A Supreme Court Division Bench, in appeals stemming from judgments of Telangana, Gujarat, and Bombay High Court, rendered crucial judgments on the validity of VAT Amendment Acts in these states. They also addressed key issues related to Section 19 of the 101st Amendment to the Constitution, which facilitated the implementation of the Goods and Services Tax (GST).
Among other things, a central issue revolved around the state legislatures' authority to enact laws after 01.07.2017, which extended beyond the deadline stipulated in Section 19. This section mandated a one-year timeframe for aligning tax laws related to goods and services with the explicit provisions of the Amendment. It's important to note that the GST system was implemented on 01.07.2017.
Considering the facts and circumstances, the Bench of Justices S Ravindra Bhat and Aravind Kumar ruled:
The amendments made to the Telangana VAT Act and the Gujarat VAT Act after 01.07.2017 were rightfully deemed void due to a lack of legislative competence by their respective High Courts. However, the Bombay High Court's judgment was found to be in error and has been overturned. Furthermore, the amendment to the Maharashtra Act, which mandated a pre-deposit, is also declared void.
In the cases of Telangana and Gujarat, the respective states had filed appeals challenging the judgments that struck down the amendments they had introduced. In contrast, in the case of Maharashtra, where the Bombay High Court had upheld the contested amendment, the appellants were the taxpayers or assesses.
Section 19 of the Constitution (101st Amendment) Act, 2016, and Article 246A were established through constituent power and served as a transitional arrangement for a specific duration. They facilitated the coexistence of conflicting laws during the specified period, enabling state legislatures and Parliament to modify or eliminate these pre-existing laws.
It's worth remembering that the Amendment brought about a significant restructuring of the constitutional framework for taxation by both the Union and State Governments in India. Its primary purpose was to facilitate the implementation of the Goods and Services Tax (GST).
Given that this case primarily revolves around the interpretation of Section 19 of the Amendment Act, it is crucial to comprehend the text of this section, which is as follows:
Irrespective of the content within this Act, any provision in a law related to the taxation of goods, services, or both, in effect in any State just before this Act's commencement, which contradicts the Constitution as modified by this Act, will remain in effect until it is modified or abolished by a competent Legislature or another competent authority, or until one year has passed from the commencement of this Act, whichever occurs first.
Section 19 stipulated that laws regarding the taxation of goods, services, or both, which were in effect in any state right before the commencement of the Amendment Act, would persist until they were altered or annulled by a competent legislature or another competent authority. The alternative scenario was that, even without such amendments, these laws were to remain in force for a maximum of one year from the start of the amendment.
TAGS: Section 19 Tax on goods and services Constitutional premise Goods and Services Tax (GST) Interpretation.
