Transitional savings under GST law validly preserve pre-GST VAT powers, including investigation and summons for earlier periods.

Section 78 of the Maharashtra GST Related Laws (Amendments, Validation and Savings) Act, 2017 was upheld as a valid transitional saving provision preserving the Maharashtra Value Added Tax Act, 2002 and its subordinate legislation for pre-GST periods. The Court held that Article 246A and Article 366(12A) do not render such savings inconsistent with the Constitution, and that the State Legislature could validly continue prior VAT , including rules, notifications, appointments, delegations and proceedings, for liabilities arising before the appointed day. The challenge to investigation and summons issued under the VAT regime therefore failed.

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Issues: Whether Section 78 of the Maharashtra Goods and Services Tax Related Laws (Amendments, Validation and Savings) Act, 2017 validly saved the operation of the Maharashtra Value Added Tax Act, 2002 and the powers exercised thereunder after the introduction of GST, including investigation and summons issued for periods prior to the appointed day.

Analysis: Article 246A of the Constitution of India confers legislative competence on Parliament and the State Legislature to make GST laws, while Article 366(12A) defines GST. The transitory provision in Section 19 of the Constitution (One Hundred and First Amendment) Act, 2016 continues pre-existing State tax laws until amended or repealed by a competent legislature or until one year from commencement, whichever is earlier. Section 78 of the State GST savings legislation expressly preserves the earlier VAT law, together with rules, regulations, orders, notifications, forms, certificates, notices, appointments and delegations issued under it, for proceedings relating to periods before the appointed day. The saving provision was enacted by a competent legislature within the relevant time and was held to be neither inconsistent with the Constitution as amended nor invalid for want of express reference to subordinate legislation.

Conclusion: Section 78 was upheld as valid, and the challenge to the investigation and summons under the VAT regime failed.

Ratio Decidendi: A validly enacted transitional savings provision may continue the operation of an earlier tax statute and its subordinate legislation for pre-commencement liabilities and proceedings, provided it is not inconsistent with the Constitution as amended.

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