GST transition and VAT repeal: Telangana HC held the extended limitation amendment lacked legislative competence and was ultra vires.

After the GST constitutional amendments, the State's VAT legislative field was confined to the substituted Entry 54 for petroleum products and alcoholic liquor for human consumption, while Article 246A created a separate GST field. The Telangana High Court held that section 19 of the Constitution (One Hundred and First Amendment) Act, 2016 was only transitional and did not confer fresh power to amend the repealed VAT law for general goods. Section 174 of the Telangana GST Act, 2017 also saved the VAT regime only to the limited extent constitutionally retained. The Second Amendment Act extending assessment limitation from four years to six years was therefore ultra vires, and the notices and revision orders based on that extension were liable to be set aside.

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Issues: Whether the Telangana Value Added Tax (Second Amendment) Act, 2017, which extended the limitation period for assessments, reassessments and revisions from four years to six years, was constitutionally valid after the GST constitutional amendments and the repeal of the VAT regime, and whether notices and revision orders founded on the extended limitation could survive.

Analysis: The substituted Entry 54 of List II, read with Article 246A inserted by the Constitution (One Hundred and First Amendment) Act, 2016, truncated the State's legislative field to the specified petroleum products and alcoholic liquor for human consumption, while Article 246A created a distinct GST field requiring simultaneous levy by Parliament and the States. Section 19 of the Constitution (One Hundred and First Amendment) Act, 2016 was held to be only a transitional provision that preserved inconsistent pre-existing laws for a limited period; it did not confer fresh legislative power to amend the repealed VAT law beyond the limited field retained by the Constitution. Section 174 of the Telangana Goods and Services Tax Act, 2017 repealed the VAT Act except to the extent saved by the substituted Entry 54, reinforcing that the State could not unilaterally amend the VAT statute for general goods after the GST constitutional change. The Ordinance of 17.06.2017 could not supply constitutional competence to the later Amendment Act, because legislative competence must be traceable to the Constitution, not to an earlier ordinance or enactment.

Conclusion: The Second Amendment Act was ultra vires for want of legislative competence, and the notices and revisional orders issued by invoking the extended six-year limitation were liable to be set aside.

Ratio Decidendi: After the GST constitutional amendments, a State cannot further amend a repealed VAT law for general goods beyond the limited field retained in the substituted State List entry, and a transitional clause preserving inconsistent laws does not itself create legislative competence.

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