GST
TRT-2025-
Supreme Court of India
Date:-20-10-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 20 October 2023
Parties: The State of Telangana & Ors. Vs Ms Tirumala Consrtuction
Facts –
- The Appellants, Telangana, Gujarat and Bombay states have appealed aggrieved by the judgments delivered by the Telangana, Gujarat and Bombay High Court.
- The Facts relating to the state of Telangana is that local VAT Act was amended through an ordinance in 2017, extending the limitation period and allowing assessments to be reopened. However, the Telangana High Court struck down the amendment, citing various reasons, 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, also its limited scope and legislative competence after July 1, 2017.
- The Facts relating to the state of Gujarat is the Maharashtra VAT Amendment Act initially enacted on 15.04.2017 was read down by a Bombay High Court Division Bench judgment. Subsequent amendments attempted to reverse it, with retrospective effect.
- In the Gujarat batch of cases, Section 84A was introduced in the Gujarat Value Added Tax Act, 2003 by the Gujarat Value Added Tax (Amendment) Act, 2018, gazetted on 06.04.2018 but with retrospective effect from 1.4.2006. The State legislature's retrospective provision aimed to reopen finalized assessments. The Gujarat High Court invalidated it due to legislative incompetence and arbitrariness.
Issue –
- Whether the power of amendment or repeal is subject to limitations under Section 19?
Order –
- The Hon’ble Apex Court of India observed 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.
- 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. On an overall interpretation of the provisions of the Amendment, it is held that Sections 19 and 20 constitute incidental and transitory provisions which have limited life, so to speak. Whether they became part of the Constitution or not is really academic. What really matters is the effect of those provisions.
- Further it was 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.
- 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.
- 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.
- 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 regime came into effect. Therefore, for the same reasons, as in the other cases, the amendments to the Maharashtra VAT Act cannot survive.
- The appeals (and any other special leave petitions) filed by the States of Telangana and Gujarat are hereby dismissed. The appeals of the assessees against the judgment of the Bombay High Court succeed and are allowed.
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