2023 (4) TMI 913 - BOMBAY HIGH COURT

Legislative competence - power to amend repealed Gujarat VAT act with retrospective effect - denial of interest on delayed refund - Impermissible Judicial Overiride - Infringement of doctrine of separation of powers - petitioner contended that the State legislature could have never amended the repealed GVAT Act, 2005 without even bothering to revive the same, assuming such revival was possible after 16.09.2017 - whether the impugned Amendment Act is an instance of impermissible judicial override to reverse or set at nought the judicial decisions of this Court even after SLPs against the same were dismissed by the Hon'ble Supreme Court? - HELD THAT:- The Constitution Bench has held that the Court examining the validity of a validating statute must first examine the issue of legislative competence. Secondly, granted legislative competence, it is not sufficient to declare merely that the decision of the Court shall not bind, for that would tantamount to reversing the decision in the exercise of judicial power, which the Legislature does not possess or exercise. A Court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances - the validity of a validating law depends upon whether the Legislature possesses the competence that it claims over the subject matter and whether, in making the validation, it removes the defect that the Courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax.

The super-session of judicial verdicts through legislation sometimes involves the violation of the separation of powers doctrine under the Constitution of India. The Hon'ble Supreme Court considered this issue in Government of Kerala, Irrigation Department and Ors, vs James Varghese and Ors. [2022 (6) TMI 97 - SUPREME COURT], and State of Tamil Nadu vs State of Kerala [2014 (5) TMI 1110 - SUPREME COURT] - the Hon'ble Supreme Court held that even without the express provision of the separation of powers, the doctrine of separation of powers is an entrenched principle in the Constitution of India. This doctrine informs the Indian Constitutional structure and is an essential constituent of the rule of law. In other words, the doctrine of separation of powers though not expressly engrafted in the Constitution, its sweep, operation and visibility are apparent from the scheme of the Indian Constitution.

The impugned Amendment Act is an impermissible legislative override. Therefore, based upon the impugned Amendment Act, the respondents cannot decline to implement this Court's decisions in Writ Petition No. 424/2018 and connected matters. These decisions have attained finality after SLPs against the same were dismissed by the Hon'ble Supreme Court. Accordingly, notwithstanding the impugned Amendment Act, which is an instance of impermissible legislative override, the respondents will have to comply with the directions in this Court's decisions in Writ Petition No. 424/2018 and connected matters.

Amendment to a repealed/lapsed statute without its revival - HELD THAT:- The impugned Amendment Act purports to amend the GVAT Act, 2005, with retrospective effect. This Amendment was made in 2020. Before that, the Goa State Legislative passed the Goa GST Act, 2017, which entered force on 01.07.2017.

The impugned Amendment Act of 2020 concerning goods other than those included in Entry 54 of the State List of Seventh Schedule to the Constitution is ultra vires, unconstitutional and void. - The impugned Amendment Act, 2020, in so far as it applies to goods other than those included in amended Entry 54, would be ultra vires, null and void. Therefore, based upon the impugned Amendment Act, the relief granted to the petitioners in Writ Petition No.23/2021 and 229/2022 could not have been withheld.

Legislative Competence - HELD THAT:- The primary Amendment in the Maharashtra Act was enacted within one year of the coming into force of the Constitution (101st Amendment) Act, 2016. However, Gujarat and the Goa amendments were after one year, i.e., 2018 and 2020 respectively. Further, there is a similarity between Section 174 of the Gujarat GST Act, 2017 and Section 174 of the Goa GST Act, 2017. The Maharashtra VAT Act, 2002 was never formally repealed after the Constitution (101st Amendment) Act, 2016, entered into force though some exercise was undertaken to align its provisions with the constitutional amendments.

Manifest arbitrariness - HELD THAT:- The State of Goa does not dispute liability to refund the excess tax amount in the present cases. The State does not even dispute the liability to pay interest at 8% per annum. However, the State contends that interest would not become payable from the 91st day of the refund order but the 91st day of the sanction order. As noted earlier, no time limit for making the sanction order is fixed. No reasons are required to be provided for any delay in making the sanction order. Thus, the State contends that it can, based upon its Officers' tardiness or procrastination, retain the excess tax amount for an indefinite period or at least an unreasonably lengthy period without obligation for payment of any interest - prima facie, such a provision would be arbitrary and unreasonable given the reasoning in the decisions of the Hon'ble Supreme Court on the issue of the necessity to pay interest by way of compensation where tax refunds are unduly delayed.

Deprivation of vested constitutional rights with retrospective effect - HELD THAT:- The provisions providing interest on delayed refund of excess tax collected by the Revenue created statutory and constitutional rights. Even though Article 19(1)(f) is no longer a fundamental right under the Constitution, Article 300-A provides that no person shall be deprived of his property save by the authority of law - by depriving the Assessee of interest on excess tax paid, the State is depriving the Assessee of his property save by authority of law. Besides, there is a constitutional bar under Article 265 about the levy and collection of taxes except by the authority of the law. Even Article 14 would shun the retention of excess taxes determined as refundable either indefinitely or for unreasonably lengthy periods only due to the tardiness of revenue officers making sanction orders without liability to pay any interest on the delayed periods. Therefore, this is also a case of taking away vested constitutional rights with retrospective effect. The grant of retrospective effect is consequently liable to be interfered with.

Thus, the impugned Amendment Act is an impermissible judicial override defying the doctrine of separation of powers. Moreover, by granting retrospective effect to the impugned Amending Act, the vested constitutional rights of the petitioners have been taken away - petition allowed.