TMI Blog2022 (12) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... uses in Section 174(2) are within the competence of the State Legislature. To escape the saving clause's effect, the arguments noted above are canvassed. The argument proceeds on the assumption that with the repeal of the KVAT Act, an absolute right in favour of Dealers erasing and effacing every legal obligation under the KVAT Act has been attracted. The purpose of savings is intended to have certainty on initiation, enquiry, etc., even after the repeal is given effect. Statutory obligation means an obligation arising under a Statute. Legal obligation means an obligation that derives from the operation of law. These obligations are discharged by duly complying with the requirement thereof, or the obligation stands discharged with the efflux of limitation. The third way now canvassed is that since notices are issued after 01.07.2017, the State cannot proceed to recover the amount - The absence of initiation of any proceeding before 16.09.2017 is not a criterion at all in the scheme of the KVAT Act. With the applicable saving clause, what is required in law is that when steps for reassessment etc., are taken up, those steps conform to the limitation covered by the applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dependently disposed of following the common judgment dated 11.01.2019. We refer to the appellants as Dealer and respondents as Revenue for consistency in referring to the parties. 2. This Court, in this common judgment, would be considering the challenge to Section 174(2) of the Kerala State Goods and Services Tax Act, 2017 (short KSGST Act ). In the analysis of these jurisprudential and constitutional issues, we will advert to a few Sections in the Constitution (101st Amendment) Act, 2016 (for short CAA 2016 ); Kerala Value Added Tax Act, 2003 (for short KVAT Act ); The General Clauses Act, 1977 (for short GC Act ); the Constitution of India (for short Constitution ); and the Kerala Interpretation of Statutes and General Clauses Act, 1897 (for short KGC Act ). With effect from 01.07.2017, by Article 246A of the Constitution, the levy of tax on the supply of goods or services or both are made by the Centre and States depending on the exigible event. We would preface our consideration of issues with a short prelude on GST. Goods and Services Tax 3. The GST is a tax on goods or services or both with a comprehensive and continuous chain of benefits from the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Committee s report dated 22.07.2015. Finally, on 03.08.2016, the Bill was passed by Rajya Sabha with the amendment suggested by the Select Committee, and on 08.08.2016, the amended Bill was passed by the Lok Sabha, later the States ratified the amendment, resulting in the assent of the President of India on 08.09.2016. On 08.09.2016, CAA 2016 was notified in the Gazette of India. 5. The constitutional amendments carried out through the CAA 2016 have conferred sufficient power and legislative competence to both the Parliament and the States to levy tax on the supply of goods or services or both. The summary of amendments made to the Constitution is as follows: (i) Articles inserted: 246A, 269A, 279A, 366 (12A), 366 (26A). (ii) Articles amended: 248, 249, 250, 268, 269, 270, 271, 286, 368, Schedule VI, Schedule VII, List I, Entry 84; List II. Entries 54 and 62. (iii) Articles omitted: 268A, Schedule VII, List I, Entries 92 92C; Schedule VII List II, Entries 52, 55. 6. Brevity is, of course, the soul of wit. But the economy should never be carried to such an extent as to sacrifice clarity. We are brief and concise in narrating the events touchin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Acts or repealed Acts or orders under such repealed or amended Acts: Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or (d) affect any tax, surcharge, penalty, fine, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Acts or repealed Acts; or (e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve also heard the learned Special Government Pleaders (Taxes), Mohammed Rafiq, Senior Government Pleader V K Shamsudheen and Government Pleader M M Jasmine for the State. 12. The learned Counsel advanced detailed and exhaustive arguments touching upon the concepts or issues considered in the impugned judgment. A host of citations is relied upon and commended for our consideration in interpreting the Entries in List II of the Seventh Schedule, Section 19 of the CAA 2016 etc. Before we cut out the task in the batch of appeals, we reckon the view of Justice Learned Hand on interpretation that the theory of legal interpretation is discussed interminably and often so obscurely leaves even the most intelligent readers, or especially the most intelligent readers, befuddled . [See Learned Hand proceedings in commemoration of 50 years of federal judicial service]. So, the question then posed is why would we add to the number? We do not intend to engage in interminable discussion. 13. Far from proposing yet another novel approach, we remind ourselves of the oldest and most common sensical interpretative principle In their full context, words mean what they convey to reasonable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or sale of goods. Article 246-A is a simultaneous power to legislate on the supply of goods and services but not on the sale and purchase of goods exercised simultaneously by the Parliament and the State Legislature. Therefore, Article 246-A is unavailable to the State Legislature to justify legislation of Section 174(2) of the KSGST Act. 15.3 Section 19, a transitional provision in CAA 2016, has two facets, namely that the laws inconsistent with the provisions of the Constitution as amended by CAA 2016 shall continue to be in force (a) until amended (b) or repealed by a competent legislature or other competent authority, secondly until the expiration of one year from such commencement, namely 16.09.2016. Being so, the scheme of repeal and savings taper beyond any of the limitations prescribed by Section 19 of CAA 2016. Therefore, Section 174(2) of the KSGST is unconstitutional. 15.4 The State Legislature does not have the competence to make laws on savings. Article 246-A confers legislative competence and not a field by referring to which the State Legislature could have the power to continue collecting taxes beyond 17.09.2017 under the KVAT Act. 15.5 Section 19 confe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the Dealers in support of the two contentions, namely that the State Legislature firstly lacks the competence to enact Section 174(2) of the KGST Act and secondly, that the saving clause in Section 174(2) either under Section 6 of Interpretation and General Clauses Act (Kerala) cannot survive to live beyond 16.09.2017 have placed reliance on a few citations. 18. Before embarking upon the applicability of the cited judgments and the ratio laid down to the question on hand, we refer to what constitutes a binding precedent, ratio decidendi, and obiter dicta of the judgments. The provisions for interpretation in the batch of appeals arise under CAA 2016, the Articles of Constitution, and provisions of the KSGST Act. In more than one sense, the Articles/provisions of law we examine are unique to the standard scheme of things under the Constitution before 08.09.2016, i.e., the day on which both Houses of Parliament passed CAA 2016. 19. In Islamic Academy of Education v. State of Karnataka (2003) 6 SCC 697, the Supreme Court, in paragraph 2 of the judgment, held that: The ratio decidendi of a Judgment has to be found out only on reading the entire Judgment. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the merits of the controversy in the suit were used by this Court in State of U.P. v. Janki Saran Kailash Chandra (1973) 2 SCC 96, the words were not used to take in every adjudication which brought to an end the proceeding before the court in whatever manner but were meant to cover only such adjudication as touched upon the real dispute between the parties which gave rise to the action. Objections to adjudication of the disputes between the parties, on whatever ground are in truth not aids to the progress of the suit but hurdles to such progress. Adjudication of such objections cannot be termed as adjudication of the merits of the controversy in the suit. As we said earlier, a broad view has to be taken of the principles involved and narrow and technical interpretation which tends to defeat the object of the legislation must be avoided. 142. In Rajeshwar Prasad Mishra v. The State of West Bengal reported in AIR 1965 SC 1887 , it was held: Article 141 empowers the Supreme Court to declare the law and enact it. Hence the observation of the Supreme Court should not be read as statutory enactments. It is also well known that ratio of a decision is the reasons assig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of the legislature, imposing the tax and the law must be validly enacted, I must not also contravene the specific provisions of the Constitution and the tax in question must be be authorised by such valid law. The expression levy and collection are used in Article 265 in a comprehensive sense and are intended to include the entire process of taxation commencing from taxing statute to the taking away of the money from the citizen. What the Article enjoins is that every stage in this entire process must be authorised by the law. This being the position, in the case in hand, several tax legislations enumerated in the Schedule to the Validation Act having been declared ultra vires, on the ground that the State Legislature had not the legislative competence to make the legislation, there existed no authority of law for making any levy or collection of tax and cesses on minerals. The Parliamentary intervention by enacting the Validation Act and giving it retrospective effect and making the law existed till 04.04.91. 21. The ratio decidendi laid down in Tata Iron and Steel Co. cannot be applied to the circumstances in which the competence of the State Legislature to incorporate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... corded that when the Defence of India Act itself could be said to be repealed by Act 2 of 1948 and had not expired by efflux of time, this saving clause undoubtedly permitting prosecution for offences was also dead. The foremost question for consideration is the scope and, purpose, effect of Section 19 of CAA 2016 during and post the currency of its validity. Hence, we consider that the said judgment, from the mere narration of the circumstances therein, is distinguishable and not applicable to the propositions for which it relied on. 24. A Division Bench of Gujarat High Court in Ravi Electronics v. Assistant Commercial Tax Commissioner (2), Enforcement (2013) 63 VST 414 (Guj) was considering a challenge to the notices issued by the Sales Tax Department of the State of Gujarat for reopening previously closed assessments. To wit, the dealer for the Financial Year 2003-04 filed the returns under Gujarat Sales Tax Act, 1969. On 05.03.2012, notice impugned in the reported judgment was issued to reopen the assessment between April 1, 2003, and March 31, 2004. The Division Bench considered the scheme of provisions such as the power of reassessment, reopening, penalty, suo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertained when the Assessing Authority makes the assessment under Section 10 or when the assessee himself quantifies it through the process of self-assessment under sub-section (2) of Section 7. The dissenting judgment, it is argued, has been accepted by the Supreme Court in subsequent judgment. So, the argument proceeds that the tax-determined point is crucial for taking any step by the Department post 16.09.2017. 26. We have perused the judgments commended to us during the hearing. As an illustration, we have taken out three of the strongly relied-on judgments and explained how the judgments are distinguishable and cannot be applied in all fours to the controversy on hand. We refrain from explaining further how the other judgments relied on by the counsel appearing for the Dealers are distinguishable, and the inapplicability of those precedents to the singular controversy in hand would be sufficiently clear when we take up the core questions for consideration in the following paragraphs: Section 19 of CAA 2016 27. A Statute can be said to be either perpetual or temporary. It is perpetual when no time is fixed for its duration, and such a Statute remains in force until ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittee of State Finance Ministers, through their report dated 30.04.2008, had submitted the final version of the model and roadmap for the GST. The burden of multiple taxations under the Central Excise Act and the General Sales Tax Act etc. was felt, resulting in the introduction of VAT. Before the introduction of VAT, any commodity produced, inputs into the commodity were taxed and then after the commodity got produced with input tax load, output was taxed again. The Nation needed to lessen the burden on multiple taxations with a cascading effect. With the introduction of VAT in place of Central Excise Duty, a set-off is given, and a deduction is made from the overall tax burden for input tax. VAT was introduced in place of the General Sales Tax levy. A set-off is given from the tax burden, not only for input tax paid but also for the tax paid on previous purchases. Though the VAT regime is stated to have provided success vis- vis indirect taxes on manufacturers, sellers, agriculturists, and consumers, it has been felt at the federal level of our confederacy that the Value Added Tax in operation still had a few shortcomings. 31. By choice, we refrain from narrating the shortcomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgain of concurrent power to levy tax on the supply of goods and services, the State Legislatures have been denuded of power under the KVAT, post 01.07.2017 even for the alleged legal obligation arising before the introduction of GST. This we will consider in detail a little later in our judgment. 35. The conspectus of pre and post-amendments to the Constitution has been very well tabulated in the judgment under appeal. For continuity, we prefer to excerpt the very same tabular statement, which reads thus: Before Amendment After Amendment Impact 246A Not existing Introduced Special provision on goods and services tax conferring simultaneous legislative powers on both the Union and the States. 248 Residuary power Amended The Union s residuary legislative power is subjected to Article 246A. 249 Power of Parliament to legislate regarding a matter in the State List in the national interest Amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Inserted Provision for creating the GST Council, a constitutional body. 286 Restrictions on the imposition of tax on the sale or purchase of goods Amended First, the word sales is replaced with supply , and the word goods is replaced with goods or services or both States cannot legislate on the supply of goods or services if such supply is outside their state or is in the course of import or export. Originally, States could not levy and collect tax on specific Interstate transactions. With omitting Clause (3), now even inter-state transactions of that nature would attract GST. 366 Definitions Inserted Three definitions have been added to the Constitution: (12A) Goods and Services Tax; (26A) Services; and (26B) State. 368 Power of Parliament to amend the Constitution and procedure therefore Amended As regards provisions and laws regarding GST Council, Parliament has been vested with the power to amend the Constitution. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or commerce. (Now the sale or purchase of goods stands subsumed by GST) Entry 55 Taxes on advertisements other than advertisements published in the newspapers and advertisements broadcast by radio or television. Omitted Taxes on advertisements other than advertisements broadcast by radio or television has also been subsumed into GST. Entry 62 Taxes on luxuries, including taxes on entertainments, amusements, betting, and gambling. Amended (a) Taxes on Luxury, betting, and gambling have been subsumed into GST. (b) Right to levy Tax on entertainments and amusements has been restricted to Panchayats, Municipalities, Regional Councils, and District Councils. Consideration Point No.(i) Whether Section 174(2) of the KSGST Act is ultra vires, beyond the legislative competence of the State Legislature and contrary to Section 19 of CAA 2016? 35. The preceding paragraphs narrated the history and roadmap for implementing GST and Constitutional/ Statutory amendments made by the Parliament and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods or services. The competence traceable to unamended Entry 54 is no more available with the coming into force of Section 19 of CAA 2016. Therefore, the legislative mechanism through Section 174(2) is unconstitutional. 35.4 Article 265 of the Constitution deals with the imposition of taxes, and the Article begins with the words, No tax shall be levied or collected except by authority of law .. When it comes to fiscal legislation, the authority of law is referable to the distribution of powers between the Centre and the State as there is no Entry on 22.06.2017 giving authority to the State Legislature to make provisions in the form of saving to actions, rights etc., covered under the KVAT Act. In the interpretative process, the words repeal , amended , and substituted have definite connotations. Thus appreciated, Entry 54 is substituted by a new Entry. So, the State Legislature under the present Entry or amended Entry lacks competence. 35.5 Mr Krishnan and Mr Kumar have relied on the following excerpt from Justice G P Singh on Principles of Statutory Interpretation (Eighth Edition 2001) for appreciating the general principles of strict construction of taxation Statutes: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the Centre and the State, fiscal relations are kept in perspective, and the operation of GST was made from 01.09.2017. In other words, the amendments are prospective. 36.1 Dealers argument on the competence to legislate the saving clause suffers from an inherent fallacy. CAA 2016 and Section 19, both by word and meaning, are prospective. Section 19 saves law and levy of tax on the sale and purchase of goods/services in the interregnum. In other words, the unamended Articles and Entries operate with an outer limit of one year from 16.09.2016. From this implication, the collection of indirect taxes till 01.07.2017 is legitimate and legal. Section 19 has two stages, and the mandate of Section 19 extinguishes within one year if the laws relating to the sale and purchase of goods and tax on luxuries are repealed. Suppose the competent Legislature or other competent authority does not take steps to amend or repeal the provisions. In that case, any laws inconsistent with the GST regime shall cease to operate on completion of one year. 36.2 Section 19 of CAA 2016, being an Act of Parliament, called upon a competent Legislature or other competent authority to repeal or amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s abrogated by CAA 2016 or consequential constitutional amendments. He relies on the same judgments relied on by the learned Counsel for the appellants and also a few paragraphs from the judgment under appeal and argues that the whole controversy centres around the legislative competence, distribution of powers, fiscal legislation, repeal, amendment, and substitute, which have been considered in great detail in the impugned judgment and no exception is pointed out on the line of reasoning adopted therein. 36.7 The argument on the applicability of the KGC Act vis- -vis Article 367 is canvassed. The mechanism provided by Section 19 of the CAA 2016 relegates the issue to the State Legislature. Therefore, as a consequence of power under Section 6 of the KGC Act, the effect of repeal is attracted, and to obliterate any argument, saving clause in Section 174(2), to the extent without being contrary to amended constitutional provisions, has been enacted. 37. We have appreciated the arguments of counsel for the Dealers and the State. A catena of judgments cited by the learned counsel on both sides circle around the interpretation of constitutional provision/constitutional amendment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of powers between the Centre and the States (2) infringement of a fundamental right (3) violation of other constitutional restrictions/limitations. 37.5 The Supreme Court in Milk Food Ltd v. GMC Ice cream (P) Ltd. (2004) 7 SCC 288 held in paras 103 and 105 that a transitional provision is to be interpreted in the light of facts and circumstances existing on the date the new Act is coming into force and, therefore, the construction of such provision must depend upon its terms. 37.6 In Union of India v. Filip Tiago De Gama of Vedem Vasco De Gama (1990) 1 SCC 277, the purpose and the scope of transitional provision are held as follows: The purpose of incorporating Transitional Provision in any Act or amendment is to clarify as to when and how the operative parts of the enactments are to take effect. The Transitional Provisions generally are intended to take care of the events during the period of transition. Mr Francis Bennion in his book on Statutory Interpretation (14th Edn.,p. 142) outlines the purpose of such provisions: 189. Transitional Provisions.-Where an Act contains substantive, amending or repealing enactments, it commonly al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. State Tax Officer 2019 (27) KTR 119 (Ker.) [W.P.(C) No. 9963/2019 and batch]. The judgment in Reliance Industries Ltd has considered the three stages of migration from the Value Added Tax regime to the GST regime, the constitutional amendments during the operation of transitional and post-transitional provisions. The arguments now made in this Court have direct answers in Reliance Industries Ltd s judgment, and we excerpt the applicable portion from Reliance Industries Ltd. 69. Applicability of the General Clauses Act, 1897 for the interpretation of the Constitution 69.1 Article 367(1) of the Constitution states that the General Clauses Act, 1897 (subject to the adaptations and modification made under Article 372) shall apply for the interpretation of the Constitution. The relevant extract is as under: 367.(1) Unless the context otherwise requires, the General Clauses Act, 1897, shall, subject to any adaptations and modifications that may be made therein under Article 372, apply for the interpretation of this Constitution as it applies for the interpretation of an Act of the Legislature of the Dominion of India. 69.2 Thus, the General Clause Act appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lahabad High Court in the case of Farzand v. Mohand, AIR 1968 All 67(73). However, no reasoning has been given to apply Section 6 of the General Clauses Act, 1897 to the Constitution.) 69.6 The above principle about the non-applicability of the General Clauses Act, 1897 is relevant and applicable even to the Constitutional Amendment Acts as they are made by the Parliament in exercise of its constituent powers under Article normal legislative 368 and not in exercise of normal legislative powers under Article 245 of the Constitution. 69.7 The question as to whether Section 6 applies to the Constitution is relevant to determine whether after the repeal of the Entry in the legislative list, the laws made in pursuance of such legislative powers can be saved. That provision has presently been made under Section 19 of the Constitution (One hundred and First) Amendment Act, 2016. Thus, contextually also Section 6 will not apply to the present case. (Emphasis supplied) Section 19 of CAA 2016 has provided the power, as has been held in Reliance Industries Ltd, to State Legislature. The contentions on repeal and saving are also examined in the Reliance Industries Ltd, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case. The Legislature proceeds on the footing that the old Act was alive at the date. Then the new Act was passed, and the new Act merely purports to amend one of the provisions of the old Act. There could be no amendment of an enactment which a not in existence and from the fact that the Legislature purports to amend an Act, it could not held as a matter of construction that the intention of the Legislature was to renew a dead Act or make a new enactment on the same terms as the old with retrospective effect. 74.4 However, in the case of State of Rajasthan v. Mangilal Pindwal, AIR 1996 SC 2181 , the Supreme Court held that retrospective amendments can be made to the repealed statutes in respect of the transactions past and closed. The judgement has been summarised in Justice GP Singh's Principles of Statutory Interpretation, 14th Edition at page 757- 758 as under: Since repeal of a law takes effect from the date of repeal and the law repealed remains in operation for the period before its repeal without assistance of nay saving clause for transaction past and closed, it can be retrospectively amended to affect such transactions even after its repeal. Thus, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to who is the competent legislature for the purpose of Section 19: the State Legislature or Parliament? 75.4 It is argued on behalf of the State that the law relates to tax on sales, which may be covered within the ambit of Article 24CA. It has been argued that the State Legislature will be a competent legislature for the purpose of Section 19. 75.5 Further, Section 19 can be said to be an independent and limited legislative power to repeal the earlier enactments. Such power will also include all ancillary powers necessary to exercise the main powers. Further, as this is an independent power, by necessary implication it may exclude the applicability of other articles such as Article 286, Article 279A, etc. Thus, the saving clause can also be enacted in exercise of such power to save the initiation, continuation and conclusion of assessments. (emphasis supplied) 38. The above declaration of law on a detailed exposition should end the debate on legislative competence introduced by the Dealers. Be that as it may, the interpretation of Section 19 of CAA 2016 is an act of Parliament and must be on the language of Section 19 of CAA 2016. Considering the purpose and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 19 of CAA 2016 to effect repeal in such a way as to save past rights, obligations and transactions arising under the VAT regime. 38.2 The saving clauses, it is argued, in a sense, operate KVAT along with KSGST, and such a course is impermissible. The argument, though canvassed, is a half-hearted contention, the operation of any of the saving clauses is not relatable to the post-GST regime, but the levy and collection relate to pre01.07.2017, i.e., the KVAT regime. The learned Counsel for the Dealers have relied on a catena of citations; the cited cases are different from the question now this court is considering in subject appeals. The argument of the counsel for Dealers restricting the effect of repeal or amendment in Section 19 of CAA 2016 would make the CAA 2016 more retrospective than what is expressed by the Parliament and consented upon by the State legislatures. The reasons for employing the simple words, viz. to amend or repeal, are not far from searching because the Parliament left it to States to decide on the working of the VAT in respective States. In other words, instead of providing any saving mechanism through Section 19 of CAA 2016 or any other Section, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act came into force or, more precisely, until one year after that Act came into force. Indeed, the CA Act allowed the State Acts in the same legislative field to coexist for one year: the window period. 143. So I must hold that Section 19 of the CA Act is- transitional as it may have been-a repealing clause simpliciter, not a saving clause. Nothing more. That job of saving is done by Section 174 of the KSGST Act. Well and truly. So the repeal has not, as Section 174 elaborates, affected the previous operation of the amended Acts or repealed Acts and orders or anything duly done or suffered thereunder. In other words, the repeal has not affected any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Acts or repealed Acts or orders under such repealed or amended Acts. Nor has it affected any tax, surcharge, penalty, fine, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Acts or repealed Acts . 144. In other words, the repeal has not affected any investigation, inquiry, verification (including scrutin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lers. As held in the Reliance Industries Ltd case, this agreement is untenable for more than one reason. It is legally impermissible to hold that by enacting Section 19, Parliament, through word, desired only repeal but not enacting saving clauses. The repeal and savings co-exist in most of the enactments. CAA 2016, as an objective, desired to implement One Nation One Tax from 17.09.2017. The saving circumstances incidences, what to save, etc., are matters of consideration by the respective State Legislatures. So, in its wisdom, as expressed through words, the Parliament succinctly enabled the State Legislature/competent authority to repeal or amend the laws inconsistent with the amendments carried out through CAA 2016. The legislature, by enacting the saving clause, cannot be understood as carrying the vestige of its legislative competence as amended by CAA 2016. The saving clause does save a few rights, functions and duties only for completing the obligations and functions which has arisen during the currency of the KVAT Act. 41.2 To sum up: (i) Section 19 of CAA 2016 confers the power to repeal the earlier enactments dealing with indirect taxes. (ii) As a corollary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period stipulated and, in such manner prescribed by the Rules, accompanied by such documents as may be prescribed. Section 21 defines the procedure for self-assessment, subject to Sections 22, 24 and 25 of the KVAT Act. Section 23 deals with the visit of dealers premises, audit of accounts, or other records by the Officers of the Department. Section 24 provides for consequential audit assessment by the Department. Section 25 exclusively deals with the assessment of escaped or under-assessed turnover or turnover assessed at a lower rate than the applicable or assessable rate, erroneous deductions including input tax, special rebate wrongly availed, the Assessing Officer within five years or six years as the case may be from the last date of the year to which the return relates, proceed to determine to the best of his judgment the turnover escaped or under assessed etc. and collect the VA Tax from the Dealer. 43.2 Another mechanism in Section 31 of the KVAT Act is payment and tax recovery. Sections 56, 58 and 67 deal with the suo motu revisional power of the Deputy Commissioner and the Commissioner. The conspectus of indirect taxes under the KVAT Act is that the dealer is obli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in a Statute. The limitation for the State Legislature with the advent of the GST regime is either in the repeal or saving clause. The competence of the State Legislature ought not to be overshooting 16.09.2017 and make law on the sale of goods and purchases. With the above limitation, the State Legislature is competent to create exceptions for the general things mentioned in the repealed Statute. (3) The State Legislature is competent to repeal the KVAT Act. The Legislature, in its financial interest and recovery of amounts due under the KVAT Act, can undoubtedly make exceptions as saving clauses. (4) The claim of Dealers by referring to right, accrued right, or vested right is unavailable for the simple reason that any right or any obligation is relatable to a document or a Statute. (5) The Dealers are under a legal obligation to pay turnover tax and file returns compliant with the KVAT Act and Rules. (6) Reopening of escaped assessment is available subject to the limitation prescribed in respective Sections. (7) Till the period of limitation prescribed under Section 25, illustratively stated, is over, the Dealer is said to have been not discharged fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the period of limitation from 5 years to 6 years to be not applicable to those assessments which stood completed and the 5 year period for re-opening of assessment under S.25(1) stood expired. We do not see any reason to interfere with the impugned judgments on the basis of the amendment made subsequent to limitation with retrospective effect, the same was not done . We cannot but observe that even if such an exercise was carried out, necessarily there should have been a validation clause so as to get over the judgment of the writ Court. . (emphasis supplied) 46.1 To wit, the Division Bench accepted that the expiry of five-year period of limitation prescribed by Section 25 of the KVAT Act and the amendment does not affect the right accrued in favour of a Dealer against whom the five-year period for reassessment stood expired. Consideration 47. We have, while answering the first point, held that the State Legislature is competent to enact Section 174(2) of the KSGST Act. The consequence of such a conclusion is that clauses in Section 174(2) are within the competence of the State Legislature. To escape the saving clause's effect, the arguments noted above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favour or discharge of a legal obligation by a dealer. Juxtaposing the legal obligations under the KVAT Act fastened on a dealer or how the obligation could be said to have been discharged, we are of the considered view that the Revenue/State has not disentitled itself from enforcing its right to recover the defaulted tax or tax dues under the KVAT Act arising before 01/07/2017. For the above reasons, we hold that the impugned notices are saved by clauses (i) to (iv) of Section 174(2) of the KSGST Act and are within the competence of the Department. 50. The counsel for the Dealers have not made independent arguments on the conclusions or consideration in the judgment under appeal. The judgment under appeal is one of the first judgments on CAA 2016. We have perused the structured judgment written by the learned Single Judge. Interpretation and legislative competence have been considered in great erudition and through intense analysis of various interdependent principles and Doctrines on the transitory provision, sunset clause, and constitutionality. To achieve a judgment of this standard, we are sure the learned Judge, with his in-depth knowledge of the language, law, and seve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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