Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2023 Supreme(SC) 1081

SUPREME COURT OF INDIA
S. Ravindra Bhat, Aravind Kumar, JJ.
The State of Telangana & Ors. - Appellants
Versus
M/s Tirumala Constructions - Respondent
Civil Appeal No(s). 1628/2023 With C.A. No. 2502-2513/2023, C.A. No. 2644-2686/2023, C.A. No. 2732/2023, C.A. No. 2733/2023, C.A. No. 1654/2023, C.A. No. 1683/2023, C.A. No. 1662//2023, C.A. No. 1663/2023, C.A. No. 1629/2023, C.A. No. 1658/2023, C.A. No. 1630/2023, C.A. No. 1653/2023, C.A. No. 1655/2023, C.A. No. 1657/2023, C.A. No. 1672/2023, C.A. No. 1676/2023, C.A. No. 1656/2023, C.A. No. 1661/2023, C.A. No. 1664/2023, C.A. No. 1660/2023, C.A. No. 1682/2023, C.A. No. 1665/2023, C.A. No. 1666/2023, C.A. No. 1667/2023, C.A. No. 1668/2023, C.A. No. 1669/2023, C.A. No. 1659/2023, C.A. No. 2690/2023, C.A. No. 1670/2023, C.A. No. 1673/2023, C.A. No. 1671/2023, C.A. No. 1674/2023, C.A. No. 1675/2023, C.A. No. 1677/2023, C.A. No. 2687/2023, C.A. No. 2688/2023, C.A. No. 2689/2023, SLP(C) No. 7776/2023, SLP(C) No. 13543-13545/2023, SLP(C) No. 13529-13530/2023, SLP(C) No. 13523-13526/2023, SLP(C) No. 13547- 13559/2023, SLP(C) No. 13562-13574/2023, SLP(C) No. 13561/2023, SLP(C) No. 13539- 13540/2023, SLP(C) No. 13527-13528/2023, SLP(C) No. 13560/2023, SLP(C) No. 13534- 13537/2023, C.A. No. 2433/2023, C.A. No. 2436/2023, C.A. No. 2437-2443/2023, C.A. No. 2730/2023, C.A. No. 2731/2023, C.A. No. 1645/2023, C.A. No. 1649/2023, C.A. No. 1643/2023, C.A. No. 1636/2023, C.A. No. 1652/2023, C.A. No. 1679/2023, C.A. No. 1637/2023, C.A. No. 1632/2023, C.A. No. 1651/2023, C.A. No. 1633/2023, C.A. No. 1648/2023, C.A. No. 1634/2023, C.A. No. 1647/2023, C.A. No. 1644/2023, C.A. No. 1638/2023, C.A. No. 1678/2023, C.A. No. 1631/2023, C.A. No. 1681/2023, C.A. No. 1641/2023, C.A. No. 1640/2023, C.A. No. 1680/2023, C.A. No. 1639/2023, C.A. No. 1646/2023, C.A. No. 1635/2023, C.A. No. 1642/2023, C.A. No. 1650/2023
Decided On : 20-10-2023

Advocates appeared:
For the Appellant(s) : Mr. Vikram Nankani, Sr. Adv. Ms. Kavita Jha, AOR Mr. Shammi Kapoor, Adv. Mr. Arnab Roy, Adv. Mr. Aditeya Bali, Adv. Mr. Prithwiraj Choudhury, Adv. Ms. Prachi Jain, Adv. Mr. Prithwiraj Choudhuri, Adv. Ms. Archana Pathak Dave, Adv. Ms. Deepanwita Priyanka, AOR Mr. Varun Mishra, Adv. Mr. Ankur Jain, Adv. Mr. Prablin Singh Abrol, Adv. Mr. Aniruddha Singh Rajavat, Adv. Mr. Sanchit Jain, Adv. Mr. Anshul Agarwal, Adv. Mr. Ajay Sharma, Adv. Ms. Manju Jetley, AOR Mr. Arvind P.datar, Sr. Adv. Mr. B.S. Prasad A.G.for Telangana State,Sr. Adv. Mr. Somanadri Goud Katam, AOR Mr. Rahul Unnikrishnan, Adv. Mr. Sirajuddin, Adv.
For the Respondent(s): Mr. Soayib Qureshi, AOR Ms. T. Archana, Sr. Adv. Mr. S. Dwarakanath, Sr. Adv. Mr. K. K. Mani, AOR Mr. Rajeev Gupta, Adv. Mr. Raj Kumar Mahto, Adv. Mr. K. R. Sasiprabhu, AOR Mr. R Jawaharlal, Adv. Mr. Siddharth Bawa, Adv. Mr. Anuj Garg, Adv. Mr. Mayank Kshirsagar, AOR Ms. Mary Mitzy, Adv. Mr. B Ravikiran Singh, Adv. Mr. Oleander D Singh, Adv. Mr. Anil Bhardwaj, Adv. Mr. Ashutosh Jha, AOR Ms. Charulata Chaudhary, AOR Mr. D. Srinivas, Adv. Mr. G.L. Nageswar Rao, Adv. Mr. K. Jyothi Prasad, Adv. Mr. S. Venkateswarlu, Adv. Mr. Avadesh Kumar Dubey, Adv. Mr. Somanatha Padhan, AOR Mr. A.S.S. Raju, Adv. Mr. Uchit Sheth, Adv. Mr. Santosh Krishnan, AOR Ms. Deepshikha Sansanwal, Adv. Mr. Balbir Singh, A.S.G. Mr. Aniruddha Joshi, Adv. Mr. Shrirang B. Varma, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR Mr. Naman Tandon, Adv. Mr. Samarvir Singh, Adv. Mr. Prasanjeet Mohpatra, Adv. Mr. Aditya Rathore, Adv. Mr. Sourav Singh, Adv. Mr. Aditya Krishna, Adv. Ms. Mannat Waraich , AOR Mr. Sridhar Potaraju, Adv. Mr. Aayush, Adv. Mr. Rajat Srivastava, Adv. Mr. Ranjeet Singh, AOR Ms. Zeba Zoariah, Adv. Mr. V. Seshagiri, Adv. Mr. Bikram Bhattacharya, Adv. Mrs. Bela Maheshwari, AOR Mr. Rupesh Kumar, AOR Mr. R. Krishnan, Adv. Ms. Pankhuri Shrivastava, Adv. Ms. Neelam Sharma, Adv. Mr. Rajeev Sharma, Adv. Mr. Aryaman Sharma, Adv. Mr. Kumar Visalaksh, Adv. Mr. Udit Jain, Adv. Mr. Arihant Tater, Adv. Mr. Ajitesh Dayal Singh, Adv. Mr. Abhishek Vikas, AOR Ms. Tatini Basu, AOR Mr. V Murali Manohar, Adv. Ms. Nitipriya Kar, Adv. Mr. Kumar Shashank, Adv. Mr. Byrapaneni Suyodhan, Adv. Mr. Krishan Kumar, AOR Ms. Neetu Sharma, Adv. Mr. Nitin Pal, Adv. Mr. Shivam Pandey, Adv. Ms. Muskan Jain, Adv. Dr. M.V.K. Moorthy, Adv. Mr. M.V.J.K. Kumar, Adv. Mr. Hitendra Nath Rath, AOR Mr. M. Kumar, Adv. Mr. Abhishek Pati, Adv. Mr. R. Sreeramulu, Adv. Mr. Yelamanchili Shiva Santosh Kumar, Adv. Mr. Tarun Gupta, AOR Mr. Sridhar Potaraju, Adv. Ms. Aditi Anil Dani, AOR Mr. Rajat Srivastava, Adv. Mr. Aayush, Adv. Ms. Shiwani Tushir, Adv. Ms. Zeba Zoariah, Adv. M/S. Shree Chakra Chambers, AOR Mr. G.N. Reddy, Adv. Mr. Uchit Sheth, Adv. Mr. Uchit N. Sheth, Adv. Mr. Malak Manish Bhatt, AOR Mr. Ishaan George, AOR Mr. Jay Savla, Sr. Adv. Mr. Jasdeep Singh Dhillon, Adv. Ms. Pinky Behera, AOR Mr. Prabhat Kumar Chaurasia, Adv. Mr. Dama Sheshadari Naidu, Sr. Adv. Mr. Rizwan Ahmad, AOR Mr. Shakeel Ahmed, Adv. Mr. Amir Kaleem, Adv. Mr. Jatin Anand Diwedi, Adv. Mr. Raghvendra Pratap Singh, Adv. Mr. Mohd Wasiq Khan, Adv. Mr. Ahmed Pervez, Adv. Mr. Ravinder Kumar Yadav, AOR Mr. Vinay Mohan Sharma, Adv. Mrs. Arti Anupriya, Adv. Ms. Arti Anupriya, Adv. Mr. Vineet Yadav, Adv. Mr. Kartikey, Adv. Mr. Vineet Kumar Yadav, Adv. Mr. Amir Yadav, Adv. Mr. Raghav Anthwal, Adv. Mr. Paras Juneja, Adv. Mr. Baljeet Singh, Adv. Mr. Vinayak Sharma, Adv. Mrs. Akshi Kaushal, Adv. Mr. Jai Subhash Thakur, Adv. Mr. Soumik Ghosal, AOR Mr. Ramesh Allanki, Adv. Ms. Aruna Gupta, AOR Mr. Syed Ahmad Naqvi, Adv. Mr. B Krishna Reddy, Adv. Mr. K. Aroah, Adv. Mr. Sarvam Ritam Khare, AOR Mr. K.K.tyagi, Adv. Ms. Garima Tyagi, Adv. Mr. Vikash Chandra Shukla, AOR Mr. V. C. Shukla, Adv. Mr. Naga Deepak, Adv. Mr. Aishvary Vikram, Adv. Mr. Ajay Awasthi, Adv. Mr. Anantha Narayana M.g., Adv. Mr. Siddhartha Relan, Adv. Mr. Prakash Gautam, Adv. Mr. Puspraj Singh Parihar, Adv. Mr. Pushpraj Singh Parihar, Adv. Mr. Akshya Kumar Panda, Adv. Mr. Prabhsimar Singh, Adv. Mr. Amritesh Raj, Adv. Mr. Nitesh Ranjan, Adv. Mr. Tarun Gulia, Adv. Mr. Manish Dutt Sharma, Adv. Mr. Piyush Singh, Adv. Mr. Ajay Vikram Singh, AOR Mr. Karan Talwar, Adv. Mr. Siddhant Buxy, AOR Mr. Krishna Sumanth, Adv. Mr. Sumanth Nookala, AOR Dr. Anindita Pujari, AOR Mr. Shaileshwar Yadav, Adv. Ms. Radhika Mohapatra, Adv. Ms. Bhoomika Chouksey, Adv.

Section 19 of the Constitution (101st Amendment) Act preserves existing laws but does not confer unrestricted authority to amend post-GST transition, resulting in the invalidation of later amendments made by the States.

Headnote:(A) Constitution (101st Amendment) Act, 2016 - Section 19 - Article 246A - Amendments to tax laws following GST introduction - Legislative competence of States post-amendment questioned - Telangana and Gujarat High Courts found errors in allowing amendments post-GST; legislative authority limited to pre-existing laws during transition but void thereafter - Main issues included the interpretation of Section 19's transitional arrangements - Court concluded that Section 19 preserved existing laws but did not confer unlimited powers to amend - Subsequent amendments by States to tax laws struck down for lack of authority. (Paras 116, 117)

(B) The importance of ensuring legislative actions align with constitutional amendments and the transitional provisions outlined therein is crucial for maintaining the efficacy of tax law enforcement. (Paras 89, 116)

Table of Content
1. facts of the case regarding vat appeals. (Para 1 , 14 , 15 , 16)
2. arguments from states regarding legislative power. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27)
3. court's analysis of constitutional amendments. (Para 70 , 72 , 73 , 74 , 75 , 76 , 77 , 78)
4. constitutional provisions enabling legislative amendments. (Para 116)
5. conclusion and dismissal of appeals. (Para 117)

JUDGMENT :

S. RAVINDRA BHAT, J.

I.	Background and relevant provisions
II.	Facts
III.	Arguments of the appellant-states
IV.	Arguments of the respondent-assessees
V.	Analysis and reasoning
A.	Interpretation of Section 19
B.	Whether the power of amendment or repeal is subject to limitations under Section 19
C.	Validity of Telangana Act tested from the touch stone of its originating as an ordinance
D.	Gujarat and Maharashtra Acts
VI.	Conclusions

1. This batch of appeals arise from judgments delivered by the Telangana, Gujarat and Bombay High Court. The concerned states (Telangana and Gujarat) have appealed aggrieved by the judgments. The assessee petitioners are appellants, and are aggrieved by the judgments of Bombay High Court.

I. Background and relevant provisions

2. The Constitution (101st Amendment) Act, 2016, (hereafter referred to as “the Amendment”) introduces a fundamental re-ordering of the constitutional premise of taxation by the Union and State Governments in India. It is the framework to enable the introduction of the Goods and Services Tax (GST). It confers new powers upon the Union Parliament and State Legislative Assemblies, and also creates institutions that have a significant bearing on the federal character of the Constitution.

3. The pre-Amendment constitutional scheme had a vision of taxation of goods and services supplied within India. Excise and customs duty and excise on manufacture were within the scope of the legislative powers of the Union Parliament¹[Entries 83 and 84, List I, Seventh Schedule of the Constitution of India], under the Seventh Schedule. No separate entry for Service Tax existed in the Constitution at the time it was enacted. In T.N. Kalyana Mandapam Assn. v. Union of India, 2004 Supp (1) SCR 169; (2004) 5 SCC 632, this court held that service tax as a subject matter was within the “residuary power” of the Union; nevertheless, Entry 92C was introduced into the Union List by the Constitution (88th Amendment) Act, 2004 clarifying that the Union had exclusive authority to impose a service tax. Taxation of sale and movement of goods was within the exclusive purview of the States, by Entries 52 and 54 of the State List (List II of the VIIth Schedule to the Constitution). The delineation of Union and State taxation powers through the Union and State Lists of the Seventh Schedule was precise and clear, leaving little room for any overlap in the kind of taxes that the Union could impose and those that a State could levy. The “Concurrent List” (or List III of the VIIth Schedule) contained no taxing entries, signifying that the constitutional scheme for taxation was to apportion two distinct, exclusive spheres of taxation for the Union and the States.

4. The initial move to introduce GST was through the Fiscal Responsibility and Budget Management Report and the first official announcement for a transition to GST, was made by the Government of India in 2006-07 by the Budget Speech of the then Finance Minister; this was reiterated in the Budget Speech of 2008-09 and followed up in 2009-10 when certain policy changes were announced in the Budget for that year. The "First Discussion Paper on Goods and Services Tax in India" released by the Empowered Committee in November 2009 was the first official document publicly delineating the contours of the proposed reform and nuances of the GST Model.

5. The First Discussion Paper, in

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2023 Supreme(SC) 1081

Section 19 of the Constitution (101st Amendment) Act preserves existing laws but does not confer unrestricted authority to amend post-GST transition, resulting in the invalidation of later amendments made by the States.

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