THE STATE OF TELANGANA & ORS. v. M-S TIRUMALA CONSTRUCTIONS

Citation: 2023 INSC 942, [2023] 15 S.C.R. 141

Court: Supreme Court of India

Bench: S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ.

Judgment text

SUPREME COURT OF INDIA THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA CONSTRUCTIONS [2023] 15 S. C. R. 141 : 2023 INSC 942 CASE DETAILS THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA CONSTRUCTIONS (Civil Appeal No(s). 1628 of 2023) OCTOBER 20, 2023 [S. RAVINDRA BHAT AND ARAVIND KUMAR, JJ. ] HEADNOTES Issue for consideration: The Constitution (101st Amendment) Act, 2016, introduces a fundamental re-ordering of the constitutional premise of taxation by the Union and State Governments in India. It is the framework to enable the introduction of the Goods and Services Tax (GST). These batch of appeals arise from judgments delivered by the Telangana, Gujarat and Bombay High Court. The concerned States (Telangana and Gujarat) have appealed aggrieved by the judgments. The assessee petitioners are appellants, and are aggrieved by the judgments of Bombay High Court.

Constitution of India - Constitution (101st Amendment) Act, 2016 - Eff ect of: Held: 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 eff ect 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 fi eld, 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.

[Para 8] 141 142 SUPREME COURT REPORTS [2023] 15 S. C. R. Constitution of India - Constitution (101st Amendment) Act, 2016 - s. 19 - Interpretation of: Held: S. 19 seeks to achieve three aims - The fi rst is to preserve the existing status quo with regard to the state and central indirect tax regime, for a period of one year from the date of commencement of the Amendment or till a new law is enacted whichever is earlier - The second is authorizing the competent legislatures i. e. the State Legislatures and Parliament to amend existing laws which were in force in states and other parts of the country (both Central and State laws) - The third was the repeal of such laws - S. 19 was meant to be transitional - In its absence, the several hundreds of state enactments and central laws which were in force, would have been jeopardized - Other than s. 19 there is no saving provision which is part of the Amendment - So, s.

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 eff ect of continuing the operation of inconsistent laws for the period(s) specifi ed by it and, by virtue of its operation, allowed state legislatures and Parliament to amend or repeal such existing laws.

[Paras 73, 116] Constitution of India - Ordinary law and Constitutional law: Held: An ordinary law such as an Act of Parliament, is a product of a legislative exercise - The source of that power is traced to the Constitution in some specifi c provisions or through fi elds of legislation enumerated in one or the other lists - Constitutional law on the other hand is that it arises out of the Constitution and creates diff erent organs of the State, defi nes their power and imposes limitations on the functioning of the Executive and legislative wings through the fundamental rights and other limitations - An ordinary law can be made or changed by the same body, the legislating body in exercising legislative power - Since constitutional amendments relates to the fundamental law of the land which is a source of authority for other laws, it can be achieved only through fulfi lling the special procedure. [Para 77] Constitution of India - Constitution (101st Amendment) Act, 2016 - s.

19 - Whether the power of amendment or repeal is subject to limitations u/s. 19: THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 143 CONSTRUCTIONS Held: There were no limitations u/s. 19 (read together with Art. 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 case 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 - Since other provisions of the said Amendment Act, had the eff ect of deleting heads of legislation, from List I and List II (of the Seventh Schedule to the Constitution of India), both s. 19 and Art. 246A refl ected the constituent expression that existing laws would continue and could be amended - The source or fi elds of legislation, to the extent they were deleted from the two lists, for a brief while, were contained in s. 19 - As a result, there were no limitations on the power to amend. [Paras 97 and 116] Constitution of India - Constitution (101st Amendment) Act, 2016 - Validity of Telangana Act tested from the touch stone of its originating as an ordinance: Held: 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 confi rmation of an ordinance is within the competence of the State legislature - Since the law was introduced through a diff erent procedure, i. e. ordinance, the eff ect of that law, empowering the VAT offi cials to reopen or complete assessments, was no diff erent - The state of Telangana had argued to the contrary, and 144 SUPREME COURT REPORTS [2023] 15 S. C. R.

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 u/s. 19 of the Amendment - However, that argument is not tenable, because the ordinance's validity and eff ect might not have been suspect on the date of its promulgation; yet, the issue is that on the date when it was in fact, approved and given shape as an amendment, the State legislature had ceased to possess the power - By that time, the State GST and the Central GST Acts had come into force (on 01. 07. 2017) - Therefore, Section 19 ceased to be eff ective - The original entry (Entry 54 of the State List) ceased to exist - In the circumstances, the state legislature had no legislative competence to enact the amendment, which approved the ordinance, which consequently was rendered void.

[Paras 102, 105] Constitution of India - Constitution (101st Amendment) Act, 2016 - Gujarat Act: Held: In the Gujarat batch of cases, s. 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 eff ect 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 eff ect the State legislature thus sought to enable reopening of assessments which had already attained fi nality - 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 - In the instant case, the retrospective eff ect, given to the amendment, which was brought into force, with eff ect 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 - The amendments in question, made to the Gujarat VAT Act after 01. 07. 2017 were correctly held void, for want of legislative competence, by the High Court of Gujarat. [Paras 16,113,116] THE STATE OF TELANGANA & ORS. v.

M/S TIRUMALA 145 CONSTRUCTIONS Constitution of India - Constitution (101st Amendment) Act, 2016 - Maharashtra Act: Held: As far as the Maharashtra appeals are concerned, the assessees' grievance is that the retrospective amendments, made to the Maharashtra VAT Act, were void - There is no quarrel with the proposition that a legislative body is competent to enact a curative legislation with retrospective eff ect - 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 eff ect - Therefore, for the same reasons, as in the other cases, the amendments to the Maharashtra VAT Act cannot survive.

[Paras 15, 115] LIST OF CITATIONS AND OTHER REFERENCES Ramkrishna Ramanath v. Janpad Sabha [1962] Suppl. (3) SCR 70; Kesavananda Bharati v State of Kerala [1973] Supp 1 SCR 1; Krishna Kumar Singh v. State of Bihar [2017] 5 SCR 160 - followed. Synthetics and Chemicals Ltd. and Ors. v. State of U. P. & Ors [1989] Supp (1) SCR 623; Vipulbhai M Chaudhary v Gujarat Milk Mktg Federation Ltd. [2015] (3) SCR 997; Bondu Ramaswamy v. Bangalore Development Authority [2010] 6 SCR 29; Bimolangshu Roy (Dead) through L. Rs. v. State of Assam & Ors [2017] 13 SCR 301; A. Hajee Abdul Shakoor & Co v. State of Madras [1964] 8 SCR 217; Jaya Thakur v Union of India & Ors 2023 SCC OnLine SC 813; Kerala State Electricity Board v. Indian Aluminium Co. Ltd [1976] 1 SCR 552; Union of India v Mohit Mineral Pvt. Ltd [2018] 13 SCR 139 - relied on. T. N. Kalyana Mandapam Assn. v. Union of India [2004] Supp 1 SCR 169; Godfrey Phillips India Ltd. v. State of U. P. [2005] 1 SCR 732; A. K. Roy v.

UOI [1982] 2 SCR 272; R. K. Garg v. Union of India [1982] 1 SCR 947; Fuerst Day Lawson Ltd v Jindal Exports Ltd [2001] 3 SCR 479; UOI & Anr. v. Mohit Minerals Private Limited [2022] 9 SCR 300; Anant Mills Company Limited v. State of Maharashtra [1975] 3 SCR 220; 146 SUPREME COURT REPORTS [2023] 15 S. C. R. Vijay Prakash D. Mehta v. Collector of Customs (Preventive), Bombay [1988] Supp (2) SCR 434; State of Haryana v. Maruti Udyog Limited & Ors. [2000] Supp 3 SCR 185; Thirumali Chemicals Limited v. Union of India [2011] 4 SCR 739; Neena Aneja & Anr. v. Jai Prakash Associated Limited [2021] 15 SCR 96; M/s West Ramnad Electric Distribution Co. Ltd. v. State of Madras [1963] 2 SCR 747; State of Rajasthan v. Mangilal Pindwal [1996] Supp (3) SCR 98; Mafatlal Industries Ltd. v. Union of India [1996] Suppl. (10) SCR 585; State of Gujarat v. Reliance Industries Ltd [2017] 13 SCR 25; Sundergarh Zilla Adivasi Advocates Association and Ors.

v State of Odisha and Ors [2013] 6 SCR 420; Union of India v. VKC Footsteps India (P)Ltd [2021] 15 SCR 169; R. Abdul Quader v. Sales Tax Offi cer [1964] 6 SCR 867; State of Madhya Pradesh v. M. V. Narasimhan [1976] 1 SCR 6; R. K. Garg Etc. Etc v. Union Of India & Ors. [1982] 1 SCR 947; State of Gujarat v. Reliance Industries Ltd [2017] 16 SCC 28; Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality [1970] 1 SCR 388; Government of Andhra Pradesh v. Hindustan Machine Tools Ltd [1975] Supp (1) SCR 394; Ujagar Prints v. Union of India [1988] Supp 3 SCR 770; Anshul Impex Private Ltd. v. State of Maharashtra STA No. 2/2018; United Projects v State of Maharashtra (Writ Petition (ST. ) No. 11589 of 2021, and Writ Petition No. 13754 of 2018; State of Gujarat v. Welspun Gujarat Stahl Rohren Ltd. [2014] 71 VST 550 (Guj); Reliance Industries Ltd. v. State of Gujarat [2018] 58 GSTR 366 (Guj); Sree Rayalaseema Alkalies and Allied Chemicals Limited v. State of Andhra Pradesh and Ors.

2007 SCC OnLine AP 1158 - referred to. Constitutional Law of India 4th Edition Volume 3 page 3119; P. Ramanatha Aiyar's Advance Law Lexicon Volume I at Page 271 - referred to. OTHER CASE DETAILS INCLUDING IMPUGNED ORDER AND APPEARANCES CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1628 of 2023. From the Judgment and Order dated 03. 08. 2022 of the High Court for the State of Telangana at Hyderabad in WP No. 5010 of 2021. THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 147 CONSTRUCTIONS With C. A. Nos. 2502-2513, 2644-2686, 2732, 2733, 1654, 1683, 1662, 1663, 1629, 1658, 1630, 1653, 1655, 1657, 1672, 1676, 1656, 1661, 1664, 1660, 1682, 1665, 1666, 1667, 1668, 1669, 1659, 2690, 1670, 1673, 1671, 1674, 1675, 1677, 2687, 2688, 2689 of 2023 SLP(C) Nos. 7776, 13543-13545, 13529-13530, 13523-13526, 13547-13559, 13562-13574, 13561, 13539- 13540, 13527-13528, 13560, 13534-13537 of 2023, C. A. Nos.

2433, 2436, 2437-2443, 2730, 2731, 1645, 1649, 1643, 1636, 1652, 1679, 1637, 1632, 1651, 1633, 1648, 1634, 1647, 1644, 1638, 1678, 1631, 1681, 1641, 1640, 1680, 1639, 1646, 1635, 1642 and 1650 of 2023. Appearances: Vikram Nankani, Arvind P. Datar, Sr. Advs. , B. S. Prasad A. G. /Sr. Adv. , Ms. Kavita Jha, Arnab Roy, Prithwiraj Choudhuri, Ms. Archana Pathak Dave, Kumar Prashant, Ms. Deepanwita Priyanka, Ms. Manju Jetley, Varun Mishra, Ankur Jain, Prablin Singh Abrol, Sanchit Jain, Aniruddha Singh, Rajavat, Ajay Sharma, Awadhesh Kumar, Manju Jetley, Digant Mishra, Somanadri Goud Katam, Rahul Unnikrishnan, Sirajuddin, Advs. for the Appellants. Balbir Singh, A. S. G. , S. Dwarakanath, Saurabh Soparkar, Kapil Sibbal, S. Ganesh, Jay Savla, Dama Seshadari Naidu, Sr. Advs. , Sameer Jain, Ms. Anu Sura, Soayib Qureshi, K. K. Mani, Ms. T. Archana, Rajeev Gupta, Vinay Rajput, K. R.

Sasiprabhu, Uchit Sheth, Santosh Krishnan, Vishnu Sharma A S, Prakhar Agarwal, Robin Ratnakar David, R Jawaharlal, Siddharth Bawa, Anuj Garg, Mohit Sharma, Mayank Kshirsagar, Sridhar Potaraju, Ms. Aditi Anil Dani, Rajat Srivastava, Aayush, Ms. Simran Gupta, Ashutosh Jha, Dr. M. V. K. Moorthy, M. V. J. K. Kumar, M. Kumar, Hitendra Nath Rath, Mohan Raj A, Hariharan, Ms. Charulata Chaudhary, Ravinder Kumar Yadav, D. Srinivas, A. V. S. Raju, R. Ravi, Sadam Satyanarayana Raja Yadav, Srinivas Rao Ambaji, Somanatha Padhan, Sujit Ghosh, Mridul Gupta, Shubh Dixit, Ms. Mannat Waraich, Aniruddha Joshi, Shrirang B. Varma, Siddharth Dharmadhikari, Naman Tandon, Samarvir Singh, Prasanjeet Mohpatra, Aditya Rathore, Aaditya Aniruddha Pande, Bharat Bagla, Sourav Singh, Aditya Krishna, Ranjeet Singh, Mrs. Bela Maheshwari, V Seshagiri, Bikram Bhattacharya, R. Krishnan, Rupesh Kumar, Ms. Pankhuri Shrivastava, Ms.

Neelam Sharma, Rajeev Sharma, Kumar Visalaksh, Udit Jain, Arihant Tater, 148 SUPREME COURT REPORTS [2023] 15 S. C. R. Abhishek Vikas, Ms. Tatini Basu, Ms. Nitipriya Kar, Kumar Shashank, Byrapaneni Suyodhan, Krishan Kumar, Mrs. Neetu Sharma, Nitin Pal, Shivam Pandey, Yelamanchili Shiva Santosh Kumar, Rudrajit Ghosh, Tushar Arora, Tarun Gupta, Ishaan George, Ms. Shiwani Tushir, M/s. Shree Chakra Chambers, Venkatram Reddy Mantur, G. N. Reddy, Ravi Shankar, Vedrumudi Vishnoo C. Kashyap, Uchit Seth, Malak Manish Bhatt, Jasdeep Singh Dhillon, Prabhat Kumar Chaurasia, Yugantar Singh Chauhan, Ms. Pinky Behera, Rizwan Ahmad, Shakeel Ahmed, Amir Kaleem, Paras Nath Singh, Jatin Anand Diwedi, Soumik Ghosal, Ramesh Allanki, Ms. Aruna Gupta, Syed Ahmad Naqvi, B Krishna Reddy, K. Aroah, K. K. Tyagi, Iftekhar Ahmad, Ms. Garima Tyagi, Sarvam Ritam Khare, Vikash Chandra Shukla, V. C. Shukla, Sidharth Relan, Naga Deepak, Aishvary Vikram, Ajay Awasthi, Anantha Narayana M. G.

, Siddhartha Relan, Prakash Gautam, Puspraj Singh Parihar, Pushpraj Singh Parihar, Akshya Kumar Panda, Prabhsimar Singh, Amritesh Raj, Nitesh Ranjan, Tarun Gulia, Manish Dutt Sharma, Piyush Singh, Anshuman Sinha, Vijay Kumar Pandey, Vinay Prakash, Ajay Vikram Singh, Mrs. Pragya Sharma, Udayan Sinha, Karan Talwar, Krishna Sumanth, Siddhant Buxy, Sumanth Nookala, Advs. for the Respondents. JUDGMENT / ORDER OF THE SUPREME COURT JUDGMENT S. RAVINDRA BHAT, J. Table of Contents I. Background and relevant provisions ...................................... 2 II. Facts ......................................................................................... 9 III. Arguments of the appellant-states ......................................... 11 IV. Arguments of the respondent-assessees ................................ 20 V. Analysis and reasoning ......................................................... 33 A. Interpretation of Section 19 .................................................. 35 B.

Whether the power of amendment or repeal is subject to limitations under Section 19 ............................................. 40 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 149 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] C. Validity of Telangana Act tested from the touch stone of its originating as an ordinance ............................................. 50 D. Gujarat and Maharashtra Acts ............................................. 57 VI. Conclusions ............................................................................ 63 1. This batch of appeals arise from judgments delivered by the Telangana, Gujarat and Bombay High Court. The concerned states (Telangana and Gujarat) have appealed aggrieved by the judgments. The assessee petitioners are appellants, and are aggrieved by the judgments of Bombay High Court. I. Background and relevant provisions 2.

The Constitution (101st Amendment) Act, 2016, (hereafter referred to as "the Amendment") introduces a fundamental re-ordering of the constitutional premise of taxation by the Union and State Governments in India. It is the framework to enable the introduction of the Goods and Services Tax (GST). It confers new powers upon the Union Parliament and State Legislative Assemblies, and also creates institutions that have a signifi cant bearing on the federal character of the Constitution. 3. The pre-Amendment constitutional scheme had a vision of taxation of goods and services supplied within India. Excise and customs duty and excise on manufacture were within the scope of the legislative powers of the Union Parliament1, 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 India2, 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 1 Entries 83 and 84, List I, Seventh Schedule of the Constitution of India. 2 2004 Supp (1) SCR 169; (2004) 5 SCC 632 150 SUPREME COURT REPORTS [2023] 15 S. C. R. 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 spheres of taxation for the Union and the States. 4. The initial move to introduce GST was through the Fiscal Responsibility and Budget Management Report and the first official announcement for a transition to GST, was made by the Government of India in 2006-07 by the Budget Speech of the then Finance Minister; this was reiterated in the Budget Speech of 2008-09 and followed up in 2009-10 when certain policy changes were announced in the Budget for that year. The "First Discussion Paper on Goods and Services Tax in India" released by the Empowered Committee in November 2009 was the fi rst offi cial document publicly delineating the contours of the proposed reform and nuances of the GST Model. 5. The First Discussion Paper, in fact, explained the rationale for a constitutional amendment to introduce GST.

It noted that while the Centre is empowered to tax services and goods up to the production stage, the States have the power to tax the sale of goods. The States do not have the power to levy a tax on the supply of services while the Centre does not have the power to levy a tax on the sale. It suggested for a constitutional amendment that would contain a mechanism for a harmonious structure of GST that would not aff ect the federal fabric. 6. Then, with the deliberations between the Centre and States, aided by the Empowered Committee, the constitutional amendment process to usher in GST began. It resulted in the "Constitution (One Hundred and Fifteenth Amendment) Bill, 2011" After that failed attempt, the 2014 Amendment Bill was adopted and passed on 8 September 2016. The Bill became "the Constitution (One Hundred and First Amendment) Act, 2016". 7. The GST Council was constituted in September 2016.

It is a constitutional institution comprising as its members the Finance Ministers of the Union and the States including Union Territories with members of the legislatures. It has the authority THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 151 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] "to recommend to the Union and the States on various facets of GST, including Model GST laws, principles to determine the place of supply, levy of the tax, design of GST, dispute settlement, special provisions for a special category of States, and so forth". GST Council's recommendations led Parliament to enacted legislation. 3 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 eff ect 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 fi eld, 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 fundamental change to the scheme of legislative relations between the Union and the States by departing from the underlying theory of exclusivity of legislative fi elds between Parliament and the State legislatures,in terms of the distribution of legislative powers carried out by Chapter I of Part XI of the Constitution4. 10.

To exemplify this:whilst Article 246-A changes the legislative distribution of powers, however, it does not upset the balance between 3 The Central Goods and Services Tax Act, 2017: it levies a tax on intra-State supplies of goods and services in all supplies within a State; 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. 4 Godfrey Phillips India Ltd. v. State the Union and the States. Instead, it carries out the function of cross- empowerment. On the one hand, it enables the Union to legislative and collect taxes on certain subjects which were hitherto within the exclusive fold of the States (such as the taxes on sale and purchase of goods, luxury taxes, advertisement taxes, etc.

), while retaining the legislative rights it hitherto possessed (such as taxes on manufacture, taxes on services, etc. ) except that these taxes are subsumed in a larger legislative fi eld - i. e. , GST - and would be levied thereunder. On the other hand, Article 246-A also expands the legislative reach of the States to bring within their fold the subjects which were hitherto beyond their competence-such as tax on the supply of services, etc. As in the case of the Union, the States also continue to enact and impose taxes on the legislative fi elds they hitherto possessed (such as taxes on sale and purchase, taxes on betting and gambling, and taxes on advertisements), albeit as a partof GST which subsumes these legislative fi elds. 11. Article 279-A provides for the Goods and Services Tax Council (hereafter "GST Council"). This provision also changes the underlying constitutional philosophy to a certain extent.

Sub-clause (1) of Article 279- A creates a new constitutional institution; (2) confers upon it the power to make recommendations to the Union and the States; (3) provides that certain functions of other constitutional institutions shall be carried out on the basis of the recommendations of the GST Council5; (4) has overarching jurisdiction and carries extensive functions in relation to the design and structure of the goods and services tax; (5) has substantial role in resolution of disputes amongst the executive governments relating to GST, etc. 6 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: 5 For illustration, see Art. 246-A Explanation, Art. 269-A(1), Constitution of India.

6 Article 279-A, infra, for a detailed discussion. THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 153 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] "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 eff ect from the date recommended by the Goods and Services Tax Council. " By Section 7, Article 268-A was omitted. After Article 269, Article 269-A has been inserted, which reads as under: "269A.

Levy and collection of goods and services tax in course of inter-state trade or commerce--- (1) Goods and Services tax on supplies in the course of inter-State trade or commerce shall be levied and collected by the Government of India and such tax shall be apportioned between the Union and the States in the manner as may be provided by Parliament by law on the recommendations of the Goods and Services Tax Council. Explanation---For the purposes of this clause, supply of goods, or of services, or both in the course of import into the territory of India shall be deemed to be supply of goods, or of services, or both in the course of inter-State trade or commerce. (2) The amount apportioned to a State under clause (1) shall not form part of the Consolidated Fund of India. (3) Where an amount collected as tax levied under clause (1) has been used for payment of the tax levied by a State under article 246A, such amount shall not form part of the Consolidated Fund of India.

(4) Where an amount collected as tax levied by a State under article 246A has been used for payment of the tax levied under clause (1), such amount shall not form part of the Consolidated Fund of the State. 154 SUPREME COURT REPORTS [2023] 15 S. C. R. (5) Parliament may, by law, formulate the principles for determining the place of supply, and when a supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. " Section 12 of the Amendment inserted Article 279-A, which reads as follows: "279A. Goods and Services Tax Council --- (1) The President shall, within sixty days from the date of commencement of the Constitution (One Hundred and First Amendment) Act, 2016, by order, constitute a Council to be called the Goods and Services Tax Council. (2) The Goods and Services Tax Council shall consist of the following members, namely:- (a) the Union Finance Minister....... Chairperson; (b) the Union Minister of State in charge of Revenue or Finance......

Member; (c) The Minister in charge of Finance or Taxation or any other Minister nominated by each State Government ..... Members. (3) The Members of the Goods and Services Tax Council referred to in sub-clause (c) of the clause (2) shall, as soon as may be, choose one amongst themselves to be the Vice-Chairperson of the Council 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; THE STATE OF TELANGANA & ORS. v.

M/S TIRUMALA 155 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] (d) the threshold limit of turnover below which goods and services may be exempted from goods and services tax; (e) the rates including fl oor rates with bands of goods and services tax; (f) any special rate or rates for a specifi ed 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 relating to the goods and services tax, as the Council may decide. (5) The Goods and Services Tax Council shall recommend the date on which the goods and services tax be levied on petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel.

(6) While discharging the functions conferred by this article, the Goods and Services Tax Council shall be guided by the need for a harmonized structure of goods and services tax and for the development of a harmonised national market for goods and services. (7) One-half of the total number of Members of the Goods and Services Tax Council shall constitute the quorum at its meetings. (8) The Goods and Services Tax Council shall determine the procedure in the performance of its functions. (9) Every decision of the Goods and Services Tax Council shall be taken at a meeting, by a majority of not less than three-fourths of the weighted votes of the members present and voting, in accordance with the following principles, namely:--- (a) the vote of the Central Government shall be a weightage of onethird of the total votes cast, and (b) the votes of all the State Governments taken together shall have a weightage of two-thirds of the total votes cast, in that meeting.

156 SUPREME COURT REPORTS [2023] 15 S. C. R. (10) No act or proceedings of the Goods and Services Tax Council shall be invalid merely by reason of--- (a) any vacancy in, or any defect in, the constitution of the Council; or (b) any defect in the appointment of a person as a Member of the Council; or (c) any procedural irregularity of the Council not aff ecting the merits of the case. (11) The Goods and Services Tax Council shall establish a mechanism to adjudicate any dispute--- (a) between the Government of India and one or more States; or (b) between the Government of India and any State or States on one side and one or more other States on the other side; or (c) between two or more States, arising out of the recommendations of the Council or implementation thereof. " 13. Section 14 (of the Amendment)had the eff ect of introducing Article 366 (12A), (26-A) and (26-B). A crucial amendment was in the VIIth Schedule to the Constitution.

In List I (Union List) for Entry 84, the following entry was substituted: "84. Duties of excise on the following goods manufactured 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: THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 157 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] "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 commencement, whichever is earlier. " Section 20 read as follows: "20.

(1) If any diffi culty arises in giving eff ect to the provisions of the Constitution as amended by this Act (including any diffi culty in relation to the transition from the provisions of the Constitution as they stood immediately before the date of assent of the President to this Act to the provisions of the Constitution as amended by this Act), the President may, by order, make such provisions, including any adaptation or modifi cation of any provision of the Constitution as amended by this Act or law, as appear to the President to be necessary or expedient for the purpose of removing the diffi culty: Provided that no such order shall be made after the expiry of three years from the date of such assent. (2) Every order made under sub-section (1) shall, as soon as may be after it is made, be laid before each House of Parliament. " II. Facts 14. There are three batches of appeals, arising from separate special leave petitions fi led 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 158 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 confi rmed, as the state was denuded of legislative competence after 01. 07. 2017. 15. 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 eff ort to reverse the eff ect of a judgment, given retrospective eff ect. The writ petitions fi led 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 eff ect 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 eff ect the State legislature thus sought to enable reopening of assessments which had already attained fi nality. 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. THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 159 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] III. Arguments of the appellant-states 17. It was argued on behalf of the State of Telangana, by Mr. Arvind Datar, Senior Advocate, Mr. Balbir Singh, learned Additional Solicitor General (ASG), on behalf of Maharashtra, that the Constitutional Amendment was introduced on 16. 09. 2016. It was highlighted that by its provisions various entries in the State and Union list were amended drastically to limit the powers of the two legislatures. The object of the amendment was to re- organize the powers of indirect taxation that the original Constitution makers had envisioned. Indirect taxes: more specifi cally, sales tax, service tax, central excise and value added tax were the subject matter of this amendment. The original intent of the Constitution and powers in relation to levy of customs duty were retained as it were.

For the fi rst time, the amendments denuded the States and Parliament of exclusive fi elds of legislation and introduced the concept of shared or pooled sovereign powers in relation to value added tax, central excise and service tax. These were brought into one compendious term "goods and services tax", ensuring that all aspects in this fi eld of taxation were covered. For the fi rst time, the power of taxation could be traced to a substantive provision of the Constitution, introduced by the Amendment. Furthermore, the issue of evolving principles division of pooled fi eld of taxation was left to a new entity, the Goods and Service Tax Council (hereafter "GST Council"), created as a constitutional entity. This design was to ensure that the federal balance of power was retained and in fact furthered. 18.

Learned counsel relied upon the provisions of the Amendment to emphasize that the GST Council is comprised of Finance Ministers of all States and that the Union has only 1/3rd weightage in its decision making. The balance is with the States collectively. Furthermore, any decision in the council becomes eff ective when it is voted for by a 3/4 ths majority. 19. It was contended, that the almost the revolutionary change brought about by redistribution of indirect taxation power and the giving eff ect to it through the Amendment meant that both Parliamentary and state legislative powers were denuded in respect of fi elds 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 eff ect of the Amendment, the fi elds of taxation in Entries 84 of the Union List (List I) of the Seventh Schedule to 160 SUPREME COURT REPORTS [2023] 15 S. C. R.

the Constitution of India and Entries 54 and 62 of the State List, too were amended. The revamping of these fi elds 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-à-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 confl ict (in terms of repugnancy) between laws enacted by the States and the Parliament. 20. The eff ect of Article 246A is that both the Parliament and the State legislatures have the power to enact laws with respect to goods and service imposed by the Union or such State.

Article 246A (2) states that Parliament has the overriding power to enact laws with respect to goods and services taxes qua supply of goods and services and both of them in the course of inter-state trade and commerce. Another substantial provision is Article 269A which authorizes the Union to collect GST on supplies in the course of inter-State trade or commerce which "shall be apportioned between the Union and the States in the manner as may be provided by the Parliament on the recommendations of the GST Council". The other provisions of Article 269A clarify the nature of the collections which are not to form the Consolidated Fund of India. Article 279A provides for the GST Council and elaborately deals with its structure to ensure balanced decision making, ensure democratic participation of the Union and the States. 21.

It was also submitted that consequent to these amendments, Article 366 [12(A)]was introduced, which defi ned GST, astax on supply of goods and Services or both, excluding alcoholic liquor for human consumption It was urged on behalf of the States that with the coming into force of the amendment, Parliament and the states realized that any changes in the law or the practical application of the existing law would become impossible. As a consequence, to cater to these eventualities, certain constitutional provisions were made, i. e. Section 19 which provided fi rstly that laws relating to tax on goods or services or both "in force in any state immediately before the commencement of the amendment Act shall continue to be in force until amended or repealed by a competent legislature or other THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 161 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] competent authority.

" The other eventuality was that with or without such amendments such laws were to be in force only for a period of one year from the commencement of the amendment. Section 20 authorized the President to, by order, make provisions, including modifi cation and adoption of "any provision of the Constitution as amended by the amendment Act in case of any defect, including defect in relation to transition from the provisions of the State as they stood immediately before the commencement of the amendment Act, for a period of three years. " 22. In view of Section 19 of the Amendment, the Telangana legislature amended the existing state statute - Value Added Tax Act (hereafter "the Telangana VAT Act")7. The amended provisions empowered the Assessing Offi cer 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 eff ect, 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 as they related to ongoing assessment proceedings and matters which had not become fi nal. 24.

The learned counsel submitted that the impugned judgments of the Telangana and Gujarat High Courts are erroneous. It was submitted that the Telangana High Court's interpretation that the expression "amend" had limited import is without basis. Learned counsel highlighted that the 7 Sections 20(4), 21(3), 21(4), 21(6), 21(7), 21(8), 31(1), 32(3), 32(6), 32(7) and 57(5). 162 SUPREME COURT REPORTS [2023] 15 S. C. R. ordinance in terms of the several judgments of this Court, especially A. K. Roy v. UOI8 (hereafter, "AK Roy") and the seven judge decision in Krishna Kumar Singh v. State of Bihar9 (hereafter, "Krishna Kumar Singh") have declared that there is no diff erence between the eff ect of an ordinance and that of a law enacted by the State legislature. Being in the nature of special power to cater to unforeseen eventualities, the executive was empowered to enact laws for a limited duration as far as the conditions spelt out in Article 213.

The Union executive in a like manner was authorized by Article 123 to promulgate ordinances. 25. Learned counsel also relied upon the decision of this Court in Ramkrishna Ramanath v. Janpad Sabha10 (hereafter, "Rama Krishna Ramanath") and relied upon the principle that so long as the power to amend existed, both the Parliament and the State legislatures could not be limited in the exercise of that power which was plenary and sovereign. The interpretation placed by the Telangana and the Gujarat high Courts that the expression amend only conferred a constricted power which is to bring the existing enactments in line with the amendments of the Constitution, was erroneous. In fact, it amounted to unduly restricting - without any warning - the purport and amplitude of the saving and Presidential power expressed through Section 19. 26.

Learned counsel submitted that if one takes into account the fact that the eff ect of an ordinance and the eff ect of law are identical which is that they bind the space or subject matter to the extent they provide for it, the diff erence lies only in the manner of their creation. Learned counsel emphasized that the distinction lies in the procedure adopted rather than the content or the eff ect of the law. Whereas the origin of an ordinance is through a diff erent entity which is the executive (clothed with limited legislative power), the Act, on the other hand, is an expression of a State legislative or Parliament. This distinction cannot obliterate the eff ect of the law which is the same and would continue to bind the parties for which express provision is made. 8 (1982) 2 SCR 272 9 (2017) 5 SCR160 10 1962 Suppl. (3) SCR 70 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 163 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] 27.

In support of the proposition that there is no diff erence 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 India11. 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 diff erent 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 terms of the ordinance through the body of law enacted by it. In other words, if the State legislature or the Parliament disapproves the ordinance or does not approve any part of the ordinance and embodies the ordinance in the form of an enactment, that enactment would then be decisive from the date the ordinance itself was brought into force. However, in the case of disapproval, in terms of the disapproval, the limited life of the ordinance would cease. It was thus argued that upon the State legislature approving the terms of the ordinance in Telangana and embodying it in terms of the second amendment which was brought into force on 02. 12. 2017, its terms related back. Therefore, the State power to legislate has to be viewed in continuum or as continuing from the date it was brought into force which is 17. 06. 2017 and formed from the State enactment.

Consequentially, even the power to enact the law on the part of the state was preserved. Learned counsel also relied upon the decision of this Court in Fuerst Day Lawson Ltd v Jindal Exports Ltd12 in support of the submission. In the case of Maharashtra VAT Act, it was highlighted that the amendment Act was brought into force on 15. 04. 2017. The Central Goods and Services Tax Act (hereafter "CGST Act") came into force on 01. 07. 2017. In terms of the amendment to the State VAT Act, the pre-deposit of 10% became the condition for hearing the appeal. 11 (1982) 1 SCR947 12 2001 (3) SCR 479 164 SUPREME COURT REPORTS [2023] 15 S. C. R. 28. It was argued on behalf of the State of Maharashtra that what is material is the existence of a power to legislate and not the manner of exercise of that power.

Therefore, the existence of a power to legislate was preserved by Section 19; its purpose was to preserve both the portion of existing laws and also to permit the State legislature and the Parliament to amend or repeal the existing law. Being a constitutional amendment, no expression or term ought to be interpreted in a limited manner. The reasoning of the Telangana and Gujarat High Courts that the power of amendment was limited to bringing the existing enactments, i. e. State VAT Acts in conformity with the express terms of the 101st amendment, was erroneous. It was submitted that till the date specifi ed in the 101st amendment, i. e. the expiration of one year which was eff ectively 30th June, 2017, the power of the competent legislatures, i. e. the State and the Union was untrammeled.

Learned counsel 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 Limited13. 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 specifi cally inserting Section 19 in the Constitution makes no diff erence. It is still a part of the Constitution as amended. The reference in this regard is made to the seventh constitutional amendment which conferred power upon the President to frame regulations for administering Part D States. After the said Amendment, 13 2022 (9) SCR300 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 165 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] the Regulations were continued for a limited period. The constitutional amendment completely became part of the Constitution. This Court in the matter of A. K. Roy (supra) has considered the issue. 31.

It was urged, on behalf of the Maharashtra state that the amendment to Section 26 of Maharashtra Value Added Tax Act, 2002 (hereafter as "MVAT Act") requiring a pre-deposit is not inconsistent with the Amendment. It is procedural in nature and no vested right of the assessee was taken away. It is also not in dispute that the same is in respect of past levies prior to the introduction of GST w. e. f. 1st July, 2017 and therefore, even otherwise are saved by Section 174 of the Maharashtra GST Act. 32. It is submitted that the plain language of Section 26(6A) and 26(6B) of the MVAT Act clarifi es that it applies in all cases where the order is passed after 15th April, 2017 and an appeal is preferred. That provision only requires a pre-deposit of 10% and takes away the discretion of the Appellate Authority/Tribunal. It does not take away the statutory right of appeal and only regulates the same by removing the discretion of the Tribunal.

The condition of pre-deposit is also not even an onerous condition to make it arbitrary. The only question, therefore, is whether there is any vested right of fi ling an appeal without a pre-deposit. The plain language of the amendment has taken away the discretion of the Appellate Authority and not the right of appeal in case where the order is passed by the original authority after 15th April, 2017. The state relies on the decisions, to say that the right to appeal remains unaltered, only its conditions are controlled, or regulated, with pre-deposit requirements, at the appellate stage, i. e. Anant Mills Company Limited v. State of Maharashtra14; Vijay Prakash D. Mehta v. Collector of Customs (Preventive), Bombay15 State of Haryana v. Maruti Udyog Limited &Ors16Thirumali Chemicals Limited v. Union of India17; Neena Aneja & Anr. v. Jai Prakash Associated Limited18. 33.

The State of Gujarat urges that the High Court fell into error in not recognizing that in somewhat similar situations, this court in A. Hajee 14 (1975) 3 SCR220 15 (1988) Supp (2) SCR 434 16 (2000) Supp 3 SCR 185 17 (2011) 4 SCR739 18 (2021) 15 SCR96 166 SUPREME COURT REPORTS [2023] 15 S. C. R. Abdul Shakoor& Co v. State of Madras19 (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 Madras20 validated the power of states to retrospectively validate actions taken under notifi cations 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 Pindwal21 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 restitution by allowing the tax authorities to collect the tax from those dealers who have passed on the burden of tax on the ultimate consumer but not paid it into the government treasury thus avoiding unjust enrichment of money as held by a special larger Constitution bench in Mafatlal Industries Ltd. v. Union of India22 (hereafter, "Mafatlal Industries"). It is urged that restitution and prevention of unjust enrichment is a principle of equity applicable irrespective of any statutory provisions.

Further, it is argued that Section 84 A does not impose new tax or liability, but merely facilitates the collection of tax whose burden was passed on to the ultimate consumer and that collected tax, being public money and its incidence and burden is always presumed in indirect taxes, it will be most inequitable and improper to allow some dealers to retain the benefi t of tax which has been passed on. 35. It was next urged that Section 84 A is a validating Act which increases the time limit thereby enabling the collection of public funds in the hands of the dealers of tax. The revision notices were sent after the judgment delivered by this court in the State of Gujarat v. Reliance Industries 19 1964 (8) SCR 217; AIR 1964 SC 1729 20 1963 (2) SCR 747 21 (1996) Supp (3) SCR 98 22 1996 Suppl. (10) SCR 585 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 167 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] Ltd23.

Counsel submitted that the time limit prescribed under Section 84 A is not too long if Articles 61(b), 62, 63(b), 64, 65, 66, 67, 92, 94, 96, 106, 107, 108, 109, 110 and 136 of the Limitation Act, 1963 are viewed which provide for time limits of 12 or even 30 years from the occurrence of any event which may also take many years to occur. IV. Arguments of the respondent-assessees 36. It was argued on behalf of the assessee-respondents by Mr. Kapil Sibal, Mr. S. Ganesh, Mr Nankani and Mr Soparkar, learned Senior counsel and Mr. Sujit Ghosh, Advocate (hereafter "the assesses") that continuance of inconsistent existing law is solely for the purposes of making them consistent (through amendments) with the amended architecture of the Constitution. It was submitted that to elucidate the ambit of powers under Section 19 of the Amendment, an inference can be drawn from Article 243ZF of the Constitution, which has been couched in a manner identical to Section 19.

There are however, two distinctive features inter se between them, fi rst, being, that unlike Section 19 Article 243ZF was incorporated into the body of the Constitution, and the 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 Ors24 (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 23 (2017) 13 SCR25. 24 (2013) 6 SCR420 168 SUPREME COURT REPORTS [2023] 15 S. C. R. 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 purpose is to cure the inconsistencies and iron out the creases.

Further, in view of the fact that, unlike Article 243ZF which is a part of the Constitution and also overrides part IXA of the Constitution, Section 19 is not part of the Constitution and also not overriding any provision of the Constitution, the power to amend under Section 19 of the CAA would be even narrower as compared to the power to amend available under Article 243ZF as interpreted in Sundergarh Zilla (Supra). 38. Counsel urged that a similar transitional provision was introduced in the form of Section 143(2) of the Government of India Act 1935, with the introduction of Part III introducing the concept of 'provisional legislation' in Rama Krishna Ramanath (supra). 39.

It is submitted that even where express power to continue the levy was granted through incorporation into the Government of India Act, 1935, the Constitution Bench of this Court proceeded to hold that even in such cases, the power of the Provincial Legislature is extremely limited and certainly cannot be used to 'alter the incidence'. In the present case, such powers to continue the levy are wholly absent and accordingly powers under Section 19 of the CAA would be construed in an extremely narrow framework, i. e. limited to bring the legislation in consonance with the Constitution. 40. It was submitted that the term 'amend' ought not to be interpreted textually, instead contextual interpretation ought to be adopted. By applying contextual interpretation, it would appear that Section 19 of the Amendment Act is couched in a manner which contemplates ultimate repeal and obliteration from the statute books.

This suggests that the legislature contemplated a diminishing life of the legislation concerned and the state could not have used the power to amend to breathe any more life into the statute concerned. Further, the usage of the word 'inconsistent' followed later with the word 'until amended', clearly suggests that the intention was to let the inconsistent provisions survive for a limited time, until it is amended to make it consistent. Had the intention been to confer plenary power to amend, then section 19 would have been couched in a manner such that it provided for 'subject to amendment', which would have then suggested THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 169 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] that the existing inconsistent law 'as is' or 'as amended', 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 specifi cally provided within the Constitution. This harmony has been interpreted by the Supreme Court in Union of India v. VKC Footsteps India (P)Ltd25, 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 more life into it than what existed earlier, would be in the teeth of constitutional morality and contrary to the principle of the 'Pure Theory of Law' propounded by Kelsen. This is so because plenary legislation stands at a pedestal lower than the Constitution of India and can never clash with the Grundnorm. Accordingly, whatever legislative power may be couched in Section 19 of the Amendment, will have to be subservient to Articles 245 and 246 of the Constitution. If under the latter two Articles, there is no power available with the State to legislate on a subject which has been deleted or truncated from List II of the Seventh Schedule, then Section 19 of the Amendment cannot be pressed into services to override such a Constitutional restriction. Counsel urges that the entire Amendment was enacted by following the procedure under Article368 of the Constitution.

While the said Article confers constituent power to the Parliament to amend the Constitution, stricto senso the enactment of Section 19 of the Amendment not being made a part of the Constitution may be viewed as not having been enacted in exercise of powers under Article 368 25 2021 (15) SCR 169 170 SUPREME COURT REPORTS [2023] 15 S. C. R. of the Constitution. However, considering that along with the remaining provisions of the Amendment, Section 19 of the Amendment also went through the entire drill prescribed under the Amendment, a possible view emerges that Section 19 of the Amendment is perhaps an adjunct to exercise the powers under Article 368 of the Constitution which have been enacted using the 'incidental and ancillary' powers available to the Legislature. It is well known and well settled that incidental and ancillary powers are exercised in aid of the main Legislation (Reliance is placed on the decision of this court in R. Abdul Quader v. Sales Tax Offi cer26).

Therefore, to interpret the word "amend" in Section 19 of the Amendment to mean conferment of a parallel power wider than making curative legislation, which runs contrary to the revised Constitutional architecture of simultaneous levy through the introduction of GST, cannot be said to be in aid of the main subject of Amendment. 43. It is alternatively argued that assuming arguendo, Section 19 has been legislated by the Parliament in exercise of power under Entry 97 of List I of the Seventh Schedule (being a residuary entry for matters not enumerated in List II or List III 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 fi nd its source of power in Article 246A. This is for two reasons, fi rstly, 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 defi ned term, entirely diff erent 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 26 (1964) 6 SCR 867 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 171 CONSTRUCTIONS [S. RAVINDRA BHAT, J.

] immediately before the commencement of this Act' shall continue to be in force until amended or repealed or until the expiration of one year which is earlier. Hence, the edifi ce of Section 19 is based on the law being in force before the Commencement of the Amendment i. e. on 15. 09. 2016. 46. In one of the cases, pursuant to the order dated 31. 12. 2007 of the AP High Court in Sree Rayalaseema Alkalies and Allied Chemicals Limited v. State of Andhra Pradesh and Ors27. , the levy of entry tax under AP Tax on Entry of Goods into Local Areas Act of 2001, was declared unconstitutional. The said decision of the A. P High Court was set aside by this court on 29. 03. 2017 by Order dated 29. 03. 2017 which is much after the Amendment which came into eff ect on 16. 09. 2016. In the meanwhile, the AP Tax on Entry of Goods into Local Areas Act, 2001whichwasdeclared unconstitutional, was also adopted by the State of Telangana vide G. 0. M No. 45 dated 01. 06. 2016. 47.

It is submitted that where the law was declared as unconstitutional and thereby obliterated from the statute book, such law cannot be treated as 'a law in force' as contemplated under the Amendment. Accordingly, where the AP Tax on Entry of Goods into Local Area Act of 2001 was not in force on the date immediately before the commencement of the Amendment, such legislation in any case, cannot continue to be in force in the manner as contemplated under the Amendment. 48. It is further submitted that even the adoption of the AP Tax on Entry of Goods into Local Area Act, 2001 by the State of Telangana was also unconstitutional in as much as the AP Tax on Entry of Goods into Local Area Act, 2001 was already declared as unconstitutional as on 31. 12. 2007. Accordingly, being a dead law, the same could not have been adopted by the State of Telangana on 01. 06. 2016.

Further, the subsequent decision of this court which set aside the order of the Hon'ble AP High Court cannot breathe life and validate the adoption as it was well settled that the validity of a statute is to be tested at the time of enactment by the legislature. An After-acquired power cannot ex proprio vigore validate a statute void when enacted. 27 2007 SCC OnLine AP 1158 : (2008) 13 VST 15 172 SUPREME COURT REPORTS [2023] 15 S. C. R. 49. Section 6 of the Telangana Tax on Entry of Goods into Local Area Act, 2001 incorporates the provisions of the Telangana VAT Act in relation to assessment, returns etc. Accordingly, 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")28, 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 unaff ected 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 ineff ectual; (iv)Where the amendment of the previous Act, either expressly or by necessary intendment applies the said provisions to the subsequent Act. 50. In the present case, since none of the exceptions as laid down by this court in M. V.

Narasimhan (supra)stand satisfi ed, the amendment in the Telangana VAT Act would not be applicable to the Telangana Tax on Entry of Goods into Local Area Act, 2001 and as such the entire demand is in any case barred by limitation. 51. The intention behind Section 19 was to stipulate a time frame for subsuming of erstwhile indirect taxes and for States to amend or repeal to pave the way for imposition of SGST. It was not for permitting States to freely amend their legislation till GST laws were enforced. Post 16. 09. 2016 28 (1976) 1 SCR6 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 173 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] the States had no competence to freely legislate on goods other than those mentioned in Entry 54List II of Constitution as amended by the 101st CAA. Section 19 was intended only to allow the States to bring their laws into compliance with the Constitution as amended by the 101stCAA. Section19 is pari materia with Article 243ZT.

In Vipulbhai M Chaudhary v Gujarat Milk Mktg Federation Ltdṅ29 (hereafter, "Vipulbhai"), it was observed, in the context of Article 243ZT, which required laws relating to co-operative societies in force in States prior to the Amendment Act to be in tune with and in terms of the constitutional concept and set up of cooperative societies and provided a period of one year, it was held that "the Constitution enables the competent legislature or authority to suitably amend the existing provisions in their laws in tune with the constitutional mandate. " 52. The Telangana Amendment Act to the extent it seeks to legislate on the basis of erstwhile Entry 54 of List Il of the 7th Schedule is bereft of legislative competence. Section19 contemplates amendment by a "competent legislature". Post amendment the competence has to be determined with reference to post amendment provisions.

It is submitted that States had legislative competence only as an incidental power to amend or repeal the provisions dealing with State indirect taxes so as to bring them in line with the amended Constitution. An example of a valid amendment would have been to amend the defi nition of "goods" in the Telangana VAT Act. The same was however achieved by S. 174(1)(i) of the Telangana Goods and Services Tax Act, 2017 ("TGST Act") by confi ning the repeal of the Telangana VAT Act to all goods except those covered by Entry 54 of List II of the 7th Schedule. Section 19 of the101stAmendment 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. 29 2015 (3) SCR997 174 SUPREME COURT REPORTS [2023] 15 S. C. R. 54. It was argued that the Telangana Ordinance was issued with eff ect 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 eff ect 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 eff ect that the issuance of the Ordinance and its incorporation into an enactment constitutes a single law making power being exercised akin to a principal ratifying an agent's actions are belied by the very provisions of the State Amendment. 55.

Thus, the lack of legislative competence is immediate. That is not the subject matter of Section 19. Instead, what is kept in suspension under Section 19, is the eff ect of such incompetence on enactments that had already been passed prior to the Amendment, i. e. , enactments in force. Section 19 is pari materia to Article 243 ZF and must be given the above interpretation in accordance with Bondu Ramaswamy v. Bangalore Development Authority30 (hereafter, "Bondu Ramaswamy") Further, the words "shall come into force" in Section 1(2) will have no meaning if Section 19 is interpreted to mean that the operation of the Amendment itself is to be stayed for a period of one year. 56. Counsel stated that a transitional provision cannot be used for oblique purposes. The scope of a power to 'amend' a statute is co-terminus with the scope of legislative competence and cannot travel beyond such Competence as on the date of such amendment. With eff ect from 16. 09. 2016, and therefore, as on o 17.

06. 2017, the competence of the State Legislature to make law with respect to Article 246(3) read with unamended Entry 54 did not exist. The word 'amend' in Section 9 therefore cannot be read to be wider than the competence of the State Legislature on 17. 06. 2017. Instead, the word 'amend' is limited to the power to make law only with respect to the new contours of Entry 54. The term 'until' indicates that the lifetime of an inconsistent law is immediately decided by Section 19. An inconsistent law continues to be in force until: 30 (2010) 6 SCR29 THE STATE OF TELANGANA & ORS. v. M/S TIRUMALA 175 CONSTRUCTIONS [S. RAVINDRA BHAT, J. ] a. The State legislature amends the inconsistent law to bring it in conformity with the Constitution as amended by the 101stAmendment OR b. The State Legislature repeals the inconsistent law OR c. The period of one year from the commencement of the Act expires i. e. , 15. 09. 2017. 57.

The purpose of using the word 'amend' is to allow the State Legislature to bring existing laws in conformity with the 101st Constitution Amendment so that they can continue to operate. If the legislatures chooses to take such a route, the inconsistent provisions of the Act cease to exist upon amendment. 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 eff ectively 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 fi nd the subject matters with respect to which the power may be exercised. When concurrence as a principle already exists in such a manner, the decision of the Parliament to house both the power and the subject matter in a single article of the Constitution, i. e. , Article 246A, leads to the conclusion that such power is to be exercised simultaneously by the Parliament and the State and cannot be exercised independently as they do under the provisions of Article 246(3). 176 SUPREME COURT REPORTS [2023] 15 S. C. R. 60.

Therefore, the State Legislature can only exercise its taxing powers with respect to goods and services either under Article 246A, which is to be exercised along with the Parliament, or under Article 246(3) r/w amended Entry 54 only with respect to the six items mentioned therein. 61. It is argued on behalf of the assesses of Maharashtra that the High Court proceeded erroneously to uphold the state's power to legislate with respect to its extant sales tax laws, in this cas