Summary
The Supreme Court held that Section 19 of the 101st Constitutional Amendment, read with Article 246A, preserved power to amend existing indirect-tax laws during the transition; it was not confined to removing inconsistencies. That power ended with the GST regime. Telangana’s later enactment could not derive competence from an earlier ordinance, and retrospective operation could not save Gujarat’s or Maharashtra’s later amendments. The States’ appeals failed and the Maharashtra assessees succeeded.
Issues
- Whether transitional amendment power was confined to aligning existing laws with the amended Constitution.
- Whether an earlier ordinance or retrospective commencement preserved legislative competence after the transition.
- Whether the challenged VAT amendments in Telangana, Gujarat and Maharashtra were valid.
Provisions considered
- Section 19, Constitution (One Hundred and First Amendment) Act, 2016The constituent transitional provision preserved existing inconsistent laws and power to amend or repeal them for its limited duration, ending earlier upon the new GST regime. (¶¶ 72–97, 116)
- Article 246A; Seventh Schedule, List II, Entry 54, Constitution of IndiaRead with Section 19, Article 246A supported transitional changes but did not sustain the challenged post-transition VAT amendments concerning the former legislative field. (¶¶ 90–97, 105–116)
- Article 213, Constitution of IndiaAn ordinance’s temporary force did not eliminate the need for legislative competence when its provisions were subsequently enacted into law. (¶ 98–107)
Held
- Section 19 was an exercise of constituent power, despite remaining outside the Constitution’s body. It preserved the existing fiscal regime while authorising amendment or repeal during a limited transition. (¶ 72–83)
- During that transition, the amendment power was not restricted to merely bringing laws into conformity with GST. It extended to necessary changes addressing administration and unforeseen eventualities, subject to constitutional and temporal limits. (¶¶ 90–97, 116(i)–(iii))
- The Telangana legislature needed competence when it enacted the replacement law. An ordinance issued while competence existed did not make the later enactment relate back so as to cure the absence of competence after GST took effect. (¶ 98–105)
- The savings argument did not sustain notices and proceedings founded on the invalid extension. An ordinance supplied no general enduring-rights theory permitting such action to survive the loss of legislative competence. (¶ 101–106)
- Gujarat’s retrospective extension could not be saved merely as curative legislation: competence had to exist on enactment, and retroactivity did not restore a lost legislative field. (¶ 108–113)
- The same defect affected Maharashtra’s later amendment concerning mandatory pre-deposit. The Bombay High Court’s contrary ruling was set aside and the challenged amendment to that extent held void. (¶ 114–116)
- The Telangana and Gujarat judgments invalidating the challenged amendments were sustained; the States’ appeals were dismissed and the Maharashtra assessees’ appeals allowed. (¶ 116–117)
Result
Telangana and Gujarat appeals and associated State special-leave petitions dismissed. Maharashtra assessees’ appeals allowed; Bombay High Court judgment set aside and the challenged pre-deposit amendment held void. No costs.