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2023 Supreme(Online)(SC) 13977
S. RAVINDRA BHAT, J
THE STATE OF TELANGANA & ORS. – Appellant
Versus
M/S TIRUMALA CONSTRUCTIONS – Respondent
CIVIL APPEAL NO(S). 1628 OF 2023 | 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
For the Appellants/Petitioners: Mr. Arvind Datar, Mr. Balbir Singh
For the Respondents: Mr. Kapil Sibal, Mr. S. Ganesh, Mr Nankani, Mr Soparkar, Mr. Sujit Ghosh
The legislative competence of states to amend taxation laws under the 101st Amendment is limited to bringing existing laws in conformity with the GST framework within specified time after its enforcement.
Headnote:(A) Constitution (101st Amendment) Act, 2016 - Section 19 - Amendment of local VAT Act by Telangana state - Legislative competence questioned due to lack of authority post-GST implementation - High Court rightly struck down amendments for being invalid and arbitrary; Gujarat VAT amendment also invalid as enacted post-GST implementation - Maharashtra VAT amendments upheld earlier, invalidated by this court as without competence. (Paras 116-117)
(B) Legislative powers - Constitutional provisions must provide both sources and limits for power - Legislative authority maintained by Section 19, allowing amendments until one year or implementation of new GST law; extends to amendments within legislative competence. (Paras 16, 27, 29)
(C) Curative legislation - Retrospective effect of amendments valid if within legislative competence but not after cut-off date for GST. (Paras 12, 34, 39)
| Table of Content |
|---|
| 1. procedural background of appeals (Para 1 , 14 , 15) |
| 2. arguments by the state regarding amendment powers (Para 17 , 20 , 21) |
| 3. analysis of legislative competence under gst framework (Para 18 , 19 , 70 , 99) |
| 4. arguments by respondents on the scope of section 19 (Para 36 , 37 , 41) |
| 5. court's conclusion on amendments' validity (Para 72) |
JUDGEMENT
S. RAVINDRA BHAT, J. Table of Contents I. Background and relevant provisions ..................................................................................... 2 II. Facts ................................................................................................................................ 9 III. Arguments of the appellant-states .................................................................................... 11 IV. Arguments of the respondent-assessees ............................................................................ 20 V. Analysis and reasoning ................................................................................................... 33 A. Interpretation of Section 19 ............................................................................................. 35 B. Whether the power of amendment or repeal is subject to limitations under Section 19 .... 40 C. Validity of Telangana Act tested from the touch stone of its originating as an ordinance .. 50 D. Gujarat and Maharashtra Acts ........................................................................................ 57 VI. Conclusions .................................................................................................................... 63
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, 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 2, 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 In
