{"id":212450,"date":"2019-03-27T16:00:08","date_gmt":"2019-03-27T10:30:08","guid":{"rendered":"https:\/\/www.scconline.com\/blog\/?p=212450"},"modified":"2019-03-29T15:18:37","modified_gmt":"2019-03-29T09:48:37","slug":"ker-hc-s-174-of-kerala-sgst-act-which-saves-proceedings-arising-under-kerala-vat-act-held-valid","status":"publish","type":"post","link":"https:\/\/www.scconline.com\/blog\/post\/2019\/03\/27\/ker-hc-s-174-of-kerala-sgst-act-which-saves-proceedings-arising-under-kerala-vat-act-held-valid\/","title":{"rendered":"Ker HC | S. 174 of Kerala SGST Act which saves proceedings arising under Kerala VAT Act held valid"},"content":{"rendered":"

Kerala High Court:\u00a0<\/strong>Dama Seshadri Naidu, J., dismissed a set of writ petitions challenging the legislative competence of the State of Kerala to enact Section 174 of the Kerala State Goods and Services Tax Act, 2017.<\/p>\n

Section 174 is a saving provision brought about by the State Legislature to save the transactions under the State’s various pre-GST enactments, including the Kerala Value Added Tax Act, 2003. The constitutional validity was challenged in the present petition.<\/p>\n

All the petitioners were dealers registered under the KVAT Act. Proceedings arising from assessments for earlier years (2011-12\/2012-13\/2013-14) were reopened against them. They filed the present petitions questioning the notices issued against them. Notably, the Constitution (101st\u00a0 Amendment) Act ushered in the Goods and Services Tax regime which replaced the then existing sales tax regime. It led to a federal fiscal experiment by engendering a host of enactments including the Central GST Act, 2017 and various State GST Acts. Earlier, the States imposed sales tax under Entry 54 List II of the Seventh Schedule of the Constitution.<\/p>\n

The petitioners insisted that Section 19 of the 101st Amendment Act allowed “interim or temporary continuation” of all the Acts made earlier under Entry 54 only upto 16-09-2017. They asserted that the KVAT Act became a dead letter from 16-09-2017. Regarding Section 174, petitioners maintained that Section 19 of the 101st Amendment Act repealed all of the State laws inconsistent with GST laws; and that the State was denuded of the legislative power to enact Section 174.<\/p>\n

The core question before the Court was: “Does the State have the legislative competence to enact Section 174 and save the past taxation events- comprising levy, assessment, and recovery– when Entry 54, List II, which is the field of legislation empowering the State, stood omitted permanently with effect from 16-09-2017?”<\/p>\n

Goods and Services Tax — Constitutional Law and Policy\u00a0<\/strong><\/em>by Tarun Jain (published by EBC)\u00a0<\/strong>which culls out unique aspects of GST’s design was copiously quoted by the High Court during its discussion on the origins of GST and the State enactments. A wholesome discussion was made including topics such temporary and permanent legislation, repeal of statutes, sunset clause, etc. The Court also cited\u00a0Interpretation of Statutes\u00a0<\/em><\/strong>by Vepa P. Sarathi (published by EBC)\u00a0<\/strong>which notes that the distinction between an amendment and repeal is one of degree.<\/p>\n

After perusing the relevant sections and articles at length, the Court held that Section 19 of 101st Amendment Act is simply a repealing clause which reduced the remit of KVAT Act. And Section 174 of the KGST Act saved “the previous operation of the amended Acts or repealed Acts (Including KVAT Act) and orders or anything duly done or suffered thereunder”. In other words, it was held, the repeal has not affected “any right, privilege, obligation, or liability acquired, accrued or incurred under the Amended Acts or repealed Acts or orders under such repealed or amended Acts. Nor has it affected “any tax, surcharge, penalty, fine, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Acts or repealed Acts. Collaterally, it follows that “all judicial and quasi-judicial proceedings arising from the above contingencies also stand saved.”<\/p>\n

It was held that the State of Kerala did not lack the legislative power to enact Section 174 of KSGST Act and it is constitutionally valid. It was noted that after the 101st Amendment Act came into force, the State legislative powers have not been taken away; they have been on the contrary; constitutionally permitted to be shared with the Union Government.<\/p>\n

Lastly, it was clarified that presently the Court touched only the issue of constitutional validity. Other issues including that of limitation remained opened, for which the petitioners had an alternative efficacious remedy.<\/p>\n

Observing as such the Court found no merits in the petition and accordingly dismissed the same. [Sheen Golden Jewels (India) (P) Ltd. v. STO, 2019 SCC OnLine Ker 973<\/b><\/a>, decided on 11-01-2019]<\/p>\n","protected":false},"excerpt":{"rendered":"

Kerala High Court:\u00a0Dama Seshadri Naidu, J., dismissed a set of writ petitions challenging the legislative competence of the State of Kerala to <\/p>\n","protected":false},"author":8808,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3,10],"tags":[34542,34544,34543,34541],"class_list":["post-212450","post","type-post","status-publish","format-standard","hentry","category-casebriefs","category-highcourts","tag-constitution-101st-amendment-act","tag-entry-54-list-ii-of-seventh-schedule","tag-quasi-judicial-proceedings","tag-section-174-of-the-kerala-state-goods-and-services-tax-act"],"yoast_head":"\nKer HC | S. 174 of Kerala SGST Act which saves proceedings arising under Kerala VAT Act held valid | SCC Times<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" 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