There are three batches of appeals, arising from separate special leave petitions filed in this case. One batch relates to the State of Telangana. The facts in relation to that State are that the local VAT Act was amended – after the Amendment was introduced. The VAT amendment was through an Ordinance, and was brought into force on 17.06.2017, i.e. 13 days before the time granted by the 101st Amendment Act, i.e. one year. The Amendment came into force on 16.09.2016. The ordinance sought to extend the period of limitation, and permitted to re-open assessments. This ordinance, continued till the State Legislature enacted it. The Governor then assented to the law, and it came into force on 02.12.2017. Feeling aggrieved many traders and VAT payers approached the Telangana High Court, challenging the amendments to the local VAT Act. By the impugned judgment, the High Court accepted the challenge and struck it down, on various counts, including that the State had limited scope to amend its VAT Act, which in terms of Section 19 of the Amendment could have done it only to bring it in conformity with the amended Constitution. Other reasons included that the ordinance, could not have been confirmed, as the state was denuded of legislative competence after 01.07.2017. (Para 14)
In the batch of appeals arising from the judgment of the Bombay High Court, the parties were aggrieved by the fact that the Maharashtra VAT Amendment Act, which was initially 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. (Para 15)
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 down the amendment on the ground of lack of legislative competence, on the part of the legislature, after 01.07.2017, and also that it was manifestly arbitrary. (Para 16)
It is, therefore, held that there were no limitations under Section 19 (read together with Article 246A), of the Amendment. That provision constituted the expression of the sovereign legislative power, available to both Parliament and state legislatures, to make necessary changes through amendment to the existing laws. As held in Rama Krishna Ramanath (supra) the transitional power (in that case, Section 143 (3)) “the provision by its implication confers 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. (Para 97)
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. 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. (Para 102)
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. (Para 107)
In the opinion of this court, there is no quarrel with the proposition that a legislative body is competent to enact a curative legislation with retrospective effect. Yet, the same vice that attaches itself to the Gujarat amendment, i.e. lack of competence on the date the amendment was enacted i.e. in this case, 09.07.2019, the Maharashtra legislature ceased to have any authority over the subject matter, because the original entry 54 had undergone a substantial change, and the power to change the VAT Act, ceased, on 01.07.2017, when the GST 51 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 regime came into effect. Therefore, for the same reasons, as in the other cases, the amendments to the Maharashtra VAT Act cannot survive. (Para 115)
In view of the foregoing discussion and conclusions, the findings of the court in these cases are:
(i) Section 19 of the Constitution (101st Amendment) Act, 2016 and Article 246A enacted in exercise of constituent power, formed part of the transitional arrangement for the limited duration of its operation, and had the effect of continuing the operation of inconsistent laws for the period(s) specified by it and, by virtue of its operation, allowed state legislatures and Parliament to amend or repeal such existing laws.
(ii) Since other provisions of the said Amendment Act, had the effect of deleting heads of legislation, from List I and List II (of the Seventh Schedule to the Constitution of India), both Section 19 and Article 246A reflected the constituent expression that existing laws would continue and could be amended. The source or fields of legislation, to the extent they were deleted from the two lists, for a brief while, were contained in Section 19. As a result, there were no limitations on the power to amend.
(iii) The above finding is in view of the vacuum created by the coming into force of the 101st Amendment, which resulted in deletion of the heads of legislation in the two lists aforesaid.
(iv) The amendments in question, made to the Telangana VAT Act, and the Gujarat VAT Act, after 01.07.2017 were correctly held void, for want of legislative competence, by the two High Courts (Telangana and Gujarat High Court). The judgment of the Bombay High Court is, for the above reasons, held to be in error; it is set aside; the amendment to the Maharashtra Act, to the extent it required pre-deposit is held void. (Para 116)
SUPREME COURT OF INDIA
2023 STPL(Web) 376 SC
[2023 INSC 942]
State Of Telangana & Ors. Vs. M/S Tirumala Constructions
Civil Appeal No(S). 1628 of 2023 With C.A. No. 2502-2513/2023, C.A. No. 2644-2686/2023, C.A. No. 2732/2023, C.A. No. 2733/2023, C.A. No. 1654/2023, C.A. No. 1683/2023, C.A. No. 1662//2023, C.A. No. 1663/2023, C.A. No. 1629/2023, C.A. No. 1658/2023, C.A. No. 1630/2023, C.A. No. 1653/2023, C.A. No. 1655/2023, C.A. No. 1657/2023, C.A. No. 1672/2023, C.A. No. 1676/2023, C.A. No. 1656/2023, C.A. No. 1661/2023, C.A. No. 1664/2023, C.A. No. 1660/2023, C.A. No. 1682/2023, C.A. No. 1665/2023, C.A. No. 1666/2023, C.A. No. 1667/2023, C.A. No. 1668/2023, C.A. No. 1669/2023, C.A. No. 1659/2023, C.A. No. 2690/2023, C.A. No. 1670/2023, C.A. No. 1673/2023, C.A. No. 1671/2023, C.A. No. 1674/2023, C.A. No. 1675/2023, C.A. No. 1677/2023, C.A. No. 2687/2023, C.A. No. 2688/2023, C.A. No. 2689/2023, SLP(C) No. 7776/2023, SLP(C) No. 13543-13545/2023, SLP(C) No. 13529-13530/2023, SLP(C) No. 13523-13526/2023, SLP(C) No. 13547- 13559/2023, SLP(C) No. 13562-13574/2023, SLP(C) No. 13561/2023, SLP(C) No. 13539- 13540/2023, SLP(C) No. 13527-13528/2023, SLP(C) No. 13560/2023, SLP(C) No. 13534- 13537/2023, C.A. No. 2433/2023, C.A. No. 2436/2023, C.A. No. 2437-2443/2023, C.A. No. 2730/2023, C.A. No. 2731/2023, C.A. No. 1645/2023, C.A. No. 1649/2023, C.A. No. 1643/2023, C.A. No. 1636/2023, C.A. No. 1652/2023, C.A. No. 1679/2023, C.A. No. 1637/2023, C.A. No. 1632/2023, C.A. No. 1651/2023, C.A. No. 1633/2023, C.A. No. 1648/2023, C.A. No. 1634/2023, 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-Decided on 20-10-2023
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