TMI Blog2020 (4) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... as inserted by 2017 amendment Act), provides for exclusion of certain period spent by the revenue authorities in the appellate proceedings for the purpose of calculating time limit for (i) audit assessment (ii) turnover escaping assessment (iii) appeal and (iv) revision. All these provisions provide for outer time limit of the order to be made. In case where the orders are already made by the revenue authorities and matter is closed, the retrospectives amendment without validation may not validate such orders. It is permissible for the Legislature, subject to its legislative competence otherwise, to enact a law which will withdraw or fundamentally alter the very basis on which a judicial pronouncement has proceeded and create a situation which if it had existed earlier, the Court would not have made the pronouncement - it is difficult to take the view that the VAT Amendment Act, 2018 is a validating Act. Competence of the State Legislature to enact Section 84A of the Act - HELD THAT:- A law enacted by a legislature without having legislative competence would be void ab initio and the same cannot be revived or revitalised even if the legislative competence is conferred on that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to an irreparable situation and, in such circumstances, it renders Section 84A manifestly arbitrary and unreasonable - Section 84A of the VAT Act is liable to be struck down even on the ground of being manifestly arbitrary, excessive, oppressive and unreasonable. Section 84A of the Gujarat VAT Act is ultra vires and beyond the legislative competence of the State Legislature - Section 84A of the Gujarat VAT Act is manifestly arbitrary, unreasonable and therefore, violative of the Articles 14 and 19(1)(g) of the Constitution of India - Section 84A of the Gujarat VAT Act is not a validating Act. Section 84A of the Gujarat VAT Act is declared as ultra vires and beyond the legislative competence of the State Legislature under Entry 54 of List II of the Seventh Schedule to the Constitution of India and is also declared to be violative of Article 14 of the Constitution of India on the ground of being manifestly arbitrary, unreasonable and oppressive - the impugned notices in each of the writ applications issued under Section 75 of the Gujarat VAT Act is hereby quashed and set aside. - R/SPECIAL CIVIL APPLICATION NO. 14206 of 2018 With R/SPECIAL CIVIL APPLICATION NO. 13405 of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s from proceeding further pursuant to impugned notices annexed at Annexure B and C; (G) Ex parte ad interim relief in terms of prayer F may kindly be granted' 2. Thus, the subject matter of challenge in all the writ applications is the constitutional validity of Section 84A of the Gujarat Value Added Tax Act, 2003 (for short the GVAT Act ). The challenge to the constitutional validity is substantially on the ground that Section 84A of the GVAT Act is ultra vires and beyond the legislative competence of the State under Entry 54 of List II of the Seventh Schedule to the Constitution of India. The challenge to the validity is also on the ground that Section 84A of the GVAT Act is arbitrary, unreasonable and, therefore, is violative of Article 14 of the Constitution of India. 3. The facts, giving rise to this litigation, may be summarized as under; 3.1 The Deputy Commissioner of Commercial Tax, Corporate-I, Ahmedabad passed an assessment order dated 23.12.2009 for the Financial Year 2006-07 against the writ applicant company by reversing the Input Tax Credit to the extent of 8% i.e. 4% under each of the provisions of Sections 11(3)(b)(ii) and 11(3)(b)(iii) of the G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sales tax incentive limit, under the provisions of Section 49(2) of the Gujarat Sales Tax Act, 1969 the tax paid by the assessee on purchases of goods used in manufacture of taxable goods exported outside the country was not to be included. In other words, according to the Tribunal, the said incentive limit cannot be curtailed by the said tax paid by the assessee. 3.6 In an appeal filed by the State against the aforesaid decision dated 30.04.2010 rendered by the Tribunal in the case of Welspun Gujarat Stahi Rohren Ltd., this Court vide its judgment dated 04.04.2014, nullified the findings and observations of the Tribunal and, inter alia, held that while considering the availment of sales tax incentive limit, the tax paid on the purchase of goods used in the manufacture of taxable goods exported outside the country is required to be considered. 3.7 in view of the aforesaid judgment dated 04.04.2014 of this Court rendered in the case of Welspun Gujarat (supra), the Additional Commissioner of Commercial Tax issued a revision dated 10.03.2018 under Section 75 of the VAT Act to the petitioners to show cause as to why the assessment order dated 30.03.2013, referred to above, at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n No.22283 of 2018 filed by the petitioner, quashed and set aside the aforesaid revision notice issued by the department under Section 75 of the VAT Act on the ground that the said revision notice cannot be sustained being beyond the period of limitation provided under Section 75 of the VAT Act. 3.15 By virtue of the VAT Amendment Act, 2018, Section 84A came to be added in the VAT Act to be operative retrospectively w.e.f 01.04.2006, inter alia, providing for the exclusion of the period spent between the date of the decision of the appellate tribunal and that of the High Court as well as the Supreme Court in computing the period of limitation, referred to in Section 75 of the VAT Act. In the present case, the period commencing from the date of the decision of this Court dated 18.01.2013 rendered against the revenue upto the date of the decision of the Supreme Court i.e., 22.09.2017 being in favour of the revenue, is sought to be excluded by virtue of the above referred retrospective amendment to enable the department to issue a notice for revision for revising the assessment made for the year 2008-09 and thereby removing the basis of the later judgment dated 16.03.2018 of this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive State Goods and Services Tax Act, 2017 were enacted. Mr. Soparkar further submitted that Article 246A of the Constitution of India makes the provision with respect to goods and services tax. It empowers the Parliament and the legislature of every State, subject to Article 246A(2) and notwithstanding anything contained in Articles 246 and 254, to make laws with respect to Goods and Services Tax imposed by the Union or the State. According to Mr. Soparkar, while the State Legislatures have been empowered to impose goods and service tax by the newly inserted Article 246A of the Constitution, the scope of Entry 54 has been drastically curtailed to six specific products. It is submitted that the State Legislature does not have the competence to enact any law under Entry 54 except the law concerning only the six specific products. It is vehemently submitted that despite such limited legislative competence, the State Legislature proceeded to enact Section 84A whereby the assessment related to the tax liability of all goods which were earlier covered under Entry 54 are now sought to be reopened. In other words, according to Mr. Soparkar, liability is sought to be imposed and enforced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Soparkar would submit that if the State Legislature could be said to have the power to enact the Value Added Tax Laws under Article 246A of the Constitution, then the Entry 54 of List II of the Seventh Schedule to the Constitution which was retained to the extent of six products kept outside the GST regime, will be rendered redundant. The argument of the learned senior counsel is that the fact that Entry 54 of List II of the Seventh Schedule stands retained so far as the six products are concerned, indicates that the sales tax/value added tax enactment is not permissible under Article 246A of the Constitution. The learned senior counsel would submit that the stance of the State that Article 246A of the Constitution supports the enactment of the provision under the VAT Act flies in the face of the existence of Entry 54 of List II of the Seventh Schedule to the Constitution which survived the 101st Constitution Amendment Act. 9. Mr. Soparkar submitted that the case of the State that the impugned proceedings are one relating to the recovery towards one of the six products covered under Entry 54 of List II of the Seventh Schedule is contrary to the materials on record. It is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (SC); (ii) In the case of Filco Trade Centre Pvt. Ltd. vs. Union of India, (2008) 57 GSTR 204 (Guj.); (iii) In the case of Avani Exports vs. Commissioner of Income Tax, (2012) 348 ITR 391 (Guj.); (Para 24) 14. Mr. Soparkar further submitted that the test of unforeseen and unforeseeable burden should be applied keeping in mind the impugned retrospective amendment. He pointed out that the revision proceedings were permitted to be initiated only within three years from the date of passing of the order. Such position was prevailing even under the Gujarat Sales Tax Act, 1969. Section 67 of the Sales Tax Act empowered the Commissioner to initiate the revision proceedings within the stipulated time limit and it was consistently held that the revision proceedings initiated beyond the stipulated period of limitation was time barred. 15. Mr. Soparkar further submitted that the provisions of limitation in the taxing statute are enacted with a specific objective of giving certainty and finality to the legal proceedings and to avoid exposure to the risk of litigation for an indefinite period of time. Any changes in such limitation period should be ordinarily prospective. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imitation. 19. For the purpose of understanding the true meaning of the term validation Act reliance is placed on the decision of the Supreme Court in the case of Amarendra Kumar Mohapatra vs. State of Orissa, (2014) 4 SCC 583. it was also argued that Section 64 of the VAT Act fortifies all the above referred submissions, more particularly, that the impugned provision is excessive and disproportionate. Mr. Soparkar also submitted that the impugned Section 84A of the VAT Act cannot be defended on the ground that the tax dues which were morally due to the State are sought to be recovered. It is submitted that the reasons of morality and fairness can have no application to bring a person within the four corners of the taxing statute so as to make him liable to payment of tax. In this regard, reliance is placed on the decision of the Supreme Court in the case of Assistant Commissioner, Commercial Taxes vs. LIS (Registered), (2018) 15 SCC 283. 20. It is submitted that the stance of the State that as it was remedy less, it had to insert Section 84A of the Act, is absolutely not tenable in law. It is submitted that the respondents could have issued notice for revision unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, subject to the provisions of entry 92A of List I. In other words, in respect of all intra-state sale / purchase of goods other than newspaper, the State legislature was empowered to levy taxes on the said transactions. 25. However, while making a paradigm shift in the indirect tax regime to empower the Centre and the State, both to levy taxes simultaneously, the Constitution came to be amended vide the 101st Constitution Amendment Act, 2016. Pertinently, vide the said Constitutional Amendment, new Article 246A came to be inserted in the Constitution of India, which confers right upon both, the Union and the legislature of every State to make laws with respect to goods and services for imposition of tax. by the Union or by such State. 26. Mr. Trivedi pointed out that the said erstwhile Entry 54 of List ll of the 7th Schedule also came to be amended vide the 101st Constitution Amendment Act, 2016. 27. Mr. Trivedi would submit that It was never the intention of the Parliament to take away the power of the State legislature to enact laws with respect to intra-state sale or purchase of goods. However, the intention as discernible from the language of the above Article 246A, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the legislative power, but are merely topics or fields of legislation and that the competence to legislate flows from Articles in Part XI of the Constitution of India. Hence, amendment: in such Entries, like amendment in Entry 54 of List II in the present case would not make any difference to the legislative competence of the State legislature to make any laws, which otherwise flows from the substantive provisions under the Constitution. 34. It is submitted that by enacting Section 84A in the VAT Act, the State Legislature has not proposed to levy any fresh tax, but merely allowed the department to enlarge the period of limitation under the provisions of Section 75 of the VAT Act, if permissible, so as to collect the legitimate tax already levied, but was not collected in view of pendency of litigation before the Apex Court. 35. It is submitted that though the Constitutional (101 Amendment) Act, 2016, was passed to subsume various taxes, like excise, service tax, VAT, etc., but, the same does not indicate that henceforth, the State Legislature would not have any power to make laws with respect to VAT, for the past transactions under the provisions of Section 75 of the VA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding Acts have the effects of validating, curing or declaring etc. with retrospective effect for the purpose of overcoming a legal obstacle or curing existing legal defects, or validating the tax declared illegal or declaring a particular position of law. 40. According to Mr. Trivedi, for all practical purposes, the VAT Amendment Act of 2018 is a validating Act, inasmuch as it has sought to overcome the obstacle in terms of limitation of 3 years provided under Section 75 of the VAT Act, which obstacle stood confirmed by this Court vide its judgment dated 16.03.2018 in SCA No.22283 of 2018 , while quashing and setting aside the revision notice dated 03/06.11.2017 issued by the State Authorities to revise the assessment order for Financial Year 2008-09, as time barred under Section 75 and hence, illegal. This revision notice was issued on the basis of the judgment dated 22.09.2017 of the Supreme Court reported in (2017) 16 SCC 28, whereby the judgment dated 18.01.2013 of this Court, reported in 2013 SCC Online Guj. 8788 , was set aside necessitating the recovery of lost revenue. 41. Mr. Trivedi seeks to rely on the decision of the Supreme Court in the case of Shri Prit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ady attained finality before such amendment is brought into force. 2. In this regard, it is submitted that it is settled principle of law that it is the language of the provision which matters and when the meaning of the said provision is amply clear, it has to be given full effect. In other words, when the provision of law is explicit, it has to operate fully and there could not be any limit to its operation. 3. It is not disputed that a fiscal statute can be given retrospective operation. Thus, if the contention raised by the Petitioners is accepted, the clear intention of the legislature become redundant. The provisions of Section 84A of the VAT Act now inserted with retrospective effect from 01.04.2006, do not put any embargo on the department in reopening the assessment, if period, as prescribed earlier, had expired before the said section came into operation. 4. Earlier the re-assessment under the provisions of Section 75 of the VAT Act could have been completed within five years, of that particular assessment year and now, by virtue of the said Section 84A of the VAT Act, the same may extend up to the period spent in litigation before the High Court or the Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th efflux of time, without any fault on the part of the department but only due to the pendency of cases before the Higher forum. In this behalf, reliance is placed on the above judgment of the Apex Court in the case of Commercial Tax Officer Vs. Biswanath Jhunjhunwalla, reported in (11) (1996) 5 SCC 626. 4. Thus. in other words, though the interpretation provided by the Supreme Court would be applied retrospectively. due to the prescribed time limit of 3 years provided for reopening of assessments in the VAT Act. the department was not able to reopen the past assessments prior to the period of 3 years, resulting in lose the revenue, which the State was otherwise entitled for. 5. In addition to above, even otherwise. in taxation matters, the law laid down by the Courts with respect to the interpretation of any provision, apply to all the cases and that, it is not open for any assessee to contend that reopening of its case, on the ground of a judgment delivered in favour of the revenue by a Court in some other case. is manifestly arbitrary and illegal. 6. As such, at the most, the provision under challenge merely extends the time limit prescribed under Section 35/75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is not unreasonable, as alleged or otherwise. 3. As far as the test with regard to the context in which the retrospectivity is contemplated is concerned, it is submitted that the provision under challenge has been given retrospective effect only with a view to safeguard the revenue s interest which was lost because of the pendency of issue before the appropriate forum. In other words, even if an issue is decided in favour of the department but due to the delay occurred in deciding the same issue, the department would lose the opportunity to apply the said favorable decision to the cases which have been already decided on the basis of wrong/incorrect proposition of law. 4. As far as the period of such retrospectivity is concerned, it is submitted that as such it has been held by the Supreme Court that the test of length of time covered by the retrospective operation cannot, by itself, be treated as a decisive test. Even otherwise. considering the facts of the present case, there arises no question of any unforeseen or unforeseeable financial burden imposed for the past period. inasmuch as. the provision under challenge simply enables the department to exclude the peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld defeat the very purpose of the legislature to provide revisional powers to the competent authority, more particularly, in a situation where the law with respect to different issues get settled at different points of time. Thus, with respect to different issues, the assessment orders can be revised more than once, if the same is within the prescribed period of limitation. 3. In addition to the above. it is submitted that it is settled principle of law that the Doctrine of Merger is applicable only to the extent to which the issue or issues got settled/decided/ forms part of revision, expressly or by necessary implication. Thus, the issues/controversies which are not forming the subject matter of revision, the doctrine of merger would not be applicable and that the colour of the assessment order to the extent of those unchallenged issues would not get altered. 4. Pemnently, in the present case, the second revision notice dated 01.09.2018 issued to the Petitioners, is based on altogether different issue and not related or identical to the issue which was revised earlier vide Order dated 10.03 2016. In other words, the controversy sought to be raised in the present notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that also, it is submitted that the State Legislature still possesses the power and it is also permissible under the law to amend the provisions, which are repealed or not in existence. Therefore, it is incorrect to contend that the State Legislature seeks to amend the provisions of VAT Act, which are not in existence, and hence invalid. 50 In such circumstances, referred to above, Mr. Trivedi, the learned counsel appearing for the State prays that there being no merit in this writ application, the same be rejected. ANALYSIS 51. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following questions fall for our consideration; (i) Whether Section 84A of the GVAT Act is ultra vires and beyond the legislative competence of the State under Entry 54 of List II of the seventh schedule to the Constitution of India? (ii) Whether by virtue of Article 246A read with Article 366(12A) of the Constitution of India, the Union and the State Legislatures, both have the power to make laws with respect to any tax on supply of goods or services or both, except taxes on the supply of the alcoholic liquor for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Authority or Appellate Authority or the High Court has given its decision which is prejudicial to the interest of revenue in some other proceedings and an appeal to the High Court or the Supreme Court against such decision of the Appellate Tribunal or the High Court is pending, the period spent between the date of the decision of the Appellate Tribunal and the date of the decision of the High Court or the date of the decision of the High Court and the date of the decision of the Supreme Court shall be excluded in computing the period of limitation referred to in section 73 or section 75. 54. We shall now look into few relevant provisions of the Gujarat Value Added Tax (Amendment) Act, 2017. 55. In the principal Act, in section 2,- (1) clauses (1), (1 A) and (2) shall be deleted; (2) in clause (4), in sub-clause (ii), for the words plant, machinery, raw materials, processing materials, packing materials, empties, consumable stores, waste products, or such other goods, or waste or scrap of any of them , the words raw materials, processing materials, consumable stores, waste products or such other goods shall be substituted; (3) clauses (5) and (9) shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability acquired, accrued or incurred under this Act prior to the coming into force of the Gujarat Value Added Tax (Amendment) Act, 2017 (Guj. 26 of 2017) or orders made thereunder: 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 coming into force of the Gujarat Value Added Tax (Amendment) Act, 2017 (Guj. 26 of 2017); 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 this Act prior to the coming into force of the Gujarat Value Added Tax, (Amendment) Act, 2017 (Guj. 26 of 2017); 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed of in accordance with the provisions of existing law, and any amount of credit found to be admissible to the claimant shall be refunded to him in cash in accordance with the provisions of existing law, and the amount rejected, if any, shall not be admissible as input tax credit under this Act: Provided that no refund shall be allowed of any amount of input tax credit where the balance of the said amount as on the appointed day has been carried forward under this Act; (b) every proceeding of appeal, review or reference relating to recovery of input tax credit initiated whether before, on or after the appointed day under the existing law shall be disposed of in accordance with the provisions of existing law and if any amount of credit becomes recoverable as a result of such appeal, review or reference, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under this Act and the amount so recovered shall not be admissible as input tax credit under this Act. (7) (a) every proceeding of appeal, review or reference relating to any output tax liability initiated whether before, on or after the appointed day under the existing law, sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue. This bill seeks to amend the said Act of 2003 to achieve the aforesaid objects. 63. Section 174 of the GGST Act, which provides for the repeal and savings reads thus; 174. Repeal and Savings; (1) The repeal of the Acts specified in section shall not: (a) revive anything not in force or existing at the time of such amendment or repeal; or (b) affect the previous operation of the amended Acts or repealed Acts and orders or anything duly done or suffered thereunder; or (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed 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, fine, penalty, 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 repealed Acts; or (e) affect any investigation, inquiry, verification (includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Services Tax imposed by the Union or the State. Article 246A(2) recognises the exclusive power of the Parliament to make laws with respect to Goods and Services Tax where the supply of goods, or of services, or both takes place in course of inter-state trade or commerce. Article 269A deals with levy and collection of Goods and Services Tax in course of inter-state trade or commerce. Essentially, Article 269A recognises the Government of India to collect Goods and Services Tax on supplies in the course of inter-state trade or commerce. It allows the apportionment of the tax levied and collected between the Union and the States as may be provided by Parliament by law. It recognises the authority of the Parliament by law to 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. Article 279A deals with Goods and Services Tax Council. It envisages the Constitution of a Goods and Services Tax Council. It enumerates the powers and functions of such Council, the decision making process therein and the establishment of a mechanism to adjudicate any disputes. 66. Effect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast resort, for that court, when it comes to announce its decision, conforms it to the law then existing and may therefore reverse a judgement which was correct when pronounced in the subordinate tribunal from which whence the appeal was taken, if it appears that pending the appeal a statute which was necessary to support the judgement of the lower court has been withdrawn by an absolute repeal. (P. 601). .emphasis supplied 66.5 Justice G.P. Singh in his Principles of Statutory Interpretation, 12th Edition 2010, while examining the consequences of repeal has stated as following at page 695. Under the common law rule the consequences of repeal of a statute are very drastic. Except as to transactions past and closed, a statute after its repeal is as completely obliterated as if it had never been enacted. The effect is to destroy all inchoate rights and all causes of action that may have arisen under the repealed statute. Therefore, leaving aside the cases where proceedings were commenced, prosecuted and brought to a finality before the repeal, no proceeding under the repealed statute can be commenced or continued after the repeal. 66.6 The Apex Court in Mohan R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igation, legal proceedings or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. 67.3 The aforesaid provision will apply to repeal of any enactment by a Central Act, unless a different intention appears from the repealing Act. The section inter alia provides that repeal shall not affect the previous operation of any enactment so repealed, anything duly done or suffered; or affect any rights, privileges, obligations or liabilities acquired, accrued or incurred under the repealed enactment; or affect penalty, forfeiture or punishment incurred or investigation, legal proceedings in respect of right, privilege, obligation, liability, penalty, forfeiture or punishment. 1.68. The term repeal is used when the entire act is abrogated. The term amendment is used when a portion of an Act is repealed and re-enacted. There is no real distinction between them. Repeal thus includes partial repeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntly an Act purporting to be an amendment has the same qualitative effect as a repeal the abrogation of an existing statutory provision- and have therefore applied the term implied repeal and the rules of construction applicable to repeals to such amendments. Amendment is, in fact, a wider term and it includes abrogation or deletion of a provision in an existing statute. If the amendment of an existing law is small, the Act professes to amend; if it is extensive, it repeals a law and re-enacts it. 68.3 Further, in the case of Fibre Boards (P) Ltd v. CIT Bangalore, 2015 (8) TMI 482 SC, the Supreme Court held that there is no distinction between repeal and omission . Similar dictum is laid in the case of Shree Bhagwati Steel Rolling Mills v. Commir. Of Central Excise, 2015 (326) ELT 2019 (SC). 68.4 Accordingly, Section 6 of the General Clauses Act, 1897 will also apply to the omission, amendment, substitution, etc. which repeals a part of an Act or partially repeals an Act. 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, 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otherwise requires (in Article 367) mean that the General Clauses Act, section 8, is to be excluded. Even by its terms, section 8 of the General Clauses Act will not apply to the Constitution, because expression enactment (which occurs in section 8) would not take in the Constitution, which is not an enactment . The Constitution is supreme and is, in fact, the foundation of all enactments. 69.5 Thus, Section 6 of the General Clauses Act, 1897 will not apply to the Constitution (contrary view taken by the Allahabad 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 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 legislativ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by a competent authority. Without the aid of such an article there would be utter confusion in the field of law. The assumption underlying the article is that the State laws may or may not be within the legislative competence of the appropriate authority under the Constitution. The article would become ineffective and purposeless if it was held that pre- Constitution laws should be such as could be made by the appropriate authority under the Constitution. The words subject to the other provisions of the Constitution should, therefore, be given a reasonable interpretation, an interpretation which would carry out the intention of the makers of the Constitution and also which is in accord with the constitutional practice in such matters. The article posits the continuation of the pre-existing laws made by a competent authority notwithstanding the repeal of certain acts under Art. 395; and the expression other in the article can only apply to provisions other than those dealing with legislative competence. 70.5 Thus, in the absence of Article 372 in the Constitution, perhaps the laws enacted under the Government of India Act, 1935 would have ceased to operate. Article 372 sav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Article 372, as Article 372 is subject to the other provisions of the Constitution. If Article 277 was not enacted, a doubt may arise whether the laws enacted by the Government of State prior to the constitution would become inconsistent with Article 246 due to the heads of taxation being shifted to the Union List. 71.5 Thus, to put the matter beyond any doubt, Article 277 saves the laws relating to taxes, duties, cesses or fees even though they are inconsistent with the provisions of the Constitution until provision to the contrary is made by the Parliament. 72. Unconnected ancillary matter Whether Section 19 of the Constitution (One Hundred and First) Amendment Act, 2016 applies to laws relating to service tax, excise duty, etc. levied by the Parliament. 72.1 Section 19 of the Constitution (One Hundred and First) Amendment Act, 2016 reads as under: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislature which has the power to enact a law, can repeal such a law. This was held by the Supreme Court in the case of Rama krishna Ramanath v. The Janpad Sabha, Gondia, 1962 AIR 1073 as under: There is no doubt that the general principle is that the power of a legislative body to repeal a law is co-extensive with its power to enact each a law, as would be seen from the following passage in the judgment by Lord Watson in Attorney General for Ontario v. Attorney General for the Dominion: Neither the Parliament of Canada nor the provincial legislatures have authority to repeal statutes which they could not directly enact. 73.4 Thus, the power to repeal or alter an enactment is coextensive with the power to enact. The power has to be seen at the time when the repealing legislation is being enacted. The legislation may be prospective or retrospective. It can also be made retrospective for the period for which the legislature did not have the competence. However, the legislature should have the competence at the time when such a repealing law is being enacted. 74. Possibility of amendment of a repealed Act, after its repeal when it is not in operation. 74. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 757758 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, when Rule B made under Article 309 of the Constitution substitutes Rule A, which in effect means that A is repealed and B is enacted in its place, A can be amended retrospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 76. Which is the legislature competent to amend the laws relating to the Sales Tax after the Constitution (One Hundred and First) Amendment Act, 2016? State Legislature or Parliament? 76.1 Article 245 of the Constitution provides that the Parliament may make laws for the whole or any part of the territory of India and the Legislature of a State can make laws for the whole or any part of the State. 76.2 Article 245 is the fountain source of the power. In other words, both the Parliament and State legislature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... newspapers, where such sale or purchase takes place in the course of inter State trade or commerce . 76.10 Thus, the State Legislature could make laws for taxes on sale or purchase of goods other than those taking place in the course of inter state trade or commerce. Article 269(3) of the Constitution provided that the Parliament may by law formulate principles for determining when a sale or purchase takes place in the course of inter-state trade or commerce. Section 3 of the Central Sales Tax Act, 1956 was enacted in pursuance of this power. 76.11 The other restrictions were placed by Article 286 of the Constitution (as it stood post Constitution Sixth Amendment Act and before its amendment by Constitution One Hundred and First Amendment Act). 76.12 Prior to the One Hundred and First Amendment of the Constitution, Article 286 of the Constitution had stood as follows:; 286. (1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place- (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for formulating principles for the purpose of determining which supplies shall be an intra-State supply of goods or services or both. The powers of Legislatures of States can be derived from Article 246A (1) read with Article 246A (2) and Article 286. There is no other provision in the Constitution which either confer the GST Law making the powers or curtails such law making powers of the Legislatures of the States. However, unless Clause (1) of Article 246A takes effect in relation to the petroleum crude, high speed diesel, motor spirit (commonly known as petrol), natural gas and aviation turbine fuel, the Parliament and the Legislatures of the States, both, cannot make the law providing levy of goods and services tax (GST) on supply of these goods. 76.16 Thus, a law of a state cannot impose tax on sale or purchase of goods which takes place (a) outside the state or (b) in the course of the import into or export out of India. Clause (2) provides that the Parliament may formulate the principles for determining when a sale or purchase takes place in the ways mentioned in clause (1). 76.17 Section 4 of the Central Sales Tax Act, 1956 has been enacted in exercise of the powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter state trade or commerce. 76.24 Further Article 286 also places some restriction on imposition of tax on the supply of goods or services or both. The Article provides that no law of a state shall authorize the imposition of tax on supply of goods and services or both where such supply takes place outside the state or in the course of the import into or export out of the territory of India. The relevant extract reads as under: 286. Restriction as to imposition of tax on the sale or purchase of goods:- (1) No law of a State shall impose, or authorize the imposition of, a tax on the supply of goods or of services or both, where such supply takes place (a) outside the State; or (b) in the course of the import of the goods or services or both into, or export of the goods or services or both out of, the territory of India. (2) Parliament may by law formulate principles for determining when a supply of goods or of services or both in any of the ways mentioned in clause (1). 76.25 Further, Article 279A provides for the constitution of a Goods and Services Tax Council which shall make recommendations on all matters relating to the goods and services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 is only for a period of one year from the commencement of the amendment act. 77.6 Secondly, the words used in Section 19 are that the laws inconsistent with the new provisions of Constitution shall continue to be in force . The Supreme Court in the case of Ram Krishna Ramanath v. The Janpad Sabha, Gondia AIR 1962 SC 1073 held that the Provincial Legislature which was competent to enact laws prior to the Government of India Act, 1935 has a limited legislative power by virtue of Section 143(2) of the Government of India Act, 1935 (which is analogous to Article 277 of the Constitution). This was because the words used was may be continued until provision to the contrary is made by the Federal Legislature . The Supreme Court construed the words may in the phrase to mean may continue to be levied if so desire by the Provincial Legislature . Accordingly, the Supreme Court found a limited legislative power in the Provincial Legislature to repeal the Act or to reduce the rate of tax but not to increase the burden by enhancing the rate of tax. 77.7 However, the above case may not apply to the present case as the words used in Section 19 of the Constitution (one Hundred and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common national market for goods and services. The proposed Central and State goods and services tax will be levied on all transactions involving supply of goods and services, except those which are kept out of the purview of the goods and services tax. 2. The proposed Bill, which seeks further to amend the Constitution, inter alia, provides for- (a) subsuming of various Central indirect taxes and levies such as Central Excise Duty, Additional Excise Duties, Excise Duty levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, Service Tax, Additional Customs Duty commonly known as Countervailing Duty, Special Additional Duty of Customs, and Central Surcharges and Cesses so far as they relate to the supply of goods and services; (b) subsuming of State Value Added Tax/Sales Tax, Entertainment Tax (other than the tax levied by the local bodies), Central Sales Tax (levied by the Centre and collected by the States), Octroi and Entry tax, Purchase Tax, Luxury tax, Taxes on lottery, betting and gambling; and State cesses and surcharges in so far as they relate to supply of goods and services; (c) dispensing with the concept of declared goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. (5) Parliamen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in clause (1) of article 269A, be levied and collected by the Government of India for a period of two years or such other period as the Goods and Services Tax Council may recommend, and such tax shall be assigned to the States in the manner provided in clause (2). (2) The net proceeds of additional tax on supply of goods in any financial year, except the proceeds attributable to the Union territories, shall not form part of the Consolidated Fund of India and be deemed to have been assigned to the States from where the supply originates. (3) The Government of India may, where it considers necessary in the public interest, exempt such goods from the levy of tax under clause (1). (4) Parliament may, by law, formulate the principles for determining the place of origin from where supply of goods take place in the course of inter-State trade or commerce. 27. Clause 19 contain compensation to States for loss of revenue on account of introduction of goods and services tax. Clause 19 of the Bill is as follows: 19. Compensation to States for loss of revenue on account of introduction of goods and services tax- Parliament may, by law, on the recommendatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral entry rather it specifically relates to goods and services tax. When express power is there to make law regarding goods and services tax, we fail to comprehend that how such power shall not include power to levy cess on goods and services tax. True, that Constitution (One Hundred and First Amendment) Act, 2016 was passed to subsume various taxes, surcharges and cesses into one tax but the constitutional provision does not indicate that henceforth no surcharge or cess shall be levied. 80. The issue can also be looked into from a different angle. Article 246(A) of the Constitution of India has been inserted in the Constitution of India to provide for integrated power to the Union of India and the States to make a common law to levy tax on the Goods and Services . Article 246A is not akin to the concurrent list enumerated in List III in Schedule VII of the Constitution of India which empowers, either the Union or State, to make laws with respect to levy of tax on either the goods or services. The Parliament in its wisdom did not incorporate power to make laws with respect to the Goods and Services Tax in the Concurrent list enumerated in List III in Schedule VII of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nferring concurrent taxing powers on the Union as well as the States including the Union territory with Legislature to make laws for levying goods and services tax on every transaction of supply of goods or services or both. It further provided that it seeks to amend the Constitution to subsume the State Value Added Tax/Sales Tax. 86. It is an established principle of interpretation of statues to look into the mischief which was intended to be remedied by enactment of the statute. 87. It has been held by the Supreme Court in the case of U.P.Bhoodan Yagna Samiti, U.P. Vs. Braj Kishore and Ors. reported in AIR 1988 SC 2239 that one has to look to the intention of the Legislature, one has to look to the circumstances under which the law was enacted, the Preamble of the law, the mischief which was intended to be remedied by the enactment of the statute. 88. The Entry 54 in List II in Schedule VII of the Constitution of India was amended to extinguish the power of states to levy taxes on sale or purchase of goods except taxes on the sale of petroleum products and alcoholic liquor for human consumption. Therefore, the power to amend any law with respect to levy of tax on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s by taking recourse to Article 246A of the Constitution of India. 91. In fact if the State legislature has the power to enact the value added tax laws under Article 246A of the Constitution of India as argued on behalf of the State, then Entry 54 of List II of the Seventh Schedule to the Constitution which was retained to the extent of six products which are outside the GST regime will be rendered redundant. The very fact that Entry 54 of List II of the Seventh Schedule was retained in so far as the six products are concerned indicates that the sales tax/value added tax enactment is not permissible under Article 246A of the Constitution of India. The vociferous argument of the State that Article 246A of the Constitution can support the enactment of provision under the Vat Act falls flat in the face of the existence of Entry 54 of List II of the Seventh Schedule to the Constitution of India which survived the 101st Constitution Amendment Act. 92. We may clarify that in Mohit Mineral Pvt. Ltd. (supra), the challenge was to the imposition of the compensation cess under the Goods Services Tax (Compensation to States) Act, 2017 on the ground of lack legislative competence. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h provision is upheld under Article 246A of the Constitution of India then Entry 54 of List II of the Seventh Schedule to the Constitution of India which was specifically retained by the 101st Constitution Amendment Act will be rendered redundant 93. In the aforesaid context, we may look into a very recent pronouncement of the Kerala High Court in the case of M/s. Opac Engineering Pvt. Ltd. vs. The State Tax Officer (Works Contract) Ors., rendered in WP (C) No.32439 of 2019, decided on 6th Day of December, 2019/ 15th Agrahayana, 1941 . In the case before the Kerala High Court, the legality and validity of the notices and assessment orders issued to the petitioners in connection with the assessment under the Kerala Value Added Tax Act (for short the KVAT Act ) for the A.Y. 2010-11 and 2011-12 was made a subject matter of challenge. The main plank of challenge to the impugned notices and orders was on the ground that the authorities concerned had no jurisdiction since the amendments introduced to Section 25(1) of the KVAT Act through the Kerala Finance Acts of 2017 and 2018 notified through Gazette Notifications dated 19.06.2017 and 31.03.2018 respectively did ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... napplicable in respect of those actions that were expressly saved by the provisions of Section 174 of the State GST Act. The Court found that the State legislature retained its legislative power to enact the savings clause under Section 174 of the State GST Act and that the only difference in the nature of that power was that, while prior to the introduction of GST through the CAA the State Legislatures enjoyed exclusivity in the mater of legislation on the subject of taxes on sale or purchase of goods, after the CAA, they had simultaneous legislative power, with the Parliament, to legislate in respect of taxes on supply (which included sale) of goods or services or both. The challenge to the notices and orders issued/passed by the revenue authorities was rejected on the finding that the actions of the revenue authorities, in issuing such notices and passing such orders, were saved by the provisions of Section 174 of the State GST Act, the validity of which was also upheld. 18. I am given to understand that an intra-court appealagainst the aforesaid judgment of the learned Single Judge is pending consideration before a Division Bench of this Court. At any rate, the said judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith the Parliament, in respect of taxes on supply of goods or services or both. While the new legislative power could justify the inclusion of a savings clause in the new legislation enacted in respect of the new levy of tax, to save accrued rights, privileges, immunities etc. under the erstwhile enactment, the deletion of Entry 54 of List II automatically denuded the State Legislatures of the power to further legislate on the subject of taxes on sale or purchase of goods, except to the limited extent retained under the Constitution. The power to amend a statute being a facet of the legislative power itself, the State legislature could not have exercised a power to amend the KVAT Act, save to the extent permitted, when it did not retain any residual right to further legislate on the subject of taxes on sale or purchase of goods. 20. There is yet another aspect of the matter. It is trite that when a Court judges the Constitutionality of a legislative enactment it should try to sustain the validity of the enactment to the extent possible and it should strike down the law only when it is impossible to sustain it State of Bihar v. Bihar Distilery - [JT (1996) 10 SC 854]. At the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislative competence of the State Legislature. In the result, these writ petitions are disposed by declaring that, (i) the assessments in respect of which the period of limitation for re-opening under Section 25 of the KVAT Act was to expire by 31.03.2017 can be re-opened up to 31.03.2018 by virtue of the amendment to the third proviso to Section 25 (1) vide Kerala Finance Act, 2017. (ii) the assessments in respect of which the period of limitation for re-opening under Section 25 of the KVAT Act was to expire by 31.03.2018 cannot be re-opened up to 31.03.2019 or thereafter, by relying on the amendments introduced through the Kerala Finance Act, 2018 since the State Legislature did not have the power to amend the KVAT Act after the CAA 2016, and the repeal of the KVAT Act pursuant thereto, on 22.06.2017. (iii) The legality of the orders/notices impugned in these writ petitions shall stand determined by the declarations in (i) and (ii) above. 95. The line of reasoning adopted by the Kerala High Court in the aforesaid decision fortifies our view that the State Legislature could not have amended the State VAT Act by enacting Section 84A which is sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hether prospective or retrospective can be made after the concerned erstwhile law has been amended or repealed or if one year has lapsed from the enactment of the CAA. 97. Mr. Kamal Trivedi, the learned Advocate General placed strong reliance on the decision of the Kerala High Court in the case of Sheen Golden Jewels (India) Pvt. Ltd vs. State Tax Officer, 2019 SCC Online Ker. 973 . Strong reliance has been placed on the following observations; 133.Article 246 of the Constitution deals with the distribution of legislative powers. Under Clause (1) of that Article, Parliament has the exclusive power to make laws on any of the matters enumerated in List I (Union List) in the Seventh Schedule. Under Clause (2) both Parliament and the State Legislature have concurrent powers to make laws on any matter enumerated in List III (the Concurrent List) of the Seventh Schedule. But the State Legislature s power to legislate over the matters in the Concurrent List is subject to Parliament s power under the Union List. Then, of course, subject to Parliament s powers under List I and List III, the State Legislature has the exclusive power to make laws on any matter enumerated in List ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enforce the KVAT Act in its amended form. The Act remained, with its remit reduced, though. Thus goes out of reckoning the petitioners another assertion: that with the repeal of the enactments, the procedural mechanism has disappeared. It has not. The prospectivity of the amendment undisputed, what remains to be examined is the State s power to save what had happened before the CA 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. 180. The petitioners argue that the CA Act has disrupted the federal demarcations; the State s legislative fields under Entry 54 of the Second Schedule have been truncated. Thus, the State has no longer the power to legislate on the files that have been taken away from it. Have the State s legislative power on the items once available for it under the Entry 52 taken away? We will see. 181 First, the State s legislative powers have not been taken away; they have been, on the contrary, constitutionally permitted to be shared with the Union Government. What is gone is the State s exclusivity. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Amendment. 98. It has been vehemently argued by Mr. Trivedi by placing reliance on the aforesaid observations of the Kerala High Court that the entries to the legislative list are not the only source of the legislative power but are merely topics or fields of legislation and that the competence to legislate flows from the Articles in Part-XI of the Constitution of India. It is sought to be argued by the learned Advocate General that the amendments in such entries like the amendment in Entry 54 of List II in the present case would not make any difference to the legislative competence of the State Legislature to make any laws, which otherwise flows from the substantive provisions under the Constitution. To fortify such submission, reliance has been placed on a decision of the Supreme Court in the case of Hoechst Pharmaceuticals Ltd. vs. State of Bihar, (1983) 4 SCC 45 . It has been argued by Mr. Trivedi that by enacting Section 84A in the VAT Act, the State Legislature has not proposed to levy any fresh tax, but merely allowed the department to enlarge the period of limitation under the provisions of Section 75 of the VAT Act, if permissible, so as to collect the legitimate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reconciliable conflict between the Entries in the Union and State Lists. In the case of a seeming conflict between the Entries in the two Lists, the Entries should be read together without giving a narrow and restricted sense to either of them. Secondly, an attempt should be made to see whether the two entries cannot be reconciled so as to avoid a conflict of jurisdiction. It should be considered whether a fair reconciliation can be achieved by giving to the language of the Union Legislative List a meaning which, if less wide than it might in another context bear, is yet one that can properly be given to it and equally giving to the language of the State Legislative List a meaning which it can properly bear. The nonobstante clause in Article 246(1) must operate only if such reconciliation should prove impossible. Thirdly, no question of conflict between the two Lists will arise if the impugned legislation, by the application of the doctrine of 'pith and substance' appears to fall exclusively under one List, and the encroachment upon another list is only incidental. 101. From the aforesaid decision, which is sought to be relied upon by the State, the principle that flo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State Legislature is competent to pass an impugned piece of legislation is in the first place to look at the Lists annexed to the Seventh Schedule of the Constitution in Order to determine whether the Legislature has legislated upon a topic within its competence. If it has legislated upon a topic not within its competence, than the legislation is clearly ' ultra vires ' and no further question arises. 105. The aforenoted Division Bench decision of the Bombay High Court was looked into by a Seven Judge Bench of the Supreme Court reported in AIR 1957 SC 699. S.R. Das, J., speaking for the Bench, observed thus: The principal question canvassed before us relates to the validity or otherwise of the impugned Act. The Court of Appeal has rightly pointed out that when the validity of an Act is called in question, the first thing for the Court to do is to examine whether the Act is a law with respect to a topic assigned to the particular Legislature which enacted it. If it is, then the court is next to consider whether, in the case of an Act passed by the Legislature of a Province (now a State) its operation extends beyond the boundaries of the Province or the State; for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Rights created by the Constitution. The Legislature cannot over-step the field of its competency, directly or indirectly. The Court will scrutinize the law to ascertain whether the Legislature by device purports to make a law which, though in form appears to be within its sphere, in effect and substance, reaches beyond it. If, in fact, it has power to make the law, its motives in making the law are irrelevant. 108. There need not be any debate on the statement of law that the entries in the lists are themselves not power of legislation, but fields of legislation. It is trite that India being a Union of State both the Parliament and the State Legislature can frame laws having regard to their respective legislative competence enumerated in the three Lists contained in the Seventh Schedule of the Constitution of India. The Parliament has exclusive power to make laws with respect of any of the matters enumerated in List I in the Seventh Schedule. Similarly, State Legislatures have exclusive power to make laws in respect of any of the matters enumerated in List II. Parliament and State Legislatures both have legislative power to make laws with respect to any matter enumerated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed to be made by disallowance of the input tax credit is on the sales made by the writ applicants which are indisputably of goods not covered under Entry 54 of List II of the Seventh Schedule to the Constitution of India. EQUITY, MORALITY AND FAIRNESS: 112. Mr. Trivedi, the learned Advocate General also tried to defend Section 84A of the VAT Act on the ground that the tax dues which were morally due to the State are sought to be recovered. In other words, the argument is that the State had no other option but to enact Section 84A in the VAT Act. It is sought to be argued that the State was remediless in a situation where there was judgment of this High Court operating in favour of the dealer at the time of assessment which was subsequently reversed by the Supreme Court. Such stance of the State is not tenable in law in view of two decisions of the Supreme Court. In the case of Asst. Commissioner, Commercial Tax vs. LIS (Registered), (2018) 15 SCC 283. it has been observed in Para-12 as under; 12. Time and again, it has been emphasized that a taxing statute cannot be made applicable to a citizen by unnatural or unreasonable extensions thereof. A recent vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. IRC, (1921) 1 KB 64 at 71 , Rowlatt J. laid down : In a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. 33. This Court has, in a plethora of judgments, referred to the aforesaid principles. Suffice it to quote from one of such judgments of this Court in Commissioner of Sales Tax, Uttar Pradesh v. Modi Surgar Mills, 1961 (2) SCR 189 at 198 :- In interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The Court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed; it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency. 113. In the case of Nestle India Ltd vs. Deputy Commissioner of Commercial Tax, (2016) 89 VST 56 (Guj.). It has been observed by M.R. Shah (as His Lordship then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the officer and/or authority is of the opinion that the earlier decision though not challenged and/or even implemented for years is not a good decision and/or not in the interest of the revenue, the revenue is not remediless. However, as observed hereinabove, the Assessing Officer being lower in rank cannot be permitted to ignore and/or cannot be permitted to take a contrary view than the view taken by the higher forum, more particularly, when in the subsequent years, there are no change circumstances and the decision of the higher forum (in the present case, learned Tribunal), has been acted upon and implemented for the years. 114. It is well known that motive or intention for making an Act or issuing an ordinance is not justifiable before a court of law. Whenever the expressions colourable exercise of power or fraud on Constitution are used in connection with any enactment, it only means that the particular legislature had no legislative competence although it purports to have exercised that power. Reference in this connection may be made to the cases of K.C.Gajapati Narayan Deo v. State of Orissa (AIR 1953 SC 375), Bhairabendra Narayan Bhup v. State of Assam (AIR 1956 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toms' (2015) 10 SCC 770 wherein a judgment of the Bombay High Court which is of considerable vintage i.e. 'Commissioner of Income Tax, Bombay v. Ellis 2015 (322) E.L.T. 372(S.C.) 8 C.Reid AIR 1930 Bom 333 , has been referred to and, in fact, relied upon to observe that reasons of morality and fairness can have no application to bring a citizen who is not within the four corners of the taxing statute with its fold so as to make him liable to payment of tax. In this regard paragraphs 31, 32 and 33 of the opinion rendered in Shabina Abraham (supra) would commend to us for recapitulation and, therefore, are extracted below : 32. The impugned judgment in the present case has referred to Ellis C. Reid's case but has not extracted the real ratio contained therein. It then goes on to say that this is a case of short-levy which has been noticed during the lifetime of the deceased and then goes on to state that equally therefore, legal representatives of a manufacturer who had paid excess duty would not by the self-same reasoning be able to claim such excess amount paid by the deceased. Neither of these reasons are reasons which refer to any provision of law. Apart from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... limit for passing of revisional order was to expire and the issue was still pending before the Supreme Court, then the respondents could have passed an order in favour of the dealer and, thereafter, carried the matter before the Tribunal/High Court by filing the revision application/appeal. IS THE VAT AMENDMENT ACT, 2018 A VALIDATING ACT? 117. Mr. Trivedi made a gallant effort to convince us to accept the submission that for all practical purposes, the VAT Amendment Act, 2018 is a validating Act. According to Mr. Trivedi, it seeks to overcome an obstacle in terms of the limitation of three years provided under Section 75 of the VAT Act. According to Mr. Trivedi, the said obstacles stood confirmed by this Court vide its judgment and order dated 16th March, 2018 rendered in the Special Civil Application No.22283 of 2018 while quashing and setting aside the revision notice dated 03/06.11.2017 issued by the State Authorities to revise the assessment order for the F.Y.2008-09 as time barred under Section 75 . According to Mr. Trivedi, the said revision notice was issued on the basis of the judgment delivered by the Supreme Court dated 22nd September, 2017 reported in (201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e validated by a validating Act. There can be a validating Act-conferring jurisdiction which was absent or validating the illegal demand of tax on the basis of wrong interpretation of the provisions. Mr. Trivedi invited our attention to a decision of the Supreme Court in the case of The Government of Andhra Pradesh vs. Hindustan Machine Tools Ltd., 1975 (2) SCC 274. 118. In the case of Government of Andhra Pradesh Vs. Hindustan Machine Tools Ltd (supra), the Andhra Pradesh High Court quashed and set aside the notice seeking to recover property tax on the factory of the Company while relying upon Section 2(15) of the Andhra Pradesh Gram Panchayats Act, 1964, defining the term house , on the ground that the said definition does not include factory and hence no tax could be recovered, since the demand in that behalf was illegal. When the appeal of the State against the judgment of the High Court was pending before the Apex Court, State Legislature retrospectively amended the said Section 2(15) of the said Act so as to eliminate the impediment on which the High Court rested its judgment. 119. However, ultimately, while upholding the demand of tax retrospectively, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etrospective effect. 121. Mr. Soparkar, the learned senior counsel appearing for the writ applicant vehemently submitted that Section 84A is a substantive provision and cannot be labelled as a validating enactment. According to Mr. Soparkar, in the case on hand, there is absolutely no levy which is sought to be validated by Section 84A of the VAT Act. It retrospectively extends the period of limitation for assessment/reassessment/revision in cases where there are pending proceedings in some other cases which result into a judgment in favour of the Revenue. 122. The question that falls for our consideration is whether Section 84A of the VAT Act is a validating Act?. 123. The Supreme Court, in the case of Amrendra Kumar Mohapatra vs. State of Orissa, (2014) 4 SCC 583 has very succinctly explained the concept of validating Act. We quote the relevant observations; 22. Black s Law Dictionary (9th Edition, Page No.1545) defines a Validation Act as a law that is amended either to remove errors or to add provisions to conform to constitutional requirements . To the same effect is the view expressed by this Court in Hari Singh Others v. The Military Estate Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation it removes the defect which the courts had found in the existing law and makes adequate provisions in the Validating Law for a valid imposition of the tax. (emphasis supplied) 25. Judicial pronouncements regarding validation laws generally deal with situations in which an act, rule, action or proceedings has been found by a Court of competent jurisdiction to be invalid and the legislature has stepped in to validate the same. Decisions of this Court which are a legion take the view that while adjudication of rights is essentially a judicial function, the power to validate an invalid law or to legalise an illegal action is within the exclusive province of the legislature. Exercise of that power by the legislature is not, therefore, an encroachment on the judicial power of the Court. But, when the validity of any such Validation Act is called in question, the Court would have to carefully examine the law and determine whether (i) the vice of invalidity that rendered the act, rule, proceedings or action invalid has been cured by the validating legislation (ii) whether the legislature was competent to validate the act, action, proceedings or rule declared invalid in the prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f performed, and that if Parliament cannot enact a law relating to sales tax, it cannot validate such a law either, and that such a law is accordingly unauthorised and void. The only basis for this contention in the Act is its description in the Short Title as the Sales Tax Laws Validation Act and the marginal note to s. 2, which is similarly worded. But the true nature of a law has to be determined not on the label given to it in the statute but on its substance. Section 2 of the impugned Act which is the only substantive enactment therein makes no mention of any validation. It only provides that no law of a State imposing tax on sales shall be deemed to be invalid merely because such sales are in the course of inter-State trade or commerce. The effect of this provision is merely to liberate the State laws from the fetter placed on them by Art. 286(2) and to enable such laws to operate on their own terms. (emphasis supplied) 29. We may also refer to Maxwell on Interpretation of Statutes (12th Edn., page 6), where on the basis of authorities on the subject, short title of the Act has been held to be irrelevant for the purpose of interpretation of statutes. Lord Moulton in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiats makes the new meaning binding upon Courts. The legislature may follow any one method or all of them and while it does so it may neutralize the effect of the earlier decision of the Court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject- matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a Validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the Courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax. (Emphasis by me) 125. In the case of D. Cawasji and Co. Vs. State of Mysore 1984 (supp). SCC 490 , the issue related to constitutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Amendment and Validation) Act, 2002 (Gujarat Act No. 9 of 2002) reads as under: 8. Validation of imposition and collection of tax on designated omnibuses:- (1) Notwithstanding any judgement, decree or order of any court, tax imposed, assessed or collected or purporting to have been imposed, assessed or collected under the principal Act, on designated omnibuses during the period beginning with 1st day of April, 1991 and ending on the 16th day of August, 2001, shall be deemed to have been validly imposed, assessed or collected in accordance with law as if at all material times when such tax was imposed, assessed or collected, the principal Act as amended by section 2, 3 and 4 except sub-clause (a) of clause (1) thereof and section 7 of this Act and section 9 had been in force and accordingly (a) no suit or other proceeding shall be maintained or continued in any court for the refund of any tax paid in respect of designated omnibus under the principal Act, (b) no court shall enforce a decree or other directing the refund of any tax paid in respect of designated omnibus under the principal Act, (c) ) any tax imposed or assessed in respect of designated o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vy, assessment, re-assessment, or collection of thee aforesaid tax, or (II) From claiming, in accordance with the provisions of the principal Act as amended by this Act, refund of the aforesaid tax paid by him in excess of the amount due from him. (a) No act or omission on the part of any person shall be punishable as an offence which would not have been punishable if this Act had not come into force. 132. Section 4 of the Gujarat Purchase Tax on Sugarcane Act, 1989 reads as under: 4.Validation of remission of interest and deferred payment of tax:- Any interest payable by the owner for any period has been waived or any deferment of payment of tax granted by any order of the State Government before the commencement of this Act shall be and shall be deemed always to have been validly waived or granted in accordance with law as if the provisions of sections 18 and 19 of the principal Act as amended by this Act had been in force at all material time when such interest was waived or the deferment of payment was granted. 133. On a bare perusal of the above referred amendment Acts, it is evident that the amending Act specifically provides for validation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ping assessment (iii) appeal and (iv) revision. All these provisions provide for outer time limit of the order to be made. In case where the orders are already made by the revenue authorities and matter is closed, the retrospectives amendment without validation may not validate such orders. 137. In Indian Aluminium Co. and others v. State of Kerala and others, (1996) 7 SCC 637, the Government of Kerala issued a statutory order levying surcharge on electricity. The order was declared by the Court to be ultra vires followed by a direction to refund the amount collected thereunder. The State Legislature introduced a Validating Act, which was impugned unsuccessfully before the High Court as also the Supreme Court. The Supreme Court laid down the following tests for judging the validity of the Validating Act: (i) whether the Legislature enacting the Validating Act has competence over the subject-matter, (ii) whether by validation, the Legislature has removed the defect which the Court had found in the previous law; (iii) whether the validating law is inconsistent (sic consistent) with the provisions of Part III of the Constitution. If these tests are satisfied, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is competent for the Legislature to enact the law with retrospective effect; (vi) the consistent thread that runs through all the decisions of this Court is that the Legislature cannot directly overrule the decision or make a direction as not binding on it but has power to make the decision ineffective by removing the base on which the decision was rendered, consistent with the law of the constitution and the Legislature must have competence to do the same. 138. Thus, it is permissible for the Legislature, subject to its legislative competence otherwise, to enact a law which will withdraw or fundamentally alter the very basis on which a judicial pronouncement has proceeded and create a situation which if it had existed earlier, the Court would not have made the pronouncement. 139. Thus, we find it difficult to take the view that the VAT Amendment Act, 2018 is a validating Act. 140. We, once again, go back to the issue with regard to the competence of the State Legislature to enact Section 84A of the Act. 141. In Bhikaji Narain Dhakras v. State of M.P. (AIR 1955 SC 781), while considering the validity of the pre-Constitution Act the Supreme Court observed: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -enactment. Such a law, whether preConstitution or post-Constitution, is not wholly dead if it violates fundamental rights; it is merely eclipsed by fundamental right and remains as it were in a moribund condition as long as the shadow of fundamental rights falls upon it. When that shadow is removed the law begins to operate proprio vigore from the date of such removal unless it is retrospective. A law declared void by a court is not effected from the Statute Book; it is revived and revitalised if Constitutional limitations are removed by Constitutional amendment or by re-enactment by legislature. 143. In view of the aforesaid discussion, we have reached to the conclusion that Section 84A of the Gujarat Value Added Tax (Amendment) Act, 2018 is invalid on the ground that the same is beyond the legislative competence of the State Legislature. IS SECTION 84A OF THE GUJARAT VAT (AMENDMENT) ACT, 2017 MANIFESTLY ARBITRARY AND UNREASONABLE? 144. The aforesaid takes us now to consider the question whether Section 84A of the VAT Act is manifestly arbitrary and is liable to be struck down being violative of Article 14 of the Constitution of India. 145. Mr. Soparkar, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose of this Act till the period of six years from the end of the accounting year to which the books of accounts and the records relate. Provided that where the dealer is a party to an appeal or revision under this Act, he shall preserve the books of accounts and the records pertaining to the subject matter of such appeal or revision until the appeal or revision is finally disposed of. 148. Thus, the provision requires the dealer to preserve books of accounts only for a period of six years from the end of the relevant accounting year. The proviso thereto requires further preservation of books of accounts only to the extent a matter is pending in appeal or revision. However, the impugned provision exposes the dealer to assessment/re-assessment/revision for an indefinite period which is excessive and disproportionate. In fact, the retrospective operation of the provision w.e.f 1st April, 2006 allows reopening of assessments of years in respect of which a dealer was not required to preserve the books of accounts and, therefore, the retrospective operation is all the more onerous and manifestly arbitrary. 149. In the last, Mr. Soparkar submitted that the retrospective op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in AIR 1964 SC 1581 , while upholding the constitutional validity of the retrospective operation of Orissa Sales Tax Validation Act, 1961, it was observed as under; (2) . Up to June 1952, the claim for exemption made by him was upheld and the amount represented by the sales of the said gold ornaments was deducted from the taxable turnover shown by the petitioner in his returns. Subsequently, however, this assessment were reopened under Section 127) of the Act and it was claimed that the deduction made on certain sales transactions of the gold ornaments were not justified and to that extent, the petitioner had escaped assessment. The petitioner resisted this attempt of reopening the assessment . (11) But it would be difficult to accept the argument that because the retrospective operation may operate harshly in same cases therefore the legislation itself is in valid. 154. The issue whether law can be declared unconstitutional on the ground of arbitrariness has received the attention of the Supreme Court in a Constitution Bench Judgment in the case of Shayara Bano v. Union of India Ors. 24. R.F. Nariman and U.U.Lalit, JJ. (State of M.P. v. Rakesh Kohli, (2012) 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C 453), SCC at para 22, in State of M.P. v. Rakesh Kohli (State of M.P. v. Rakesh Kohli, (2012) 6 SCC 312 : (2012) 3 SCC (Civ) 481), SCC at paras 17 to 19, in Rajbala v. State of Haryana (Rajbala v. State of Haryana, (2016) 2 SCC 445), SCC at paras 53 to 65 and in Binoy Viswam v. Union of India (Binoy Viswam v. Union of India, (2017) 7 SCC 59), SCC at paras 80 to 82, McDowell (State of A.P. v. McDowell and Co., (1996) 3 SCC 709) was read as being absolute bar to the use of arbitrariness as a tool to strike down legislation under Article 14. As has been noted by us earlier in this judgment, McDowell (State of A.P. v. McDowell and Co., (1996) 3 SCC 709) itself is per incuriam, not having noticed several judgments of Benches of equal or higher strength, its reasoning even otherwise being flawed. The judgments, following McDowell (State of A.P. v. McDowell and Co., (1996) 3 SCC 709) are, therefore, no longer good law. 155. The historical development of the doctrine of arbitrariness has been noticed by the Hon'ble Judges in Shayara Bano in detail. It would be suffice to reproduce paragraphs 67 to 69 of the said judgment as the discussion in these paras provide a sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in it that it is unequal both according to political logic and constitutional law and is therefore violative of Article 14, and if it effects any matter relating to public employment, it is also violative of Article 16. Article 14 and 16 strike at arbitrariness in State action and ensure fairness and equality of treatment. They require that State action must be based on valid relevant principles applicable alike to all similarly situate and it must not be guided by any extraneous or irrelevant consideration because that would be denial of equality. Where the operative reason for State action, as distinguished from motive inducting from the antechamber of the mind, is not legitimate and relevant but is extraneous and outside the area of permissible considerations, it would amount to mala fide exercise of power and that is hit by Articles 14 and 16. Mala fide exercise of power and arbitrariness are different lethal radiations emanating from the same vice: in fact the letter comprehends the former. Both are inhibited by Articles 14 and 16. 68. This was further flashed out in Maneka Gandhi v. Union of India, where after stating that various fundamental rights must be read together ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st necessarily involve the negation of equality. One need not confine the denial of equality to a comparative evaluation between two persons to arrive at a conclusion of discriminatory treatment. An action per se arbitrary itself denies equal of (sic) protection by law. The Constitution Bench pertinently observed in Ajay Hasia case and put the matter beyond controversy when it said: (SCC p. 741, para 16) 16. Wherever therefore, there is arbitrariness in State action whether it be of the legislature or of the executive or of an authority under Article 12, Article 14 immediately springs into action and strikes down such State action. This view was further elaborated and affirmed in D.S.Nakara v. Union of India. In Maneka Gandhi v. Union of India it was observed that Article 14 strikes at arbitrariness in State action and ensures fairness and equality of treatment. It is thus too late in the day to contend that an executive action shown to be arbitrary is not either judicially reviewable or within the reach of Article 14. The same view was reiterated in Babita Prasad v. State of Bihar, SCC at p. 285, para 3. 156. The aforenoted doctrine is, thus, treated as a facet of both ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e struck down by just saying that it is arbitrary or unreasonable. 'Arbitrariness' is an expression used widely and rather indiscriminately-an expression of inherently imprecise import. Hence, some or the other constitutional infirmity has to be found before invalidating the Act. An enactment cannot be struck down on the ground that the Court thinks it unjustified. The Parliament and legislatures, composed as they are of the representatives of the people and supposed to know and be aware of the need of the people and every what is good and bad for them. The Court cannot sit on the judgement over their wisdom. 159. In the recent judgement of the Supreme Court in case of Shayra Bano vs. Union of India and ors reported in (2017) 9 SCC 1, Rohinton Fali Nariman, J., however, expressed a somewhat different view. It was observed that a statute can also be struck down if it is manifestly arbitrary. It was observed as under: 101. It will be noticed that a Constitution Bench of this Court in Indian Express Newspapers v. Union of India, (1985) SCC 641 , stated that it was settled law that subordinate legislation can be challenged on any of the grounds available for challe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kfurter, J. said in his inimitable style: In the utilities, tax and economic regulation cases, there are good reasons for judicial self-restraint if not judicial difference to legislative judgment. The legislature after all has the affirmative responsibility. The courts have only the power to destroy, not to reconstruct. When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events-self- limitation can be seen to be the path to judicial wisdom and institutional prestige and stability. The court must always remember that legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry that exact wisdom and nice adoption of remedy are not always possible and that judgment is largely a prophecy based on meagre and un-interpreted experience . Every legislation particularly in economic matters is essentially empiric a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness at all. 163. In Commissioner of Income Tax vs. Vatika Township petitioner. Ltd reported in 367 ITR 466 the Constitution Bench of the Supreme Court observed as under: 31. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit : law looks forward not backward. As was observed in Phillips vs. Eyre[3], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating that the impugned amendment is arbitrary and unreasonable is quite apt. 165. We are of the view that if unlimited time period is available to the Revenue for assessment/re-assessment/revision in any case based on a decision rendered in the case of any other dealer the same would lead to an irreparable situation and, in such circumstances, it renders Section 84A manifestly arbitrary and unreasonable. 166 Then we are taking about unreasonableness in the impugned provision, we should look into the English decision in the case of Kruse vs. Johnson (1895-90) All ER 105 . It has been observed as under: Unreasonableness in what sense! If for instance they were found to be partial and unequal in their operation between different classes, if they were manifestly unjust, if they disclosed bad faith, if they involved such oppressive or gratuitous interference with rights of those subject to them as could find no justification in the minds of the reasonable men, the Court might well say parliament never intended to give authority to make such rules and that they are unreasonable and ultra vires . 24. In Municipal Corporation of Delhi v. Birla Cotton Spinning and Weav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a later point of time, a different view of law is taken. If this theory is applied universally, it will lead to unimaginable chaos. The conclusion of the Supreme Court summarizing the proposition was contained in para-99(iv) which reads as under; 99(iv) It is not open to any person to make a refund claim on the basis of a decision of a Court or Tribunal rendered in the case of another person. He cannot also claim that the decision of the court/Tribunal in another person's case has led him to discover the mistake of law under which he has paid the tax nor can he claim that he is entitled to prefer a writ petition or to institute a suit within three years of such alleged discovery of mistake of law. A person, whether a manufacturer or importer, must fight his own battle and must succeed or fail in such proceedings. Once the assessment of levy has become final in his case he cannot seek to reopen it nor can he claim refund without reopening such assessment/order on the ground of a decision in another person's case. Any proposition to the contrary not only results in substantial prejudice to public interest but is offensive to several well-established principles of law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of procedure. The general rule as stated by Halsbury in Vol. 36 of the Laws of England (3rd Edn.) and reiterated in several decisions of this Court as well as English courts is that- all statutes other than those which are merely declaratory or which relate only to matters of procedure or of evidence are prima facie prospective and retrospective operation should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability or obligation unless that effect cannot be avoided without doing violence to the language of the enactment. If the enactment is expressed in language which is fairly capable of either interpretation, it ought to be construed as prospective only. (emphasis supplied) It is no doubt true, as held by the Supreme Court, in the case of Jayam and Co vs. Assistant Commissioner and another reported in [2016] 96 VST 1 (SC) that the State has enormous powers in the matter of legislation and in enacting fiscal laws. Great leverage is allowed in the matter of taxation laws because several fiscal adjustments have to be made by the Government depending upon the needs of the Revenue and the economic circumstances prevai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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