The Telangana High Court has held that the Telangana Value Added Tax (Second Amendment) Act, 2017 to extend the limitation of four years to six years is ultra vires.
The Telangana Legislature enacted the Telangana Value Added Tax (Second Amendment) Act, 2017. It received the assent of the Governor on November 29, 2017, and was first published in the Telangana Gazette on December 2, 2017. The Telangana Value Added Tax (Second Amendment) Act, 2017 has been enacted to further amend the VAT Act. As per Section 1(2), the Telangana Value Added Tax (Second Amendment) Act, 2017 has come into force with effect from 17.06.2017. Accordingly, in Section 20 (4) and in Section 21 (3), (4), (6), (7), and (8), the words “four years” or “four years or six years” have been substituted by the words “six years”.
The petitioners have challenged the constitutionality of the Telangana Value Added Tax (Second Amendment) Act, 2017. The petitioners contended that the Telangana Value Added Tax (Second Amendment) Act, 2017 is ultra vires the Constitution of India and thus unconstitutional.
A bench comprising Chief Justice Ujjal Bhuyan and Justice P.Madhavi Devi has observed that “the ostensible objective of the Ordinance as could be discerned from the preamble is to save any investigation, assessment, recovery of dues, legal proceedings, etc., pending on the date of coming into force of the Constitution Amendment Act which is perfectly understandable and valid. But that does not mean that limitation across the board could be extended by way of amendment to initiate fresh proceedings, such as fresh revision proceedings, which otherwise had become time-barred.”
“We are in respectful agreement with the views expressed by the Kerala High Court in Baiju A.A. Intention of Parliament in ushering in the GST regime through the Constitution Amendment Act and enactment of the CGST Act and simultaneous enactment of various State GST Acts by the State Legislatures is to avoid multiplicity of taxes by subsuming those indirect taxes in a single tax called GST. It is in this context we have analyzed Section 19 of the Constitution Amendment Act. Viewed thus the amendments brought in by the Second Amendment Act, as discussed above, are wholly inconsistent with the scheme of the Constitution Amendment Act read with the CGST Act and the TGST Act,” the Court said.
In concluding the order, the Court held that “the Second Amendment Act is unconstitutional being devoid of legislative competence. It is accordingly declared as such. Consequently, the notices issued and orders passed under Section 32 (3) of the VAT Act which has been impugned in the present batch of writ petitions are hereby set aside and quashed.”
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