Point of Law: Section 19 of CAA 2016 confers power to repeal earlier enactments dealing with indirect taxes.

JUDGMENT :

S.V. Bhatti, J.

The writ petitioners are the appellants. The Writ Appeals are directed against the common judgment dated 11.01.2019 in W.P.(C) Nos.11335/2018 and batch. A few of the Writ Appeals are independently disposed of following the common judgment dated 11.01.2019. We refer to the appellants as ‘Dealer’ and respondents as ‘Revenue’ for consistency in referring to the parties.

2. This Court, in this common judgment, would be considering the challenge to Section 174(2) of the Kerala State Goods and Services Tax Act, 2017 (short ‘KSGST Act’). In the analysis of these jurisprudential and constitutional issues, we will advert to a few Sections in the Constitution (101st Amendment) Act, 2016 (for short ‘CAA 2016’); Kerala Value Added Tax Act, 2003 (for short ‘KVAT Act’); The General Clauses Act, 1977 (for short ‘GC Act’); the Constitution of India (for short ‘Constitution’); and the Kerala Interpretation of Statutes and General Clauses Act, 1897 (for short ‘KGC Act’). With effect from 01.07.2017, by Article 246A of the Constitution, the levy of tax on the supply of goods or services or both are made by the Centre and States depending on the exigible event. We would preface our consideration of issues with a short prelude on GST.

Goods and Services Tax

3. The GST is a tax on goods or services or both with a comprehensive and continuous chain of benefits from the producers and service providers’ level up to the retailer level.

The GST is essentially a tax on value addition at each stage, and, at each stage, a supplier of goods or services is permitted to avail set off through a tax credit mechanism. The GST paid on purchasing goods and services is available for set off on the GST to be paid on the supply of goods and services. In this chain of events, the final consumer will thus bear the GST charged by the last dealer in the supply chain, with a set of benefits at all the previous stages. Quoted from the Select Committee report 2015: “GST is a value-added tax levied across goods and services. The GST regime intends to subsume most indirect taxes under a single taxation regime. The broad objectives of GST are to widen the tax bills, eliminate cascading of taxes, increase compliance through lowering the overall tax burden on goods and services, and reduce economic distortions caused by inter-State variations in taxes levied and collected. ‘By doing away with latent or embedded taxes, it would provide leeway for the competitiveness of domestic industry vis-à-vis imports and in international markets. Unifying the tax structure across States, the new tax regime scheme would pave the way for a common national market for goods and services”. Selective and precise words could simplify the concept of GST, but implementation, as experience disclosed, is an arduous task.

4. The new tax proposed as GST needed a substantial overhaul of several indirect tax legislations operated both by the Centre and the States coupled with essential amendments to the Constitution to achieve the above objectives within the existing federal structure of the Constitution and division of fiscal powers between the Centre and the States. The new regime of GST is an amalgamation of several Union and State levies on the supply of goods or services or both, implemented as One Nation, One Tax. The proposal to introduce ‘One Nation One Tax’ through the GST regime encompasses a host of indirect taxes levied by the Centre and the States. The Empowered Committee of State Finance Ministers has designed the road map for implementing GST. Finally, on 19.12.2014, CAA Bill 2014 was introduced in the Lok Sabha. On 06.05.2015, the CAA Bill was passed by the Lok Sabha. The Rajya Sabha referred the Bill to the Select Committee and had the advantage of the Select Committee’s report dated 22.07.2015. Finally, on 03.08.2016, the Bill was passed by Rajya Sabha with the amen