 2018: 14. The Petitioner, a jeweler, is a dealer under the Kerala Value Added Tax Act. The State Tax Officer, the second respondent, inspected the petitioner's business premises in November 2012, seized some records, and, later, issued a notice. He directed the petitioner to produce books of accounts. The petitioner, instead, asked for the return of the seized records. But they were not returned. So the petitioner filed WP (C) No.25376 of 2012. The Court stayed further proceedings. 15. When the stay was in force, in March 2013, the second respondent issued a penalty Notice under section 67 (1) of the KVAT Act, proposing to impose penalties of Rs. 88,22,948/- and Rs. 40,99,06,936/- for the years 2010-11 and 2011-12 respectively. Reminded of the Court's restraint order in WP (C) No.25376 of 2012, the second respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner's final assessments for 2012-13 and 2013-14, under Section 25 (1) of the KVAT Act by making huge additions. 22. The main reason for the Assessing Officer to resort to the best judgment assessment is that after his verifying the petitioner's sales and purchases through the KVATIS module, he found certain unaccounted transactions. The additional reason is that the Intelligence wing of the Department has imposed a penalty upon the Petitioner under Section 47 (6) of the KVAT Act for the offence of attempted evasion of tax while his transporting goods. So the petitioner has assailed the Assessment Orders as unconstitutional and without jurisdiction. Submissions: Petitioner's: 23. In the past one year, a rash of writ petitions has been filed. Those writ petitions may count up to a few thousands. But only a handful of advocates-about half a dozen-argued; the rest adopted those arguments. Shri Abhishek Manu Singhvi, the learned Senior Counsel, instructed by Shri A. Kumar, the counsel on record, led the arguments. He was admirably complemented by Shri Venkataraman, another learned Senior Counsel, instructed by Shri K.P. Abdul Azees and Shri Akhil Suresh. Then they were ably suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore power or authority to have a further repeal and saving, as provided-erroneously though-in Section 174 of the SGST Act. Pithily put, Section 174 of the SGST Act cannot travel beyond Section 19 of the Amendment Act. * A law under Article 246A cannot be the source of power to save legislation under List II of Entry 54 at all. Article 367 & General Clauses Act: * Article 367, too, does not apply, as the constitutional command of repeal is explicit. * Neither KSGST nor CGST provides for repeal or re-enactment. * So, primarily, the General Clauses Act cannot resurrect or rescue the repealed enactments, even if its Sections 6 and Section 24 are invoked. * The State stands protected for the Centre undertakes to reimburse its losses. * The clear and unequivocal legislative intent of Section 19 of the Amendment Act is to stop the operation KVAT, 2003, from 16.09.2017. * A Statutory saving-provision, such as Section 174 of KSGST, emanating from the State's legislative power, cannot nullify the constitutional mandate of Section 19 of the Amendment Act, emanating from the Parliament's constituent power. Section 174 - Absence of Legislative Power: * Article 367 does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions or any rights and liabilities accrued. * The provisions contained in Sections 173 and 174 of the State Act are not inconsistent with the provisions contained in the Amendment Act. On the General Clauses Act and Application: * Every latter enactment which supersedes an earlier one or puts an end to a previous state of the law is presumed to intend the continuance of rights accrued and liabilities incurred under the superseded enactment. * This interpretative presumption could be negated only if there were sufficient indications express or implied in the later enactment designed to obliterate the earlier state of the law. * If the legislative intent to supersede the earlier law is the basis upon Which the doctrine of implied repeal is founded, there could be no incongruity in attributing to the later legislation the same intent which Section 6 presumes where the word 'repeal' is expressly used. * Where an intention to effect repeal is attributed to a legislature, then the same would attract the incidence of the saving found in Section 6 of the General Clauses Act. * The power to make a law regarding a tax comprehends, within its power, how to levy that tax and dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et-off benefits at all the previous stages. 30. In other words, the focus was shifted from taxable event to destination-based taxation. It avoids the evil of cascading taxation or tax on tax trouble. So goes the motto: One Nation-One Market-One Tax. 31. A nascent enactment in a nebulous field of taxation will have many teething troubles. GST is no exception. In its path to perfection, GST has much dust to settle-legislatively and judicially. These are the days of confusion and cacophony: many views, many interpretations, and many jurisprudential mumblings. GST: The Origins: 32. Before its advent as a revolutionary indirect tax regime, Goods and Services Tax (GST) had been on the parliamentary anvil for more than a decade. Its need as a harmonised indirect tax, encompassing all goods and services was documented as early as in 2004. That year the Task Force on Implementation of the Fiscal Responsibility and Budget Management in its Report stressed the need. The first official announcement for a transition to GST, though, was made by the Government of India in 2006-07 (the Budget Speech). The Government's commitment stood reiterated in the Budget Speech of 2008-09, too. But the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tarun Jain's Goods and Services Tax, already copiously quoted, observes that in constitutional terms, GST is unique because of these aspects of its design: 1. It provides for the concurrent exercise of taxing powers by the Centre and the States on the same subject-a unique and unprecedented measure. 2. Both the Centre and the States are to act in tandem based on the GST Council's recommendations. Salient features of GST: 39. The salient features of GST are these[3]: (i) GST applies on 'supply/ of goods or services as against the present concept on the manufacture of goods, or on the sale of goods, or on the provision of services. (ii) GST is based on the principle of destination-based consumption taxation as against the present principle of origin-based taxation. (iii) It is a dual GST with the Centre and the States simultaneously levying a tax on a common base. GST to be levied by the Centre is called Central GST(CGST) and that to be levied by the States called State GST (SGST). (iv) An Integrated GST (IGST) is levied on inter-state supply (including stock transfers) of goods or services. This shall be levied and collected by the Government of India, and such tax sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. (xvi) Accounts would be settled periodically between the Centre and the States to ensure that the credit of SGST used for payment of IGST is transferred by the Exporting State to the Centre. Similarly, IGST used for payment of SGST would be transferred by the Centre to the Importing State. Further, the SGST portion of IGST collected on B2C supplies would also be transferred by the Centre to the destination State. The transfer of funds would be carried out based on information contained in the returns filed by the taxpayers. (xvii) The laws, regulations, and procedures for levy and collection of CGST and SGST would be harmonized to the extent possible. 40. GST replaces these taxes currently levied and collected by the Centre: (a) Central Excise Duty, (b) Duties of Excise (Medicinal and Toilet Preparations), (c) Additional Duties of Excise (Goods of Special Importance), (d) Additional Duties of Excise (Textiles and Textile Products), (e) Additional Duties of Customs (commonly known as CVD), (f) Special Additional Duty of Customs(SAD), (g) Service Tax, (h) Cesses and surcharges, in so far as they relate to the supply of goods and services. 41. State taxes that g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Now, this Article stands repealed. As to the amended constitutional provisions, Article 248 confers residuary legislative powers on Parliament. Now this provision is subject to Article 246A of the Constitution. Article 249, amended through Section 4 of the Act, now stands changed so that if Rajya Sabha approves the resolution with 2/3rd majority, Parliament will have powers to make necessary laws regarding GST, in the national interest. So has Article 250 been amended; Parliament will have powers to make laws on GST during the emergency period. 47. At a different plane are the other amendments. Article 268 has been amended so that excise duty on medicinal and toilet preparation are omitted from the State List and are subsumed in GST. And Article 269 would empower the Parliament to make GST related laws for inter-state trade or commerce. Article 270 now provides for collection and distribution of tax to be done according to Article 246A. Then, under Article 271, GST has been exempted from being part of the Consolidated Fund of India. The amended Article 286 includes the supply of goods and services under its ambit, rather than just sale or purchase of goods; Article 366 now inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencement, whichever is earlier. 52. Until the Constitution Suffered its 101st Amendment-that is, The Constitution (One Hundred & First Amendment) Act, 2016- the Union and the State Governments have been collecting, as is relevant here, the indirect taxes under dearly demarcated legislative fields as shown in the Seventh Schedule. Then, there were 97 Entries in List-I, 66 in List-II, and 47 in List-III, not all those dealings with the Legislature's taxing power though. In List I, principal among the Entries concerning taxes are Articles 41, 42, 83, 84, 87 to 92, 92A, 92B, 92C, 97; and in List II are Entries 26, 45, 47 to 61 and 63. 53. The CA Act has brought drastic changes in the federal taxing powers of the State; it has introduced a couple of Articles, amended a few, and done away with a few more. At a glance we can appreciate the changes: Before Amendment After Amendment Impact 246A Not existing Introduced Special provision on goods and services tax conferring simultaneous legislative powers on both the Union and the States. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tside their state or is in the course of import or export. Originally, States could not levy and collect tax on specific Inter-state transactions. With omitting Clause (3), now even inter-state transactions of that nature would attract GST. 366. Definition Inserted The definitions have been added to the Constitution: (12A) Goods and Services Tax; (26A) Services; and (26B) State. 368 Power of Parliament to amend the Constitution and procedure therefore Amended As regards provisions and laws regarding GST Council, Parliament has been vested with the power to amend the Constitution. Sixth Schedule Provisions on the Administration of Tribal Areas in the States of Assam, Meghalaya, Tripura, and Mizoram 8. Powers to assess and collect land revenue and to impose taxes. Amended It concerns powers to assess and collect land revenue and to impose taxes in the Tribal Areas of a few States. Seventh Schedule List I : Barring those excluded, the Union could levy excise duty on all other goods, including tobacco, manufactured or produced in India. The excluded ones are these: (a) alcoholic liquors for human consumption; (b) opium, Indian hemp, and other narcotic drugs and narco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or levy of these taxes within the States.[6] Kerala Enactment 55. Kerala Goods and Services Tax Act, 2017 (Act 20 of 2017) received the Governor's assent on the 16th day of September 2017. It provides for, as the preamble suggests, levy and collection of tax on intra-State supply of goods or services, or both by the State of Kerala. As it is in pari materia with the Central Goods and Services Tax Act, it needs no much elaboration, but for one provision: Section 174, the customary 'repeal and saving' provision. 174. Repeal and saving.-(1) Save as otherwise provided in this Act, on and from the date of commencement of this Act,- (i) the Kerala Value Added Tax Act, 2003 (30 of 2004) except in respect of goods included in entry 54 of the State List of the Seventh schedule to the Constitution including the Goods to which the Kerala General Sales Tax Act, 1963 (15 of 1963) is applicable as per the provisions of the Kerala Value Added Tax Act, 2003 (30 of 2004); (ii) the Kerala Tax on Entry of Goods into Local Areas Act, 1994 (15 of 1994); (iii) the Kerala Tax on Luxuries Act, 1976 (32 of 1976); and (iv) the Kerala Tax on Paper Lotteries Act, 2005 (20 of 2005) (hereinafter re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 4 of the Interpretation and General Clauses Act, 1125 (Act VII of 1125) with regard to the effect of repeal. (4) The Kerala Goods and Services Tax Ordinance, 2017 (11 of 2017) is hereby repealed. (5) Notwithstanding the repeal of the Kerala Goods and Services Tax Ordinance, 2017 (11 of 2017) anything done or any action taken under the said Ordinance, shall be deemed to have been done or taken under this Act. (italics supplied) Constitutional Invalidity: 56. This Court is called upon to examine the constitutional validity of Section 174 of the KSGST Act. Its invalidity is set up in the face of Section 19 of the CA Act. The petitioners argue, among other things, the State has no legislative power to override Section 19 of the CA Act. 57. A statute may be unconstitutional if it is enacted in the absence of legislative competence, in violation of Fundamental Rights guaranteed to the citizens of India, or in contravention of other constitutional constraints. For the Constitution is the fundamental or basic law to which all the laws must conform. It is superior even to the will of the legislature. Dr. C. D. Jha in his illuminating Judicial Review of Legislative Acts[ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bihar Distillery Ltd., the Court invokes Lord Denning's observations in Seaford Court Estates Ltd Vs. Asher[1949 (2) KB 481]: the job of a Judge in construing a statute must proceed on the constructive task of finding the intention of Parliament and this must be done (a) not only from the language of the Statute but also (b) upon consideration of the social conditions which gave rise to it, (c) and also of the mischief to remedy which the statute was passed; and if necessary, (d) the Judge must supplement the written word to give 'force and life' to the intention of the legislature. Constitution was prospective in its operation: 61. In Keshavan Madhava Menon v. The State of Bombay[1951 CriLJ 680] = 1951 (1) TMI 32 - SUPREME COURT the Supreme Court was concerned with the legality of the prosecution of the appellant for contravention of the Indian Press (Emergency Powers) Act, 1931. The offence had been committed before the Constitution came into force, and prosecution launched earlier was pending after January 26, 1950. The enactment which created the offence was held to be void under Art.19 (1) (a) read with Art. 13, as contradicting one of the Fundamental Rights guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrochemical Industries Co. Ltd. v. Electricity Inspector.[(2007) 5 SCC 447] = 2007 (5) TMI 591 - SUPREME COURT Federal Features: Article 246A - A Unique Federal Feat: 66. The first illustration to this effect is Article 246-A which makes a special provision for GST. By way of Article 246-A, the Constitution Amendment Act creates (a) a new legislative field conferring, (b) outside the three Lists of the Seventh Schedule, (c) concurrent powers on both Parliament and the State Legislatures to enact on the same subject matter at the same time. Thus, there is a fundamental change to the scheme of "legislative relations" between the Union and the States by the CA Act: Article 246-A.[9] 67. To exemplify, Article 246-A does change the legislative distribution of powers; however, it does not upset the delicate balance between the Union and the States. Instead, it carries out the function of cross-empowerment. On the one hand, it enables the Union, according to Tarun Jain, to legislate and collect taxes on certain subjects which hitherto remained within the exclusive fold of the States-such as the taxes on sale and purchase of goods, luxury taxes, advertisement taxes, and so on. While d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution; and (3) as an incident of sovereignty. Bimolangshu Roy, in fact, invokes the doctrine of inherent powers. Thus, it felicitously observes: 21. The authority to make law flows not only from an express grant of power by the Constitution to a legislative body but also by implications flowing from the context of the Constitution is well settled by the various decisions of the Supreme Court of America in the context of American Constitution. A principle which is too well settled in all the jurisdictions where a written Constitution exists. The US Supreme Court also recognised that the Congress would have the authority to legislate with reference to certain matters because such authority is inherent in the nature of the sovereignty. The doctrine of inherent powers was propounded by Justice Sutherland in the context of the role of the American Government in handling foreign affairs and the limitations thereon. In substance, the power to make the legislation flows from various sources: (1) express text of the Constitution; (2) by implication from the scheme of the Constitution; and (3) as an incident of sovereignty. 71. In Synthetics and Chemicals Ltd. v. State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the legislature, in enacting the law, consciously applied its mind to the source of its own competence. Competence to legislate flows from Articles 245, 246 and the other Articles falling in Part XI of the Constitution. In defending the validity of a law questioned on the ground of legislative incompetence, the state can always show that the law was supported under any other entry within the competence of the legislature. Indeed, in supporting legislation, sustenance could be drawn from many entries. The legislation could be composite legislation drawing upon several entries such as 'rag-bag' legislation, particularly familiar in taxation. 75. In State of AP v. National Thermal Power Corpn. Ltd., [AIR 2002 SC 1895] = 2002 (4) TMI 694 - SUPREME COURT OF INDIA the Supreme Court has observed that the power of the State Legislature to enact a law to levy tax by reference to List II of the Seventh Schedule has two limitations: one, arising out of the entry itself, and the other, flowing from the restriction embodied in the Constitution. Temporary Statutes: 76. Statutes, as we know, are of two types: perpetual and temporary. By default, mostly the statutes are perpetual, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is to continue in force only for a certain specified time, it is, according to Craies[10], a temporary Act. According to the same learned author, Temporary Acts have these peculiarities: Commencement: If an Act is in the first instance temporary and is continued from time to time by subsequent Acts, it is considered as a statute passed in the session when it was first passed, and not as a statute passed in the session in which the Act which continues its operation was passed. Expiration: As a general rule, and unless it contains some special provision to the contrary, after a temporary Act has expired, no proceedings can be taken upon it, and it ceases to have any further effect. 81. Another celebrated commentary-G. P. Singh's Principles of Statutory Interpretation[11]-notes that a statute is either perpetual or temporary. It is perpetual when no time is fixed for its duration, and such a statute remains in force until its repeal, which may be express or implied. A perpetual statute is not perpetual in the sense it cannot be repealed; it is perpetual in the sense it is not abrogated by efflux of time or by non-user. 82. A statute, on the other hand, is temporary when its dura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference between statutes which expire and statutes which are repealed. Although 'the latter become as if they had never existed (except so far as they relate to transactions already completed under them), yet with respect to the former, the extent of the restrictions imposed, and the duration of the provisions, are matters of construction'[14]. 87. Indeed, there are many sunset clauses, such as the 'entire' sunset clause compared to the 'sectional'; the 'conditional' compared to the 'unconditional'; the 'direct' compared to the 'indirect'. Confining our discussion to the issue on hand, we may note that a sunset clause is direct when it prescribes the termination of the whole or part of the act which is embodied, indirect where it refers to a different act. Here, I reckon, if we accept the petitioners' contention, then Section 19 of the CA Act amounts to an indirect sunset clause-at best. 88. In this context, A.E. Kouroutakis observes that while a plethora of direct sunset clauses is recorded in the statute books, indirect sunset clauses are mainly recorded in constitutional documents. Therefore, the common utility of indirect sunset clauses is recorded in constitutional order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uth Africa in 1993, described it as the 'Interim Constitution'. It has a two-year sunset clause. (b) Sunset Clauses and Constitutional Design: 92. A.E. Kouroutakis, in the chapter named as above, quotes a very interesting stance Jefferson has taken. The third American President, regarded as the US progenitor of sunset laws, in the pre-constitutional days, was concerned with the perpetuity of the constitution. He suggested to Madison about sunsetting on any statute after nineteen years. According to him, "no society can make a perpetual constitution or even a perpetual law. The earth belongs always to the living generation. [...] Every constitution, then, and every law, naturally expires at the end of 19 years. If it be enforced longer, it is an act of force and not of right."[17] (c) Pragmatic Injustice and Sunset Clauses: 93. Finally, we may consider the sunset clauses in the context of pragmatic injustice. Pragmatic injustice, according to Roscoe Pound[18], exists when the reality is far from the ideal, which is prescribed in the law books. Currently, although equality is the default rule and it is emphatically recognised in constitutional and international documents, the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent period for different purposes." 97. Transitional provisions, the learned author continues to observe, may be relatively unimportant, in that by definition they affect relatively few cases, but they are extremely complicated; and they can be important to the cases affected[20]. Thornton in his Legislative Drafting[21] acknowledges the difficulty in describing what constitutes a transitional provision. According to him, the function of a savings provision in the legislation is to preserve or 'save' a law, a right, a privilege, or an obligation otherwise repealed or ceased to have an effect. 98. The function of a transitional provision, Thornton[22] adds, is to make special provisions for applying legislation to the circumstances which exist when that legislation comes into force. Both terms are loosely used with overlapping meanings; there is little or no advantage in seeking to pursue a water-tight distinction between them. But the distinguishing criterion is the focus of the intent of the drafter: if time is the focus, then the drafter must title and express the provision as transitional; if the focus is on exception, then the drafter must title and express the provision as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collect the cess and taxes due till that date of validation. Tata Iron and Steel has held that the Validation Act did not enable the State to collect the cess and taxes not collected till the date of validation. One of the reasons it assigned was that the Validation Act contained no saving clause and section 6 of the General Clauses Act, too, would not affect a temporary statute. So there could be no recovery and collection of cess and taxes which may have become due but had not been collected till the date of validation. 104. That said, Tata Iron and Steel has gone on to observe that a temporary statute on its expiry is not dead for all purposes, even in the absence of a saving provision like section 6 of the General Clauses Act. The question is, as stressed earlier, essentially one of construction of the Act. The nature of the right and obligation resulting from the provisions of the temporary Act and their character may have to be regarded as determinative of whether the said right or obligation is enduring or not. 105. We have, first, considered what a temporary statute is, amply aided by Craies's and G. P. Singh's commentaries. The next question is, which is the temporary st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... never existed except for the purpose of those actions which were commenced, prosecuted and concluded whilst it was an existing law". 109. To decide whether any particular transaction is affected by the repeal of an Act, it is necessary to ascertain whether the transaction in question was completed when the Act was repealed. Thus, if an Act gives a right to do anything, the thing to be done, if only commenced but not completed before the Act is repealed, must upon the repeal of the Act be left in status quo. So, under some statute, if a right becomes vested upon the completion of some certain transaction but not before, no right whatever will have been acquired if the statute in question is repealed before the transaction is completed. 110. Repeal of statute results in nullification of the subordinate legislation the repealed statute has engendered. That is, when a statute is repealed, any by-law or statutory instrument made under that statue ceases to be operative unless there is a saving clause in the new statute preserving the old by- law or statutory instrument. 111. We may acknowledge there lies a difference between the repealing of an entire Act and that of, say, a single c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust never forget that it is a constitution we are expounding." 116. To begin with, generally, the predominant approach of the Indian Judiciary, according to M.P. Jain[25], was positivist; that is, to interpret the Constitution literally and to apply to it more or less the same restrictive canons of interpretation as are usually applied to interpreting ordinary statutes. To some extent, the Constitution itself incorporates the principle of statutory construction. Article 367 provides that the General Clauses Act, 1897, shall apply for interpreting the Constitution as it applies for interpreting legislative enactments. The courts have held that not only the 'general definitions' in the General Clauses Act, but also the "general rules of construction" in the Act, apply to the Constitution. 117. The General Clauses Act can be amended by Parliament. Article 367 thus means that interpretation of many words and phrases used in the Constitution can be modified by Parliamentary legislation without amending the Constitution. From its initial days of literal, restrictive interpretation, the Constitutional Courts have shifted towards liberal, purposive interpretation. The liberal approach is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may be imposed as if the repealing Act had not been passed. 121. Indeed, we can refer to the precedents on Section 6 of the General Clauses Act to appreciate how the repeal of an enactment affects the pending cases or proceedings under that repealed enactment. In Ambalal Sarabhai Enterprises Ltd. v. Amrit Lal & Co., [(2001) 8 SCC 397] = 2001 (8) TMI 1368 - SUPREME COURT the Supreme Court has observed that as a general rule, in view of Section 6, the repeal of a statute, which is not retrospective in operation, does not prima facie affect the pending proceedings which may be continued as if the repealed enactment were still in force. In other words, such repeal does not affect the pending cases which would be decided as if the enactment were not repealed. In fact, when a lis commences, all rights and obligations of the parties get crystallised on that date. The mandate of Section 6 of the General Clauses Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Act, the Legislature may desire to consider a saving clause, to protect those who have acted as per the law till then existing. The means for providing this protection is the saving clause. Black's Law Dictionary defines "Saving Clause" in a statute as an exception of a special thing out of the general things mentioned in that statute; it is ordinarily a restriction in a repealing act, which is intended to save rights, pending proceedings, penalties, and so on, from annihilation that would result from an unrestricted repeal. In other words, "a saving clause is generally used in a repealing act to preserve rights and claims that would otherwise be lost." 127. Benion in his Statutory Interpretation[27] defines a saving as a provision "the intention of which narrows the effect of the enactment to which it refers so as to preserve some existing legal rule or right from its operation". According to the learned author, a saving resembles a proviso, except that it has no particular form. A saving often begins with the words 'Nothing in this [Act shall ... .' A saving may be qualified or conditional. Indeed, a saving is taken not to be intended to confer any right which did not exist a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose powers does not arise; but in a federal polity, the Constitution usually demarcates the legislative boundaries. Thus, as to the division of legislative powers, Article 246, and now Article 246A too, of our Constitution holds the key. Inherent Legislative Power: 133. Article 246 of the Constitution deals with the distribution of legislative powers. Under Clause (1) of that Article, Parliament has the exclusive power to make laws on any of the matters enumerated in List I (Union List) in the Seventh Schedule. Under Clause (2) both Parliament and the State Legislature have concurrent powers to make laws on any matter enumerated in List III (the Concurrent List) of the Seventh Schedule. But the State Legislature's power to legislate over the matters in the Concurrent List is subject to Parliament's power under the Union List. Then, of course, subject to Parliament's powers under List I and List III, the State Legislature has the exclusive power to make laws on any matter enumerated in List II (State List). Besides, under Article 245(4) of the Constitution, Parliament has the power on any matter for any part of the territory of India not included in a State. 134. The CA Act examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Kerala Tax on Paper Lotteries Act 139. We can see the KVAT Act, the focal enactment for our discussion, finds a place in the table on both sides: amendment and repeal. The same enactment could not have been amended and repealed simultaneously; if so, it proves the idiom "have the cake and eat it too." We can either keep the cake or eat it; so is the case with an enactment: it can either be amended or repealed. For the amendment and repeal are mutually exclusive. Yet, paradoxical as it may sound, the distinction between amendment and repeal, notes Vepa P. Sarathi in his Interpretation of Statutes[29] is one of degree. 140. In fact, the KVAT Act stands repealed "except in respect of goods included in entry 54 of the State List of the Seventh Schedule to the Constitution, including the Goods to which the Kerala General Sales Tax Act, 1963" applies as per the KVAT Act. 141. Now, let us examine both Section 19 of the CA Act and Section 174 of the KSGST Act. Section 19 mandates that any inconsistent law relating to tax on goods and services in force in any State before 16.09.2016 (the commencement of the CA Act) shall continue to be in force "until amended or repealed by a competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed." 145. Collaterally it follows that all the judicial and quasi- judicial proceedings arising from the above contingencies, too, stand saved. 146. Of course, in most cases, the question is, as the petitioners put it, whether Section 174 (2) (a) "revives" the KVAT Act, 2003 for the authorities to issue notices under that Act beyond 16.09.2017. The petitioners contend that revival presupposes the pre-existence of something valid. For them, the KVAT Act had ceased to operate completely on 16.09.2017. Legally it died that day, they assert. To support this contention, they have relied on Ambalal Sarabhai Enterprises. 147. Ambalal Sarabhai Enterprises examined, pending a tenancy dispute before a rent-control court, through amendment, its jurisdiction is taken aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuted Entry 54 with effect from16.09.2016, and Section 19, the petitioners argue, extended its transitional life by one year. That extended period ended on 15.09.2017. It is, therefore, mandatory for levy, assessment, and collection, the petitioners assert, to have been completed before 15.09.2017, for any VAT issues under the pre-GST regime lost their relevance beyond 30.06.2017. 152. In Somaiya Organics (India) Ltd. and Ors. vs. State of UP [AIR 2001 SC 1723] = 2001 (4) TMI 84 - SUPREME COURT OF INDIA, the case concerns U.P. Excise Act, 1910. The question to be considered was this: the vend fee, though levied under an appropriate state enactment, was not collected when that enactment was in force. It was prospectively declared ultra vires. Once the source of power disappeared, can the authorities collect the vend fee levied when the act was in force? The Supreme Court has held that the vend fee levied but not collected previously cannot be collected then. 153. In Manattitillah Krishnan Thangal v. State of Kerala,[AIR 1971 Ker 65 (FB)] = 1970 (4) TMI 166 - KERALA HIGH COURT this Court has held that the content of a valid law under Article 265 is that it should provide for the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, indicated expressly or by necessary implication in the subsequent statute, were to abrogate or wipe off the former enactment, wholly or in part, then it would be a case of total or pro tanto repeal. On the other hand, if the intention were merely to modify the former enactment by engrafting an exception or granting an exemption, or by super-adding conditions, or by restricting, intercepting or suspending its operation, such modification would not amount to repeal. 157. Because of Art. 265, if every tax has to be imposed by "law" it would appear, observes the Supreme Court in Chhotabhai Jethabhai Patel & Co. v. Union of India[AIR 1962 SC 1006] = 1961 (12) TMI 1 - SUPREME COURT OF INDIA, to follow that it could only be imposed by a law which is valid. The law should be (1) within the legislative competence of the legislature; (2) the law should not be prohibited by any particular provision of the Constitution such as, for example, Arts. 276(2), 286 and so on; and (3) the law or its relevant portion should not be invalid under Art.13 being repugnant to those freedoms which are guaranteed by Part III of the Constitution. 158. In Commissioner of Income Tax, Bhopal vs. Shelly Prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC 536] = 2000 (2) TMI 823 - SUPREME COURT OF INDIA, another Constitution Bench decision, has followed Rayala Corporation. This decision, too, has elaborated on neither the semantic significance nor the supposedly distinct legal impact of these two expressions. 162. But Kolhapur Cane Sugar Works stresses that at common law, the normal effect of repealing a statute or deleting a provision is to obliterate it from the statute-book as completely as if it had never been passed. To this rule, an exception is engrafted by Section 6(1) of the General Clauses Act. If a provision of a statute is unconditionally omitted without a saving clause in favour of pending proceedings, all actions must stop where the omission finds them, and if final relief has not been granted before the omission goes into effect, it cannot be granted afterwards. Savings of the nature contained in Section 6 or in special Acts may modify the position. 163. Thus the operation of repeal or deletion as to the future and the past largely depends on the savings applicable. Sometimes, a particular provision in a statute may be omitted, and in its place another provision dealing with the same contingency is introduced. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertaken, turns out to be an academic exercise. Limitation: 167. The petitioner in one writ petition has argued that on the date when the first ever Show Cause Notice, dated 15.03.2018, under Section 8 (f) (iv), read with Section 25, of KVAT Act was issued, KSGST, 2017 had been in operation for almost six months. And the KVAT, 2003 stood expired. 168. The impugned Notices have been issued for the alleged assessment of the escaped turnover. All the notices, the petitioners have maintained, pertain to the AYs 2010-2011 and 2011-2012, but were issued in March 2018 and beyond. The time for an assessment under Section 25 is five years for the relevant assessment years; so the notices are barred by time. Section 42(3) of the KVAT Act, according to them, does not save the limitation under Section 25 of the Act. They have also contended that composite notices are illegal and impermissible. 169. To sustain their plea, the petitioners, among other things, have argued that on the assessees' filing the returns under Section 20, the assessment stands completed on "the self- assessment" basis, by the mandate of Section 21. Therefore, the assessments are deemed to have been completed. 170. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. And the General Clauses Act does not apply to the State Legislation. But, perhaps, Section 4 of the Kerala Interpretation and General Clauses Act could be roped in, if ever we need anything to be saved under a repealed enactment. We can, however, also accept here that neither act needs to be invoked. 175. Though the General Clauses Act applies to repeals, it does not apply to repeals occasioned by a Constitutional Amendment. This proposition, too, needs no contradiction. 178. What does Section 19 of the CA Act do? It repeals or omits, for instance, a congeries of state statutes. And, indeed, the whole Amendment Act is prospective. So these repealed state acts failed to survive beyond the date mentioned in Section 19. They perished. First, prospectively, no State Legislature could trifle with the constitutional mandate under the Amendment Act. But, prospective as the Amendment Act is, could the State have saved the causes and the consequences flowing from the past enactments-enactments once legitimate and living. 176. We have found that the General Clauses Act is unavailable; and that is unavailable on more than on ground: (a) Omission; (b) repeal by a Constitutional Act; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pecial provision (if it can be called a provision) on the Goods and Services Tax. It empowers, as rightly contended by the learned Senior Counsel Shri Venkataraman, both the Union and the State, for the first time, to have simultaneous-not concurrent- powers to legislate on certain items. Indeed, concurrency yields to the doctrine of repugnancy, but simultaneous legislative power does not. That is, both the legislatures, say one from the Union and the other from the State, coexist-operate in the same sphere, subject to other constitutional safeguards. 184. In Synthetics and Chemicals Ltd., the Supreme Court has held that the power to legislate does not flow from a single Article of the Constitution. To articulate this assertion and to elaborate on it, Bimolangshu Roy observes that besides the declaration in Article 246, there are various other Articles in the Constitution which confer authority on the Parliament or on a State legislature to legislate, under various circumstances. 185. Indeed the State legislatures are assigned only specified fields of legislation, the residuary legislative powers lying with the Parliament. But taxing entries are distinct from the general entries. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in thirty days after its receiving a copy of the judgment, a statutory appeal or takes out any other legally sustainable proceedings against the orders under challenge, the statutory authority will entertain the appeal or the proceedings as having been filed in time. And to enable the petitioners to approach the appellate authorities, the Department will defer coercive steps by thirty days, from the date of their receiving a copy of the judgment. If the appeals involve limitation, the assessee concerned may place before the appellate authority all its defences, including the judgment of this Court in W.A.No.230 of 2017. 192. In the cases of mere notices which ought to be replied to, the petitioners will have 15 days to do so. The 15 days' time, too, must be reckoned from the day the petitioners received a copy of the judgment. No order on costs. ----------------- Notes: 1. Tarun Jain's Goods and Services Tax, Constitutional Law & Policy, ST, EBC, Ed.2018, p.59 (e-book) 2. Id., P.69 (e-book) 3. http://gstcouncil.gov.in/brief-history-gst, accessed on the 10th January, 2019. 4. Examining the of the Constitution (One Hundred and First Amendment) Act, 2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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