+ The Constitution (One Hundred & First Amendment) Act, 2016 has brought drastic changes in the federal taxing powers of the State; it has introduced a couple of Articles, amended a few, and done away with a few more.
+ In the above background, the States have enacted the respective State Goods and Services Tax Acts. These laws, among other things, (i) carry out the transition to GST; (ii) provide for the levy of GST on intra-State supplies within the State; and also (iii) modify/repeal the earlier State enactments which have to be modified/repealed because of transition to GST. Notable is the repeal of the VAT/Entry Tax/Luxury Tax, and so on, which earlier provided for levy of these taxes within the States.
+ Kerala State Goods and Services Tax Act, 2017 (Act 20 of 2017) received the Governor's assent on the 16th day of September 2017. It provides for, as the preamble suggests, levy and collection of tax on intra-State supply of goods or services, or both by the State of Kerala. As it is in pari materia with the Central Goods and Services Tax Act, it needs no much elaboration, but for one provision: Section 174, the customary 'repeal and saving' provision.
+ Often the legislature itself enacts a saving provision in the temporary Act, on the lines of Section 6 of the General Clauses Act, 1897. The usual presumption is that if such a saving provision is not present, then the proceedings began under the repealed Act ipso facto terminate as soon as the statute expires. Indeed, the expiry does not make the statute dead for all purposes even in the absence of a saving clause. The nature of the right or obligation emanating from the temporary Act may determine whether that right or obligation is enduring.
+ A saving clause is used to preserve what already exists; it cannot create new rights or obligations . Such a provision has no application to transactions completed at the time the savings provision comes into force. A savings provision is frequently included in legislation to establish beyond doubt that the provisions of that legislation are to be construed as additional to and not in derogation of existing law. The possibility of repeal by implication is thus excluded. And the operation of the common law is saved.
+ A question often arises, as it does here, about the legal proceedings about matters connected with a temporary Act: whether they can be continued or initiated after the Act has expired. The answer to such a question, G. P. Singh observes, again depends upon constructing the Act as a whole. The Legislature very often enacts in the temporary Act a saving provision similar in effect to section 6 of the general Clause Act, 1897.
+ The Constitutional Amendment Act has affected a few central enactments, as well as a few state enactments. Then, can we call them all -that is, the repealed ones or those getting repealed- temporary statutes? For "any provision of any law relating to tax on goods or services or on both" inconsistent with the Amendment Act cannot last beyond one year? Of course, before that one year, those inconsistent laws can be amended to render them compatible or altogether repealed. I am afraid the answer is a "No".
+ Then, can we call the Constitutional Amendment Act a temporary one? I am afraid this question, too, gets the same answer: No. Section 19 of the Amendment Act, at best, is a transitional provision.
+ Petitioners have argued that the enactments -Central or State-inconsistent with the Amendment Act have rendered themselves temporary statutes and perished on the temporal altar of one year. If this logic is accepted, every succeeding Act renders the previous Act a temporary one, obliterates its impact beyond a specified date, and avoids Section 6 of the General Clauses Act from applying itself. One enactment will not, rather cannot, make another enactment a temporary one; the same enactment can, for various reasons, render itself a temporary one. So a later enactment, inconsistent with the previous one, repeals that previous one either expressly or impliedly.
+ Repeal of statute results in nullification of the subordinate legislation the repealed statute has engendered . That is, when a statute is repealed, any by-law or statutory instrument made under that statue ceases to be operative unless there is a saving clause in the new statute preserving the old bylaw or statutory instrument.
+ We must also acknowledge that if a right has once been acquired under some statute, that right will not be taken away by the repeal of the statute under which it was acquired.
+ Therefore, more often than not, when an Act is repealed, a clause is expressly engrafted in the repealing Act that "this repeal shall not affect any right or liability acquired, accrued, or incurred.'' But the rule of law has been well entrenched on this point; so such a clause is apparently unnecessary, and only inserted ex abundanti cautela .
+ With effect from 01.04.2005 came KVAT Act into force. Then, on 08.09.2016 the CA Act was enacted. But it came into effect only from 16.09.2016. Section 19 of the CA Act saved a host of statutes holding field by then; those enactments include the KVAT Act. And the saving was for one year: 16.09.2017.
+ On 22.06.2017, the State of Kerala issued the Kerala State Goods and Services Tax Ordinance; it has heralded the new State GST regime. On 16.09.2017 came the Kerala State Goods and Services Tax Act, 2017 ( "KSGST Act" ). It has replaced the KSGST Ordinance. On the same day, however, the saving period prescribed under Section 19 of the CA Act, too, ended.
+ But, as a way out, the KSGST Act has its own Saving Clause: Section 174.
+ A saving, to me, is a device that preserves accrued, acquired rights and incurred liabilities under a statute that no longer exists. If the new statute that repeals an old one contains no saving clause, General Clauses Act steps in; Section 6 plays the role of a protector of the rights and liabilities under the repealed Act.
+ Section 19 is not a saving clause; any saving clause starts to operate from the day the previous Act is dead. Here, the CA Act has allowed various enactments-those that contradict it-to co-exist. Here, the repeal did not take place on 16.09.2016, when the CA Act came into force, but on 16.09.2017, when the one-year period ended. Saving Clause, in fact, if available, was needed from then on, not before. Indeed, Section 19 of the CA Act saves nothing beyond 16.09.2017.
+ The CA Act examined, we can notice that from 16.09.2016, Article 246 stood amended and modified in its operation; Article 246A was introduced. Section 2 of the CA Act signifies a drastic constitutional shift in the division of legislative powers: instead of division, it fosters amalgamation. Article 246A has no schedules.
+ Unfortunately, the whole argument is sought to be erected on a slippery slope. There is no denudation of legislative power, no obliteration of Entry 54 of List II. An entry's abrogation, as it were, would not ipso facto lead to the legislative denudation.
+ If we examine Section 173 of the KSGST Act, the State has amended a few taxing statutes that now stand affected by the CA Act. It has brought them in harmony with the Goods and Services Tax regime. On the other hand, Section 174 repealed and saved certain statutes.
+ The KVAT Act, the focal enactment for our discussion, finds a place in the table on both sides: amendment (u/s 173) and repealed (through section 174). The same enactment could not have been amended and repealed simultaneously; if so, it proves the idiom "have the cake and eat it too." We can either keep the cake or eat it; so is the case with an enactment: it can either be amended or repealed. For the amendment and repeal are mutually exclusive.
+ In fact, the KVAT Act stands repealed "except in respect of goods included in entry 54 of the State List of the Seventh Schedule to the Constitution, including the Goods to which the Kerala General Sales Tax Act, 1963" applies as per the KVAT Act.
+ Section 19 mandates that any inconsistent law relating to tax on goods and services in force in any State before 16.09.2016 (the commencement of the CA Act) shall continue to be in force "until amended or repealed by a competent Legislature or other competent authority". So the States were, first, required to amend the inconsistent laws to bring them in harmony with the CA Act. Otherwise, the States must repeal them. And they were given one year for achieving this. If the States do neither, those inconsistent Acts stand repealed.
+ I must hold that Section 19 of the CA Act is- transitional as it may have been-a repealing clause simpliciter, not a saving clause. Nothing more. That job of saving is done by Section 174 of the KSGST Act. Well and truly. So the repeal has not, as Section 174 elaborates, affected "the previous operation of the amended Acts or repealed Acts and orders or anything duly done or suffered thereunder." In other words, 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".
+ To sum up, for any tax to be imposed, it requires a taxable event triggering the levy and a taxable person to discharge it. So the petitioners contend that the levy, assessment, and collection must have been completed before 15.09.2017 under any tax regime which has been "subsumed" by the GST regime. Then, the question is, have GST laws under the CA Act subsumed all the State tax enactments, which earlier drew their legitimacy from the unamended Entry 54?
+ …I must add, on facts, that the petitioners' contention that the State has lost legislative power to enact a saving clause-Section 174-in the KSGST Act does not stand the judicial gaze. That power preserved, the concept of repeal, the scope of Section 19 of the CA Act, and the relevance of Section 6 of the General Clauses Act or Section 4 of the Kerala Interpretation and General Clauses Act pale into insignificance.
+ The impugned Notices have been issued for the alleged assessment of the escaped turnover. All the notices, the petitioners have maintained, pertain to the AYs 2010-2011 and 2011-2012, but were issued in March 2018 and beyond. The time for an assessment under Section 25 is five years for the relevant assessment years; so the notices are barred by time. Section 42(3) of the KVAT Act, according to them, does not save the limitation under Section 25 of the Act. They have also contended that composite notices are illegal and impermissible.
+ First, we must acknowledge one thing: none of the provisions repealed through the CA Act is central legislation. Each one is state legislation. And the General Clauses Act does not apply to the State Legislation . But, perhaps, Section 4 of the Kerala Interpretation and General Clauses Act could be roped in, if ever we need anything to be saved under a repealed enactment. We can, however, also accept here that neither Act needs to be invoked.
+ All the petitioners contend that the KSGST Act came into being because of the Constitutional Amendment. And that very Constitutional Amendment has put paid to many other enactments-for example, the Kerala Value Added Tax Act, 2003. So with the Entry 54 of List II unavailable for the State to incorporate Section 174 of the KSGST Act, the whole saving mechanism vis-à-vis transactions before 16.09.2017 crumbles.
+ I am afraid it is a fallacyon the petitioners' part to contend that the State lacks the legislative power to enact Section 174 of the KSGST Act . Article 246A is the special provision (if it can be called a provision) on the Goods and Services Tax. It empowers, as rightly contended by the learned Senior Counsel Shri Venkataraman, both the Union and the State, for the first time, to have simultaneous-not concurrent- powers to legislate on certain items. Indeed, concurrency yields to the doctrine of repugnancy, but simultaneous legislative power does not. That is, both the legislatures, say one from the Union and the other from the State, coexist-operate in the same sphere, subject to other constitutional safeguards.
