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TMI Blog2023 (10) TMI 1208X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution, they have no meaning and were merely historical. The reason is that they were operative, for a limited duration like Section 19. However, the fact remains that those provisions as well as Section 19 were enacted in exercise of the constituent power. Section 19 is not, in this court s opinion comparable to a mere Parliamentary enactment. There cannot be any gain in saying that Section 19 is not a mere legislative device. It was adopted as part of the 101st Constitutional Amendment Act. Undoubtedly, it was not inserted into the Constitution. Whatever reasons impelled Parliament to keep it outside the body of the Constitution, the fact remains that it was introduced as part of the same Amendment Act which entirely revamped the Constitution. It cannot be in dispute that Section 20 existed for a period of two years and enabled the President to issue orders for the removal of difficulties experienced in the course of implementing the amendments to the Constitution. If indeed those parts of the amendments were not enacted in the exercise of constituent power but mere legislative power, there would be no legitimacy of the power conferred upon the President under Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fers a limited legislative power to desire or not to desire the continuance of the levy. This limited legislative power was not constricted or limited, in the manner alleged by the states; it is circumscribed by the time limit, indicated (i.e. one year, or till the new GST law was enacted). It could, therefore, enact provisions other than those bringing the existing provisions in conformity with the amended Constitution. Validity of Telangana Act tested from the touch stone of its originating as an ordinance - HELD THAT:- In the present case, the Telangana ordinance was promulgated on 17.6.2016. The Telangana State GST Act was enacted and received the assent of the Governor on 25.05.2017; it was brought into force on 01.07.2017. The state GST Act contained a savings and repeal law, which sought to save acts done, privileges and rights accrued under the repealed enactment, i.e. the State VAT Act - The question of legislative competence would not arise, because the mere confirmation of an ordinance is within the competence of the State legislature. Since the law was introduced through a different procedure, i.e. ordinance, the effect of that law, empowering the VAT officials to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 023, C.A. No. 1647/2023, C.A. No. 1644/2023, C.A. No. 1638/2023, C.A. No. 1678/2023, C.A. No. 1631/2023, C.A. No. 1681/2023, C.A. No. 1641/2023, C.A. No. 1640/2023, C.A. No. 1680/2023, C.A. No. 1639/2023, C.A. No. 1646/2023, C.A. No. 1635/2023, C.A. No. 1642/2023, C.A. No. 1650/2023 S. RAVINDRA BHAT And ARAVIND KUMAR , JJ. For the Appellant : Mr. Vikram Nankani, Sr. Adv. Ms. Kavita Jha, AOR Mr. Shammi Kapoor, Adv. Mr. Arnab Roy, Adv. Mr. Aditeya Bali, Adv. Mr. Prithwiraj Choudhury, Adv. Ms. Prachi Jain, Adv. Mr. Prithwiraj Choudhuri, Adv. Ms. Archana Pathak Dave, Adv. Ms. Deepanwita Priyanka, AOR Mr. Varun Mishra, Adv. Mr. Ankur Jain, Adv. Mr. Prablin Singh Abrol, Adv. Mr. Aniruddha Singh Rajavat, Adv. Mr. Sanchit Jain, Adv. Mr. Anshul Agarwal, Adv. Mr. Ajay Sharma, Adv. Ms. Manju Jetley, AOR Mr. Arvind P.datar, Sr. Adv. Mr. B.S. Prasad A.G.for Telangana State,Sr. Adv. Mr. Somanadri Goud Katam, AOR Mr. Rahul Unnikrishnan, Adv. Mr. Sirajuddin, Adv. For the Respondent : Mr. Soayib Qureshi, AOR Ms. T. Archana, Sr. Adv. Mr. S. Dwarakanath, Sr. Adv. Mr. K. K. Mani, AOR Mr. Rajeev Gupta, Adv. Mr. Raj Kumar Mahto, Adv. Mr. K. R. Sasiprabhu, AOR Mr. R Jawaharlal, Adv. Mr. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Mrs. Arti Anupriya, Adv. Ms. Arti Anupriya, Adv. Mr. Vineet Yadav, Adv. Mr. Kartikey, Adv. Mr. Vineet Kumar Yadav, Adv. Mr. Amir Yadav, Adv. Mr. Raghav Anthwal, Adv. Mr. Paras Juneja, Adv. Mr. Baljeet Singh, Adv. Mr. Vinayak Sharma, Adv. Mrs. Akshi Kaushal, Adv. Mr. Jai Subhash Thakur, Adv. Mr. Soumik Ghosal, AOR Mr. Ramesh Allanki, Adv. Ms. Aruna Gupta, AOR Mr. Syed Ahmad Naqvi, Adv. Mr. B Krishna Reddy, Adv. Mr. K. Aroah, Adv. Mr. Sarvam Ritam Khare, AOR Mr. K.K.tyagi, Adv. Ms. Garima Tyagi, Adv. Mr. Vikash Chandra Shukla, AOR Mr. V. C. Shukla, Adv. Mr. Naga Deepak, Adv. Mr. Aishvary Vikram, Adv. Mr. Ajay Awasthi, Adv. Mr. Anantha Narayana M.g., Adv. Mr. Siddhartha Relan, Adv. Mr. Prakash Gautam, Adv. Mr. Puspraj Singh Parihar, Adv. Mr. Pushpraj Singh Parihar, Adv. Mr. Akshya Kumar Panda, Adv. Mr. Prabhsimar Singh, Adv. Mr. Amritesh Raj, Adv. Mr. Nitesh Ranjan, Adv. Mr. Tarun Gulia, Adv. Mr. Manish Dutt Sharma, Adv. Mr. Piyush Singh, Adv. Mr. Ajay Vikram Singh, AOR Mr. Karan Talwar, Adv. Mr. Siddhant Buxy, AOR Mr. Krishna Sumanth, Adv. Mr. Sumanth Nookala, AOR Dr. Anindita Pujari, AOR Mr. Shaileshwar Yadav, Adv. Ms. Radhika Mohapatra, Adv. Ms. Bhoomika Chouksey, Adv. JUDG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union Parliament Entries 83 and 84, List I, Seventh Schedule of the Constitution of India , under the Seventh Schedule. No separate entry for Service Tax existed in the Constitution at the time it was enacted. In T.N. Kalyana Mandapam Assn. v. Union of India 2004 Supp (1) SCR 169; (2004) 5 SCC 632 , this court held that service tax as a subject matter was within the residuary power of the Union; nevertheless, Entry 92C was introduced into the Union List by the Constitution (88th Amendment) Act, 2004 clarifying that the Union had exclusive authority to impose a service tax. Taxation of sale and movement of goods was within the exclusive purview of the States, by Entries 52 and 54 of the State List (List II of the VIIth Schedule to the Constitution). The delineation of Union and State taxation powers through the Union and State Lists of the Seventh Schedule was precise and clear, leaving little room for any overlap in the kind of taxes that the Union could impose and those that a State could levy. The Concurrent List (or List III of the VIIth Schedule) contained no taxing entries, signifying that the constitutional scheme for taxation was to apportion two distinct, exclusive sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tate; the Integrated Goods and Goods and Services Tax Act, 2017: it levies a tax on inter- State supplies of goods and services; and (3) the Union Territory Goods and Services Tax Act, 2017: it levies a tax on intra-State supplies of goods and service. 8. The coming into force of the GST regime, and the passage of the amendment demonstrates a rare unanimity, a resolve across the political spectrum, to ensure that there is a single indirect taxation regime. The effect of the Amendment is to subsume all state and union taxes, on goods and services. Both the Union and the States will ostensibly have the power to tax the supply of goods and services. The 101st Amendment Act takes away neither the Union's nor the States' taxing power but instead gives them the power to impose taxes on supply of goods and supply of services respectively. Through Article 246-A the Amendment creates: a. a new legislative field, conferring b. legislative authority outside the three Lists of the Seventh Schedule; c. concurrent powers to both Parliament and the State Legislatures to enact legislations on the same subject-matter and at the same time. 9. There consequently is a fundament ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. Article 279-A, infra, for a detailed discussion In fact, the GST Council is empowered to even recommend on the model legislations and rates of tax on supply of goods and services. 12. The relevant parts of the Amending Act, read as follows: In terms of Section 2 of the aforesaid Constitution Amendment Act, after Article 246, a new Article 246-A came to be inserted which reads as under: 246A. Special Provision with respect to goods and services tax--- (1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation.---The provisions of this article, in respect of goods and services tax referred to in clause (5) of the article 279A, take effect from the date recommended by the Goods and Services Tax Council. By Section 7, Article 268-A was omitted. After Article 269, Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cil for such period as they may decide. (4) The Goods and Services Tax Council shall make recommendations to the Union and the State on--- (a) the taxes, cesses and surcharges levied by the Union, the States and the local bodies which may be subsumed in the goods and services tax; (b) the goods and services that may be subjected to, or exempted from the goods and services tax; (c) model Goods and Services Tax Laws, principles of levy, apportionment of Goods and Services Tax levied on supplies in the course of inter-state trade or commerce under article 269-A and the principles that govern the place of supply; (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including floor rates with bands of goods and services tax; (f) any special rate or rates for a specified period, to raise additional resources during any natural calamity or disaster; (g) special provision with respect to the States of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand; and (h) any other matter relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ured or produced in India, namely:--- (a) Petroleum crude; (b) High speed diesel; (c) Motor spirit (commonly known as petrol); (d) Natural gas; (e) Aviation turbine fuel; and (f) Tobacco and tobacco products. ; Entries 92 and 92 C (Union List) were omitted. Similarly, Entry 52 was omitted and Entry 54 was substituted. The new Entry 54, reads as follows: 54. Taxes on the sale of petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas, aviation turbine fuel and alcoholic liquor for human consumption, but not including sale in the course of inter-State trade or commerce or sale in the course of international trade or commerce of such goods. Section 19 read as follows: 19. Notwithstanding anything in this Act, any provision of any law relating to tax on goods or services or on both in force in any State immediately before the commencement of this Act, which is inconsistent with the provisions of the Constitution as amended by this Act shall continue to be in force until amended or repealed by a competent Legislature or other competent authority or until expiration of one year from such commencemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itially made on 15.04.2017, was read down by a Division Bench judgment, of the Bombay High Court. That position was sought to be reversed, through an amendment which was brought into force, on 15.04.2017 and later in an effort to reverse the effect of a judgment, given retrospective effect. The writ petitions filed by such aggrieved parties, were dismissed. Consequently, they are in appeal. 16. In the Gujarat batch of cases, Section 84A was introduced in the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as the Gujarat VAT Act ) by the Gujarat Value Added Tax (Amendment) Act, 2018, gazetted on 06.04.2018 but with retrospective effect from 1.4.2006. It inter-alia provided that if for a particular issue in some other proceedings a lower forum, gave a decision which is prejudicial to the interest of the revenue and an appeal against such decision is pending before the higher forum then the period spent in such litigation will be excluded while computing period of limitation for revision. By giving such provision retrospective effect the State legislature thus sought to enable reopening of assessments which had already attained finality. The Gujarat High Court struck ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were denuded in respect of fields of taxation as far as they covered central excise, service tax, sales tax and other taxes which the states could hitherto levy and collect. As an effect of the Amendment, the fields of taxation in Entries 84 of the Union List (List I) of the Seventh Schedule to the Constitution of India and Entries 54 and 62 of the State List, too were amended. The revamping of these fields of taxation resulted in such powers getting pooled or collected as a sovereign taxation power, shared by the state and the centre. This became the subject matter of a separate entry, i.e. Article 246A. Article 246A is expressed in overriding terms and begins with a non-obstante clause and overrides Article 246 which deals with the distribution of legislative powers vis- -vis the Union and the States in terms of Lists 1 and 2, and of Article 254 which deals with the subject matter of Concurrent List, i.e. List III and the resolution of any conflict (in terms of repugnancy) between laws enacted by the States and the Parliament. 20. The effect of Article 246A is that both the Parliament and the State legislatures have the power to enact laws with respect to goods and service im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 20(4), 21(3), 21(4), 21(6), 21(7), 21(8), 31(1), 32(3), 32(6), 32(7) and 57(5) . The amended provisions empowered the Assessing Officer to reassess the returns which had been assessed previously additionally for a period of two years. In other words, originally the power to reassess was limited to four years. The lengthening of the period by two more years meant that dealers whose assessments had either escaped notice and who had mis-declared or withheld information could now be exposed to the possibility of reassessment for a further period of two years. 23. It was submitted that this amendment was made through an ordinance issued by the Governor of Telangana on 17.06.2017. The State VAT Act was to cease to have any effect, on 30.06.2017. However, before that, its provisions were amended through the ordinance which was later transformed into law through an Act of the State legislature and brought into force on 02.12.2017. The Telangana GST Act was enacted and came into force before 30.06.2017. It repealed the existing law, i.e. the State VAT Act, but by virtue of Section 174, the existing provisions of the State VAT Act were continued and all pending proceedings so far a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a State legislative or Parliament. This distinction cannot obliterate the effect of the law which is the same and would continue to bind the parties for which express provision is made. 27. In support of the proposition that there is no difference between the legislative power of the State and that of the executive, learned counsel relied upon the decision of the Constitution Bench of this Court in R.K. Garg v. Union of India (1982) 1 SCR 947 . It was argued further that the provision requiring placing or tabling the ordinance before the house, either the State legislature or the Parliament was entirely different from the exercise of tabling an enacted legislation. The former amounted to a part of the legislative activity itself. In the event the legislature, i.e. the State legislature or the Parliament approves the ordinance in its own terms, it becomes a parliamentary or State enactment. Learned counsel stressed upon the issue or point that a separate embodiment of the terms of the ordinance is not essentially a requirement under the Constitution. A mere approval of the ordinance results in its enactment and acceptance by the State legislature which in turn assimilates the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel also pointed to amendments made to the Central Excise Act, much in the same terms as in the case of the Telangana and Gujarat amendments which enlarged the period of limitation in certain respects. It is fallacious to contend that the State legislatures were denuded the power to legislate. The power was traceable to the amended provisions of the Constitution notwithstanding that relevant entries in the State List 54 and 62 had been altered. It was submitted that such a view was taken notice of and discussed in UOI Anr. v. Mohit Minerals Private Limited 2022 (9) SCR 300 . 29. It is urged that the power to amend the Constitution is a constituent power of the Parliament in accordance with Article 368. Under Article 368(2), the amendment to the Constitution is initiated by introduction of a bill and after assent to the bill by the President, the Constitution stands amended in accordance with the terms of the Bill. In other words, every single provision in the Constitutional Amendment Bill becomes a part of the amended Constitution. 30. It is further submitted that absence of specifically inserting Section 19 in the Constitution makes no difference. It is still a part of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court fell into error in not recognizing that in somewhat similar situations, this court in A. Hajee Abdul Shakoor Co v. State of Madras 1964 (8) SCR 217; AIR 1964 SC 1729 (hereafter, Hajee Abdul Shukoor ) recognized the power of states to even retrospectively validate assessments under the Act of 1939 even though the earlier Act had failed for want of Presidential assent. It was also pointed out that this court in M/s West Ramnad Electric Distribution Co. Ltd. v. State of Madras 1963 (2) SCR 747 validated the power of states to retrospectively validate actions taken under notifications of enactments which had been declared unconstitutional and non-est. Reliance is also placed on this court s decision in State of Rajasthan v. Mangilal Pindwal (1996) Supp (3) SCR 98 upheld the power of the legislature to amend repealed provisions for a period when these provisions were in operation till the date of repeal. The repealing of Section 166 of the Gujarat GST Act clearly shows that the VAT Act has not been repealed at all and hence, the consequences of repeal cannot follow. 34. It is submitted that Section 84 A is neither arbitrary nor unreasonable but aims at equity and res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second is while Article 243ZF has a non-obstante clause seeking to override all Articles contained in Part IXA of the Constitution, Section 19 of the Constitutional Amendment Act, 2017 ( CAA ) only overrides the provision of the Amendment and not the Constitution of India. In other words, ex facie Article 243ZF of the Constitution can be said to be at a pedestal higher than that of CAA. It is argued that this court had interpreted Article 243ZF in Sundergarh Zilla Adivasi Advocates Association and Ors v State of Odisha and Ors (2013) 6 SCR 420 (hereafter, Sundergarh Zilla )., wherein this court, at para held as follows: ....Clearly, the purpose of continuing an existing law (even though it may be inconsistent with Part IX-A) was to enable necessary amendments to be made to the existing law to make it in consonance with Part IX-A. 37. It is submitted that considering that the language of Article 243ZF of the Constitution and Section 19 are near pari materia, placing reliance on Sundergarh Zilla (supra), it is clear that the amending power under Section 19 is limited to making the existing inconsistent legislations consistent with the Amendment. In other words, the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could continue to be in force until the lapse of one year or its repeal, whichever was earlier. However, such is not the case for the nonce. 41. Further, by applying purposive construction, Section 19 of the CAA admits to the exercise of curative legislative action'. This is so because with the advent of GST, as per Article 279-A (6) of the Constitution, the need for a harmonized structure of goods and services tax and for the development of a harmonized national market for goods and services was specifically provided within the Constitution. This harmony has been interpreted by the Supreme Court in Union of India v. VKC Footsteps India (P)Ltd 2021 (15) SCR 169 , to mean legislative harmony between the State and the Centre with a view to achieve co-operative federalism. Therefore, this avowed purpose of harmony between the Centre and the State or inter se between the States cannot be achieved if using the power of amendment under Section 19 of the Amendment, a given State enlarges the operation and sweep of an existing tax law even after the introduction of 42. It is argued that to interpret Section 19 as conferring legislative power which is non- curative and breathing m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... including any tax not mentioned in List II or III), even then in such cases, such power can only be exercised by the Parliament and can in no manner be said to be transferred to the State Legislatures thereby enabling them to amend the plenary legislations. Neither Article 258 nor Article 258A of the Constitution admits of any transfer of legislative power by the Parliament to the State Legislatures. It cannot, therefore, be said that Parliament entrusted the legislative functions to the State Legislature. 44. Counsel argued that the amendment to the VAT legislation cannot also find its source of power in Article 246A. This is for two reasons, firstly, under Article 246A, there must be a simultaneous levy by the state as well as by the centre, the scope of which does not arise in the present case. Secondly, Article 246A contemplates, the power to legislate on Goods and Service Tax, which is a defined term, entirely different as also wider than a tax on sales. GST cannot be equated with tax on sales by any stretch. 45. It is argued that Section 19 contemplates that 'any provision of any law relating to tax on goods or services or both in force in any State immediately bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly, the present is a case of legislation by incorporation . On this basis, it is submitted that the amendments in the Telangana VAT Act will have no impact and bearing on the Telangana Tax on Entry of Goods into Local Area Act, 2001 and as such the extension in the period of limitation from 4 to 6 years would not be applicable to the assessment made in respect of entry tax. This is based on a well settled principle of law as laid down by this Court in the case of State of Madhya Pradesh v. M.V. Narasimhan (hereafter, M.V. Narasimhan ) (1976) 1 SCR 6 , which held that where a subsequent enactment incorporates the provisions of a previous act, then the borrowed provisions become an integral and independent part of the subsequent act and are totally unaffected by any repeal or amendment in the previous act. The exception to this principle is: (i) Where the subsequent Act and previous Act are supplemental to each other; (ii) Where the two Acts are pari materia; (iii)Where the amendment in the previous Act if not imported into the subsequent Act also, would render the subsequent Act wholly unworkable and ineffectual; (iv)Where the amendment of the previous Act, either expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Telangana VAT Act to all goods except those covered by Entry 54 of List II of the 7th Schedule. Section 19 of the 101st Amendment is pari materia with Clause 20 of the Constitution 122nd Amendment Bill, 2014. The said Bill was considered by the Select Committee of Rajya Sabha in its report dated 22.07.2015. 53. The assessees also argue that the extension of limitation is done so with a view to secure revenue of the state by enlarging the duration. It is submitted that this argument is not tenable and cannot be sustained. The further argument that provisions of limitation on assessments etc., are only procedural and aspects of levy and assessment are not substantial, is also untenable. 54. It was argued that the Telangana Ordinance was issued with effect from 17.6.2017. However, Section 7 of the Telangana Amendment Act clearly repealed the Ordinance without any savings clause. Further, under Section 1(2) the Telangana Amendment Act was deemed to retrospectively come into effect from 17.6.2017. Thus, the Telangana Amendment clearly intended to obliterate the Ordinance altogether and not merely continue the law. Thus, all submissions to the effect that the issuance of the Or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. In the language of Section 19 - until it was amended. Therefore, the State Legislature did not possess any legislative competence with respect to goods other than those included in the new and limited Entry 54 either on the date of the Ordinance i.e., 17.06.2017, or on the date of the Amendment Act, i.e., 02.12.2017. 58. The Telangana VAT Act 2005, was effectively repealed from 01.07.2017 by Section 174(1)(i) of the TGST Act 2017 except in respect of goods included in Entry 54 of List II. Section 174(1) operates as an express acknowledgment and acceptance of the 101st Amendment. Therefore, the TVAT Amendment of 02.12.2017 applicable to all goods cannot be made after such repeal. 59. Article 246A embodies the principle of simultaneous levy by both Parliament and the State Legislature and is distinct from the principle of concurrence. Article 246A creates both the power and the subject matter of legislation. This makes it distinct from a concurrent power of legislation u/a 246(2) which requires one to travel to List III, Schedule VIl to find the subject matters with respect to which the power may be exercised. When concurrence as a principle already exists in such a manner, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 246 has been abridged by simultaneously amending the fields of legislation in Entry-54 of List-II, which is referred to therein. In this case, there is no question of any power to legislate in respect of rest of the goods, other than the 6 presently covered by Entry-54, which survives post- amendment, even by applying the provisions of the General Clauses Act, 1897. 64. It is submitted that Section 19 of CAA does not confer unabridged or wide powers on the state legislatures/ Parliament to make any and every amendment in the laws existing in force at the time of enacting the Amendment Act. The power referred to in Section 19 is a limited power granted to the State Legislature for a limited period to make such amendments as may be necessary to remove inconsistencies, if any, and bring the existing laws in consonance with the GST legislations. Accordingly, it is submitted that only the power to enact the aligning act enacted in Maharashtra to align its existing laws with the GST provisions, will be saved in terms of Section 19. Consequently, the State of Maharashtra lacked the power to make the impugned amendments which were enacted not for removing any inconsistency but as a reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on all fours by the judgement of Hon. 9 judge bench of this Court in the case of Mafatlal Industries (supra). In that case, this court was faced with a situation converse to the present case in as much as assesses used to claim a refund after number of years on the basis of judgements rendered in the case of other assesses. This court observed that allowing refund claims beyond the stipulated period of limitation based on decisions rendered in other cases would do violence to several well-accepted principles of law. It was further observed that one of the important principles of law, based upon public policy, is the sanctity attaching to the finality of any proceeding, be it a suit or any other proceeding. Denouncing the legality of the practice of claiming a refund after a number of years based on subsequent decisions it was observed that an order or decree of a court does not become ineffective or unenforceable simply because at a later point of time, a different view of law is taken and that if this theory is applied universally. It will lead to unimaginable chaos. 69. Section 64 of the Gujarat VAT Act requires the dealer to preserve books of accounts only for a period of 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the Maharashtra batch of matters, subject matter of the proceedings was MVAT and amendments made to it. MVAT came into force on 01.03.2005 to consolidate laws regarding the collection of tax in sales and purchase of goods. 101st CAA came into effect in 16.09.2016 and by the CAA, the power of the state government to levy tax on sales and purchase of goods under Entry 54 of List II was sought to be restricted only with respect to the 6 goods mentioned therein. The state government amended Section 26 of the MVAT Act and inserted sections 6A, 6B and 6C requiring assessee to deposit 10% of the disputed tax amount, failing which the appeal of the concerned assessee will be dismissed. HC upheld the amendment made to the MVAT Act requiring assessee s to deposit 10% of the disputed amount before filing the appeal A. Interpretation of Section 19 72. The petitioners contended that the language of Section 19 of the Amendment Act does not attach itself to the body of the Constitution unlike the other provisions. The further argument was that the power to amend is to be seen in the context. The other provisions of the amendment inserted new provisions of the Constitution itself. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments of this court in Bondu Ramaswamy (supra) and Vipulbhai (supra). In the present case, there is no dispute with respect to the fact that Section 19 also seeks to achieve the same objects i.e. the preservation of existing fiscal and taxation laws prevailing in various statutes and in other parts of the country for a limited duration of one year or till they were amended or repealed. The distinction pointed out by the petitioners is that transitional provisions as they were involved in those cases become the part of the Constitution, as they continued and still continue in force long after the amendment. Whereas in the present case, Section 19 has a limited life and would not ever become part of the Constitution. 75. The question is Is that really so? It is undisputed that the amendment was enacted pursuant to what is now recognized as constituent power, which is sourced from Article 368. The present frame of Article 368 underwent a change after the Constitutional 25th Amendment Act of 1971. Before that amendment, the title of the provision was procedure for amendment of the Constitution . By virtue of the amendment, Article 368 is described as power of Parliament to am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion between constituent power and legislative power was commented upon by the late H.M. Seervai in the Constitutional Law of India 4th Edition Volume 3 page 3119 : the constituent power therefore a juristic entity or category separate from legislative power. In the case of India there are three different modes of amending the Constitution the first is the easiest or the simplest where states reorganization or names of States are sought to be changed, in that event a Parliamentary enactment would suffice. In other cases, an amendment to the Constitution requires the special procedure of two thirds majority in both houses by members sitting and voting and assent by the President. In the special category carved out is proviso to Article 368, not only the special procedure to be resorted to but also super added to it is the requirement of amendment having to secure the ratification and the proviso of one half of the State Legislature by the Resolutions. Thus the nature of the amendment and structure of Article 368 distinctly brings home the point that it encapsulates both the power and also contains the procedure for amendment. 79. This Court had in the judgment reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s responsible to the Parliament for all its actions. The Parliament does not irretrievably lose its power to bring the Amendment into force by reason of the empowerment in favour of the Central Government to bring it into force. If the Central Government fails to do what, according to the Parliament, it ought to have done, it would be open to the Parliament to delete Section (2) of the 44th Amendment Act by following the due procedure and to bring into force that Act or any of its provisions. 80. In the opinion of this Court, the mere circumstance that Section 19 does not get added to the Constitution, would not make any difference. If one looks closely at Articles 243 ZF which this Court interpreted in Bondu Ramaswamy (supra) and Article 243 ZT which was interpreted in Vipulbhai (supra) the effects of those provisions are the same as Section 19. Although those provisions continued to be part of the Constitution, they have no meaning and were merely historical. The reason is that they were operative, for a limited duration like Section 19. However, the fact remains that those provisions as well as Section 19 were enacted in exercise of the constituent power. Section 19 is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntext, Section 143(2) of the Government of India Act, 1935 was considered by a Constitution Bench of this court in Rama Krishna Ramanath (supra). That provision reads as follows: 143(2) Any taxes duties, cesses or fees which, immediately before the commencement of Part III of this Act, were being lawfully levied by any Provincial Government, municipality or other local authority or body for the purposes of the Province, municipality, district or other local area under a law in force on the first day of January, nineteen hundred and thirty-five, may, not withstanding that those taxes, duties, cesses or fees are mentioned in the Federal Legislative List, continue to be levied and to be applied to the same purposes until provision to the contrary is made by the Federal Legislature. 85. In Rama Krishna Ramanath (supra) it was held that considering the use of the phrase continue to be levied found in Section 143(2) of the Government of India Act, until provisions to the contrary are made by the Federal Legislature, the provision posits a limited legislative power in the province to indicate or express a desire to continue or not to continue the levy, which would include the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the legislative intent of Continue the tax without any break, the legal continuity being established by the retrospective operation of the provision, has to be upheld. 86. It would be worthwhile to recollect that in Synthetics and Chemicals Ltd. and Ors. v. State of U.P. Ors. 1989 Supp (1) SCR 623 this court observed that: [..] The power to legislate is given by Article 246 and other Articles of the Constitution. The three lists of the Seventh Schedule to the Constitution are legislative heads or fields of legislation. These demarcate the area over which the appropriate legislatures can operate. It is well settled that widest amplitude should be given to the language of the entries in three Lists but some of these entries in different lists or in the same list may override and sometimes may appear to be in direct conflict with each other, then and then only comes the duty of the court to find the true intent and purpose and to examine the particular legislation in question. Each general word should be held to extend to all ancillary or subsidiary matters which can fairly and reasonably be comprehended in it. ... 87. Recently, Bimolangshu Roy (Dead) through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be identified from the scheme of the three lists, the salient features of which are (i) Fields of legislation perceived to be of importance for sustaining the federation, are exclusively assigned to the Parliament, (ii) State legislatures are assigned only specified fields of legislation unlike the US Constitution, (iii) Residuary legislative power is conferred in the Parliament; (iv) taxing entries are distinct from the general entries24, and (v) List III does not contain a taxing entry, 29. At the same time, it can also be noticed that there is no logical uniformity in the scheme of the three lists contained in the Seventh Schedule. 88. In Bondu Ramaswamy (supra) the provision in question was Article 243 ZE. This was inserted, by way of amendment, in the 73rd and 74th amendments of the Constitution of India which came into force on 24.04.1993 and 01.06.1993. The object of the amendments - as indeed their enacted provisions was to strengthen the democratic political government and grass root level in urban and semi-urban areas by providing constitutional status to municipalities and panchayats. Article 243ZF s wording is identical to Section 19 in the present case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nconsistent provision will be invalid even from 1-6-1993, and the benefit of continuance for a period of one year permitted under Article 243-ZF will not be available to such a provision of law, as the BDA Act is not a law relating to municipalities. 45. Part IX-A seeks to strengthen the democratic political governance at grass root level in urban areas by providing constitutional status to municipalities, and by laying down minimum uniform norms and by ensuring regular and fair conduct of elections. When Part IX-A came into force, the provisions of the existing laws relating to municipalities which were inconsistent with or contrary to the provisions of Part IX-A would have ceased to apply. To provide continuity for some time and an opportunity to the State Governments concerned to bring the respective enactments relating to municipalities in consonance with the provisions of Part IX-A in the meanwhile, Article 243-ZF was inserted. The object was not to invalidate any law relating to city improvement trusts or Development Authorities which operate with reference to specific and specialised field of planned development of cities by forming layouts and making available plots/h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Parliament and the ratifying States felt it expedient to ensure that during the transitional period of one year or till the new GST regime was ushered through an enactment, there ought to be flexibility with the States and Parliament to make such changes as the times demanded. In the previous two judgments, Bondu Ramaswamy (supra) and Vipulbhai (supra), however, there was no question of denuding the powers, the State or conferring new powers on the Parliament and the State but rather creation of new bodies as in the case of Panchayats and Zila Parishads in Bondu Ramaswamy (supra) and imposing new standards in Vipulbhai (supra), in relation to cooperative societies. Then, the existing legal regime was preserved for a limited duration. Yet the court felt that the amendments should not have a lasting impact going beyond the period provided by the savings or transitional provisions as that would have inevitably met with challenges as not being in conformity with the new regime. 92. In the present case, however, Section 19 is seen as a plenary constituent power, subject to other limitations in the Constitution, and also given that by the amendment the legislative entries in the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of power. The authority or the power stems from Articles 245 and 246. The reorganization of those legislative fields particularly Entry 84 of the First List and Entry 54 of the Second List and the conformant of larger powers, upon both the legislative entities i.e. Parliament and the State Legislatures meant that both authorities to legislate upon all subject matters which are comprehended within the description of goods and services for the purpose of indirect taxation under Article 246 A. Yet the operationalization of this provision required the formulation of the principles by the GST Council which occurred later. The hiatus between the coming into force of the constitutional amendment and the enactment of a comprehensive legislation, [based upon the recommendations of the GST Council] provided for by Section 19. As held in the previous segment of this judgment Section 19 is to be construed as part of the Constitution for the limited duration it operated and was effective. 95. Such being the case the sequitur would have to be that the authority to legislate is expressed through Section 19, read with Article 246A. In other words, in the absence of principles formulated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d amend is to correct a fault or reform; but in the context of Article 368reliance on the dictionary meaning of the word is singularly inappropriate, because what Article 368 authorises to be done is the amendment of the provisions of the Constitution. An amendment of a law may in a proper case include the deletion of any one or more of the provisions of the law and substitution in their place of new provisions. Similarly an amendment of the Constitution which is the subject matter of the power conferred by Article 368, may include modification or change of the provisions or even an amendment which makes the said provisions inapplicable in certain cases. The power to amend in the context is a very wide power and it cannot be controlled by the literal dictionary meaning of the word amend . Sajjan Sing v State of Rajasthan Mad LJ: QD (1961-1965) Vol II C 1204-1205: (1965) 1 SCJ 377 : (1965)1 Mad LJ (SC) 57 : AIR 1965 SC 845 **************** ************** Amend; emend; Correct; Rectify; Reform. All these words convey the idea of making a things into a more perfect state. We correct when we conform things to some standard or rule; as to correct proof sheets. We amend by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act it was validly amended. This is sought to be supported by the theory of the relating back of the law to a date when the power to enact existed. The argument in support was that in terms of its effect there is no difference between an ordinance [which is merely a product of a different procedure i.e., or executive law making] as compared to enactment of law by the legislature. An ordinance may have a limited life but once confirmed, or enacted, it acquires permanence. Even during the time it is in force, it is as effective and as binding on the subject matter and the State as an enacted law. The effect of an ordinance was explained in A.K. Roy (supra), in the following terms: [..] the Constitution makes no distinction in principle between a law made by the legislature and an ordinance issued by the President. Both, equally, are products of the exercise of legislative power and, therefore, both are equally subject to the limitations which the Constitution has placed upon that power . 99. In R.K. Garg Etc. Etc v. Union Of India Ors 1982 (1) SCR 947 this court held similarly, that ordinance making power is co-extensive with the power of the Parliament to make laws, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Clause 2 of Article 213 is mandatory, emerges from reading the provision in its entirety. As we have noted earlier, an Ordinance can be promulgated only when the legislature is not in session. Upon the completion of six weeks of the reassembling of the legislature, an Ordinance shall cease to operate . In other words, when the session of the legislature reconvenes, the Ordinance promulgated has a shelf life which expires six weeks after the legislature has assembled. Thereupon, it ceases to operate. The larger Bench then proceeded to examine the need to lay the ordinance before the State Legislature: 31. Laying of an Ordinance before the state legislature subserves the purpose of legislative control over the Ordinance making power. Legislation by Ordinances is not an ordinary source of law making but is intended to meet extra-ordinary situations of an emergent nature, during the recess of the legislature. The Governor while promulgating an Ordinance does not constitute an independent legislature, but acts on the aid and advice of the Council of Ministers Under Article 163. The Council of Ministers is collectively responsible to the elected legislative body to whom t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its constitutional obligation to lay the Ordinance before the legislature. The legislature can undoubtedly even in that situation exercise its powers Under Article 213(2)(a). However, the requirement of laying an Ordinance before the state legislature is a mandatory obligation and is not merely of a directory nature. We shall see how in the present case a pattern was followed by the Governor of Bihar of promulgating and re-promulgating Ordinances, none of which was laid before the state legislature. Such a course of conduct would amount to a colorable exercise of power and an abuse of constitutional authority. Now it is in this background, and having thus far interpreted the provisions of Article 213, that it becomes necessary to refer to the precedents on the subject and to the nuances in the interpretation of the constitutional provisions. This court then examined the legal effects of an ordinance, in case, it ceased to operate: 58. What then is the effect upon rights, privileges, obligations or liabilities which arise under an ordinance which ceases to operate? There are two critical expressions in Article 213(2) which bear a close analysis. The first is that an ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of rights, privileges, obligations or liabilities that have arisen under an ordinance which has since ceased to operate either upon the expiry of its term or upon a resolution of disapproval. Significantly, there are other provisions of the Constitution where, when it so intended, the Constitution has made express provisions for the saving of rights or liabilities which arise under a law. The court then overruled previous judgments, which had relied on and applied the enduring rights theory, to hold that rights and privileges, acquired, or created, and obligations cast or assumed would continue, even if the ordinance were to lapse, or become void. It was held that: 68. [..] The enduring rights theory which was accepted in the judgment in Bhupendra Kumar Bose was extrapolated from the consequences emanating from the expiry of a temporary act. That theory cannot be applied to the power to frame ordinances. Acceptance of the doctrine of enduring rights in the context of an ordinance would lead to a situation where the exercise of power by the Governor would survive in terms of the creation of rights and privileges, obligations and liabilities on the hypothesis that these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, the Telangana ordinance was promulgated on 17.6.2016. The Telangana State GST Act was enacted and received the assent of the Governor on 25.05.2017; it was brought into force on 01.07.2017. The state GST Act contained a savings and repeal law, which sought to save acts done, privileges and rights accrued under the repealed enactment, i.e. the State VAT Act. It was sought to be argued that once the State Legislature approved the ordinance and enacted the amendment, in conformity with it, the provisions of the Ordinance became part of the act. The question of legislative competence would not arise, because the mere confirmation of an ordinance is within the competence of the State legislature. Since the law was introduced through a different procedure, i.e. ordinance, the effect of that law, empowering the VAT officials to reopen or complete assessments, was no different. 103. This court held in Hajee Abdul Shukoor (supra) that: The State legislature is free to enact laws which would have retrospective operation. Its competence to make law for a certain past period, depends on its present legislative power and not on what it possessed at the period of time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date the tax on sale of raw hides and skins was at the rate of 3 pies per rupee or 19/16th percent. This however does not mean that the sub-section is valid with respect to the sales which took place subsequent to August 1, 1957. The subsection being void in its provisions with respect to a certain initial period, we cannot change the provision with respect to the period as enacted to the period for which it could be valid as that would be re-writing the enactment. We have therefore to hold that sub-s.(1) of Section 2 void accordingly hold so. 104. It was held by this court, in Jaya Thakur v Union of India Ors 2023 SCC OnLine SC 813 that: the challenge to the legislative Act would be sustainable only if it is established that the legislature concerned had no legislative competence to enact on the subject it has enacted. 105. The state of Telangana had argued to the contrary, and explained that when the ordinance was issued, there was no doubt about the state possessing legislative competence. As of that date (17.06.2017) the power to amend existing laws, was permissible under Section 19 of the Amendment. However, that argument is not tenable, because the ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions of the Constitution, being continued. Though the observations of this court were in the context of ordinances lapsing due to their not being presented before the House of the legislatures, the same principle would, in this court s considered view, apply to cases, where the legislature ceases to have competence over the subject matter. 107. It is therefore, held that the provisions of the ordinance, as approved by the later state act, which amended the local VAT Act s, are valid. D. Gujarat and Maharashtra Acts 108. In the case of the Gujarat VAT Act, the brief facts are that the Deputy Commissioner of Commercial Tax, passed an assessment order on December 23, 2009, for the financial year 2006-07 against the assessee and reversed the input tax credit to the extent of eight per cent., i.e., four per cent, under each of the provisions of sections 11(3)(b)(ii) and 11(3)(b)(iii) of the Gujarat VAT Act. The appellate authority dismissed the assessee. On April 26, 2012, the Gujarat VAT Tribunal allowed the assesses second appeal by quashing and setting aside both the orders of the sales tax authorities by holding that reduction of the input tax credit to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... many provisions thereof by virtue of the Gujarat Value Added Tax (Amendment) Act, 2017, which. came into force with effect from July 1, 2017. Meanwhile, the High Court passed an order dated September 22, 2017 in an appeal filed by the State, setting aside the judgment State of Gujarat v. Reliance Industries Ltd [2017] 16 SCC 28 dated January 18, 2013 in respect of the assessee who had succeeded. 110. In view of the aforesaid judgment of this court, the Additional Commissioner of Commercial Tax issued a revision notice dated November 3/6, 2017 in Form 503 under section 75 of the Act to revise the assessment order for the financial year 2008-09 made vide order dated March 30, 2013 (Sr. No. 5 above), for reducing the input tax credit to the extent of eight per cent under the provisions of section 11(3)(b)(ii) and 11(3)(b)(iii) of the VAT Act in the light of the judgment dated September 22, 2017, of this court. The revision notice was quashed In the judgment in Reliance Industries Ltd. v. State of Gujarat [2018] 58 GSTR 366 (Guj)) by the High Court. 111. By virtue of the VAT (Amendment) Act, 2018, section 84A was added in the VAT Act to be operative retrospectively with effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Constitution. An existing law continues to be valid even though the legislative power with respect to the subject-matter of the existing law might be in a different list under the Constitution from the list under which it would have fallen under the Government of India Act, 1935. But after the Constitution came into force an existing law could be amended or repealed only by the Legislature which would be competent to enact that law if it were to be newly enacted... As noted earlier, Ramakrishna Ram Nath (supra) held that the power to repeal is co-extensive with the power to amend, or make a law. It was also held that (T)he power has to be seen at the time when the repealing legislation is being enacted. [ ] However, the Legislature should have the competence at the time when such a repealing law is being enacted. 113. In the present case, the retrospective effect, given to the amendment, which was brought into force, with effect from 2006, cannot in any way save it, after the coming into force of the GST laws, on 01.07.2017. Nor can there can be any argument that the amendment made in February, 2018, is traceable to Article 246A. On this aspect, this court held in Un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s applied to pre-2017 appeals and revisions. This was challenged. The High Court, by a Full Bench ruling United Projects v State of Maharashtra (Writ Petition (ST.) No. 11589 of 2021, and Writ Petition No. 13754 of 2018, decided on 12.07.2022 upheld the amendment. It was held that The State Government has legislative competence to remove the substratum of foundation of a Judgment retrospectively. The State Government is empowered to carry out amendment suitably to amend the law by use of appropriate phraseology removing the defects pointed out by the Court in any judgment and by amending the law inconsistent with the law declared by the Court so that the defects which were pointed out were never on the statute for effective enforcement of law. There is no judicial encroachment directly or indirectly by the State Government by inserting amendment which are the subject matter of these petitions as sought to be canvassed by the learned senior counsel for the petitioner. In our view curing the defect pointed out by any Court through a judgment or simplicitor removing such defects does not amount to encroachment directly or indirectly or overruling the view taken by the Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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