Bombay High Court
M/S. Bharat Udyog Limited And Anr vs State Of Maharashtra Thr. Dept. Of ... on 20 December, 2023
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
2023:BHC-AS:38892-DB
Tauseef 906-WP.15338.2023.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.15338 OF 2023
Bharat Udyog Ltd. & Anr. ...Petitioners
Versus
The State of Maharashtra & Anr. ...Respondents
WITH
INTERIM APPLICATION NO.18228 OF 2023
IN
WRIT PETITION NO.15338 OF 2023
WITH
WRIT PETITION NO.14430 OF 2023
WITH
INTERIM APPLICATION NO.18255 OF 2023
IN
WRIT PETITION NO.14430 OF 2023
WITH
WRIT PETITION NO.7501 OF 2023
WITH
INTERIM APPLICATION NO.18257 OF 2023
IN
WRIT PETITION NO. 7501 OF 2023
WITH
WRIT PETITION NO.15925 OF 2023
WITH
INTERIM APPLICATION NO.18253 OF 2023
IN
WRIT PETITION NO. 15925 OF 2023
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WITH
WRIT PETITION NO.15928 OF 2023
WITH
INTERIM APPLICATION NO.18251 OF 2023
IN
WRIT PETITION NO. 15928 OF 2023
WITH
WRIT PETITION (STAMP) NO.20136 OF 2021
WITH
INTERIM APPLICATION NO.18252 OF 2023
IN
WRIT PETITION NO. 20136 OF 2021
WITH
WRIT PETITION NO.15927 OF 2023
WITH
INTERIM APPLICATION NO.18256 OF 2023
IN
WRIT PETITION NO. 15927 OF 2023
WITH
WRIT PETITION NO.15923 OF 2023
WITH
INTERIM APPLICATION NO.18254 OF 2023
IN
WRIT PETITION NO. 15923 OF 2023
AND
WRIT PETITION NO.9624 OF 2021
Nilesh Ramniklal Pandya ...Petitioner
Versus
The State of Maharashtra,
through the Government Pleader & Ors. ...Respondents
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WITH
WRIT PETITION NO.1179 OF 2022
Mehul Transline Pvt. Ltd. ...Petitioner
Versus
The State of Maharashtra,
through the Government Pleader & Ors. ...Respondents
WITH
WRIT PETITION NO.1056 OF 2022
Hitesh Ramniklal Pandya ...Petitioner
Versus
The State of Maharashtra,
through the Government Pleader & Ors. ...Respondents
_________
Mr. Abhishek A. Rastogi a/w. Mr. Ashutosh Dash for
Petitioners/Applicants in WP/15338/2023 a/w IA/18228/2023,
WP/14430/2023, IA/18255/2023, WP/7501/2023, IA/18257/2023,
WP/15925/2023, IA/18253/2023, WP/15928/2023, IA/18251/2023,
WP/ST/20136/2021, IA/18252/2023, WP/15927/2023,
IA/18256/2023, WP/15923/2023, IA/18254/2023.
Mr. Mihir Mehta a/w. Mr. Jas Sanghavi and Mr. Yash Prakash i/b. M/s.
PDS Legal for the Petitioner WP/9624/2021, WP/1179/2022 &
WP/1056/2022.
Ms. Shruti D. Vyas, Addl. G. P. a/w. Ms. P. J. Gavhane, AGP for the
Respondent (State) in WP/15338/2023, WP/14430/2023,
WP/7501/2023, WP/15925/2023.
Ms. Shruti D. Vyas, Addl. G. P. a/w. Ms. P. N. Diwan, AGP for the
Respondent (State) in WP/15928/2023, WP/ST/20136/2021,
WP/15927/2023 & WP/15923/2023, WP/9624/2021, WP/1179/2022
& WP/1056/2022.
__________
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CORAM : G. S. KULKARNI,
JITENDRA JAIN, J.J.
DATE : 20th DECEMBER, 2023.
P.C. :-
1. These batch of petitions raise common issues of law, inasmuch
as, these petitions were filed assailing the Constitutional validity of
Section 26(6A) of the Maharashtra Value Added Tax Act, 2002 (for short
"2002 Act"), which was inserted by Maharashtra Amendment Act 31 of
2017 w.e.f. 15th April 2017. For convenience sub-sections (6A), (6B) and
(6C) of Section 26, is required to be noted which reads thus:-
"[(6A) No appeal against an order, passed on or after the commencement
of the Maharashtra Tax Laws (Levy, Amendment and Validation) Act,
2017, shall be filed before the appellate authority in first appeal, unless it
is accompanied by the proof of payment of an aggregate of the following
amounts, as applicable,-
(a) in case of an appeal against an order, in which claim against declaration
or certificate, has been disallowed on the ground of non-production of
such declaration or, as the case may be, certificate then, amount of tax, as
provided in the proviso to sub-section (6),
(b) in case of an appeal against an order, which involves disallowance of
claims as stated in clause (a) above and also tax liability on other grounds,
then, an amount equal to 10 per cent. of the amount of tax, disputed by
the appellant so far as such tax liability pertains to tax, on grounds, other
than those mentioned in clause (a),
(c) in case of an appeal against an order, other than an order, described in
clauses (a) and (b) above, an amount equal to 10 per cent. of the amount
of tax disputed by the appellant,
(d) in case of an appeal against a separate order imposing only penalty,
deposit of an amount, as directed by the appellate authority, which shall
not in any case, exceed 10 per cent. of the amount of penalty, disputed by
appellant:
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Provided that, the amount required to be deposited under clause (b) or, as
the case may be, clause (c), shall not exceed rupees fifteen crores.
(6B) No appeal shall be filed, before the Tribunal, against an order, which
is passed on or after the commencement of the Maharashtra Tax Laws
(Levy, Amendment and Validation) Act, 2017, unless it is accompanied by
the proof of payment of an aggregate of following amounts, as applicable,
--
(a) in case of an appeal against an order, in which claim against declaration
or certificate has been disallowed on the grounds of non-production of
such declarations or, as the case may be, certificates then, amount of tax, as
provided in the proviso to sub-section (6),
(b) in case of an appeal against an order, which involves disallowance of
claims as stated in clause (a) above and also tax liability on other grounds,
then, an amount equal to 10 per cent. of the balance amount of disputed
tax, so far as such tax liability pertains to tax, on grounds, other than those
mentioned in clause (a),
(c) in case of an appeal against an order, other than an order, described in
clauses (a) and (b) above, an amount equal to 10 per cent. of the balance
amount of disputed tax,
(d) in case of an appeal against any other order, an amount, as directed by
the Tribunal:
Provided that, the amount required to be deposited under clause (b) or, as
the case may be, clause (c), shall not exceed rupees fifteen crores.
Explanation.-- For the purposes of clause (b) or clause (c) of sub-section
(6B), the expression, "balance amount of disputed tax" shall mean an
amount of disputed tax, which remains outstanding, after considering the
amount paid, as directed by the appellate authority in first appeal under
clause (b) or, as the case may be, clause (c), respectively of sub-section
(6A).
(6C) The appellate authority or, as the case may be, Tribunal shall stay the
recovery of the remaining disputed dues, in the prescribed manner, on
filing of an appeal under sub-section (6A) or, as the case may be, sub-
section (6B).]"
2. It may be observed that the Central Goods and Services Tax
and Maharashtra Goods and Services Tax Act, 2017 (for short "CGST &
MGST Act, 2017") came to be enacted and brought into force from 1 st
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July 2017, in view of the Constitution 101 st Amendment Act, 2017, which
was notified on 16th September 2017. By enactment of the CGST &
MGST Act, 2017, the 2002 Act stood subsumed in these GST
legislations.
3. On such change in legislative regime, in regard to the validity of
the provisions of requirement of pre-deposit as introduced by sub-section
(6A), (6B) and (6C) to Section 26 of the 2002 Act, as incorporated by
Maharashtra Act 31 of 2017 w.e.f. 15th April 2017 had fell for
consideration of this Court in Anshul Impex Pvt. Limited Vs. State of
Maharashtra1. The said proceedings came to be decided on 28th
September 2018, wherein this Court held such an amendment to be
inapplicable to the years prior to the amending act.
4. It appears that subsequent to the decision of this Court in
Anshul Impex Pvt. Ltd. (supra), the State amended the 2002 Act by an
ordinance namely Maharashtra Ordinance No.VI of 2019 published in
the Government Gazette on 6th March 2019, whereby an explanation
came to be inserted below sub-section (6C) of Section 26 with effect from
15th April 2017. The said explanation is also required to be noted which
reads thus:-
"(6C) The appellate authority or, as the case may be, Tribunal shall stay
the recovery of the remaining disputed dues, in the prescribed manner, on
1 (STA No.2 of 2018 dt. 28.09.2018)
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filing of an appeal under sub-section (6A) or, as the case may be, sub-
section (6B).]
[Explanation.--For the removal of doubts, it is hereby clarified that, the
provisions of sub-sections (6A), (6B) and (6C) shall be applicable for any
appeal, against all such orders, referred to in those sub-sections,
irrespective of the period to which the order, appealed against, relates or
irrespective of the date on which the proceedings in respect of such order
have commenced.]"
(emphasis supplied)
5. Such amendment as brought about by the ordinance was
subsequently replaced by an Act of the legislature, namely the
Maharashtra Tax Laws (Amendment and Validation) Act 2019 as notified
on 9th July 2019. As seen from the explanation below sub-section (6C) of
section 26, it had the effect of clarifying that, the provisions of sub-
sections (6A), (6B) and (6C) shall be applicable for any appeal, against all
such orders, referred to in those sub-sections, irrespective of the period to
which the order, appealed against, relates or irrespective of the date on
which the proceedings in respect of such order had commenced.
6. It appears that the such amendment as brought about to the
2002 Act by the 2019 Act was challenged before this Court in the case of
United Projects Vs. State of Maharashtra 2. Such proceedings were
referred for adjudication before a full bench of this Court, which rendered
its judgment on 12th July 2022, whereby it was held that the State
Government had legislative competence to remove the substratum of the
2 WP/ST/11589/2021 & WP/13754/2018
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foundation of a judgment retrospectively, namely as to what was held by
the Division Bench in the case of Anshul Impex Pvt. Ltd. (supra). It was
held that the State Government was empowered to carry out amendment
suitably to amend the law by use of appropriate phraseology as pointed
out by the Court in any judgment and by amending the law inconsistent
with a law decreed by the Court, so that the defects which were pointed
out were never on the statute for effective enforcement of law. It was also
held that there was no judicial encroachment directly or indirectly by the
State Government by inserting the impugned amendment which were the
subject matter of the said petitions.
7. On such backdrop as also a similar legislative amendments were
made by other States, the proceedings were taken before the Supreme
Court which came to be decided by the Supreme Court on a batch of
appeals in the case of The State of Telangana & Ors. Vs. Tirumala
Constructions3. The proceedings arising from the decision of the Full
Bench of the Bombay High Court were also part of the said proceedings,
namely the challenge to the decision of the full bench of this Court in
United Projects Vs. State of Maharashtra (supra). In adjudicating such
issues, insofar as the decision of this Court in United Projects Vs. State of
Maharashtra (supra) was concerned, the Supreme Court held that in view
3 2023 (10) TMI 1208 SC
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of the conclusions as reached on interpretation of the Constitutional
amendment and also the provisions of Article 246A of the Constitution,
the judgment of the Bombay High Court in the United Projects Vs. State
of Maharashtra (supra) was required to be held to take an erroneous view
and accordingly the same was set aside. The relevant observations in
regard to the Supreme Court considering the Maharashtra position can be
found in paragraph Nos.114 and 115, as also in the conclusion which are
required to be noted which reads thus:-
"114. As far as the Maharashtra appeals are concerned, the assessees'
grievance is that the retrospective amendments, made to the Maharashtra
VAT Act, were void. On 15.04.2017, the State published Maharashtra Tax
Laws (Levy, Amendment and Validation) Act 2017 in the Government
Gazette thereby amending various provisions of various Acts. In
paragraph No. 26 of the MVAT Act, 2002, Sections 6(A), 6(B) and 6(C)
were inserted. The effect of these was to require a mandatory pre-deposit
of 10% of the disputed tax liability. This was challenged, and the Nagpur
Bench of the Bombay High Court in Anshul Impex Pvt. Ltd. Vs. State of
Maharashtra STA No.2/2018 in a Judgment delivered on 28 th September,
2018 (hereinafter, "Anshul Impex Private Ltd") held the amendment
inapplicable to a lis which had started in 2011. The state again amended
the enactment, through ordinance i.e. Maharashtra Ordinance No.VI of
2019, published in the Government Gazette on 6 th March, 2019. By the
Ordinance the State of Maharashtra inserted an explanation w.e.f. 15 th
April 2017. According to the state, the explanation was inserted for the
purpose of removal of doubts, in view of the Judgment of Nagpur Bench
of the court in Anshul Impex Private Ltd. (supra). On 9 th July 2019, the
Maharashtra Tax Laws (Levy, Amendment and Validation) Act 2019 was
enacted. It was published in the Government Gazette on 9 th July 2019.
The Ordinance was replaced by the enactment of the State Legislature
inserting various provisions including the said explanation to Section 26
(6C) of the MVAT Act, 2002. The explanation had the effect of clarifying
that the pre-deposit requirements applied to pre-2017 appeals and
revisions. This was challenged. The High Court, by a Full Bench ruling
United Projects Vs. State of Maharashtra (Writ Petition (Stamp) No.11589
of 2021, and Writ Petition No.13754 of 2018), decided on 12.07.2022
upheld the amendment. It was held that
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"The State Government has legislative competence to remove the
substratum of foundation of a Judgment retrospectively. The State
Government is empowered to carry out amendment suitably to amend the
law by use of appropriate phraseology removing the defects pointed out
by the Court in any judgment and by amending the law inconsistent with
the law declared by the Court so that the defects which were pointed out
were never on the statute for effective enforcement of law. There is no
judicial encroachment directly or indirectly by the State Government by
inserting amendment which are the subject matter of these petitions as
sought to be canvassed by the learned senior counsel for the petitioner.
In our view curing the defect pointed out by any Court through a
judgment or simplicitor removing such defects does not amount to
encroachment directly or indirectly or overruling the view taken by the
Court or overreaching the powers of the State Government by nullifying
the effect of the law laid down by the Court."
115. In the opinion of this court, there is no quarrel with the proposition
that a legislative body is competent to enact a curative legislation with
retrospective effect. Yet, the same vice that attaches itself to the Gujarat
amendment, i.e. lack of competence on the date the amendment was
enacted i.e. in this case, 09.07.2019, the Maharashtra legislature ceased to
have any authority over the subject matter, because the original entry 54
had undergone a substantial change, and the power to change the VAT
Act, ceased, on 01.07.2017, when the GST regime came into effect.
Therefore, for the same reasons, as in the other cases, the amendments to
the Maharashtra VAT Act cannot survive.
VI. Conclusions
116. In view of the foregoing discussion and conclusions, the findings of
the court in these cases are:
(i) .....
(ii) .....
(iii) .....
(iv) The amendments in question, made to the Telangana VAT Act, and
the Gujarat VAT Act, after 01.07.2017 were correctly held void, for want
of legislative competence, by the two High Courts (Telangana and Gujarat
High Court). The judgment of the Bombay High Court Court is, for the
above reasons, held to be in error; it is set aside; the amendment to the
Maharashtra Act, to the extent it required pre-deposit is held void. "
8. It is on the above backdrop, the proceedings are before us.
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9. Mr. Rastogi would submit that in regard to the substantive
challenge as raised in this petition, the issue in regard to the pre-deposit
would stand concluded/covered by the decision of the Supreme Court in
the case of The State of Telangana & Ors. Vs. Tirumala Constructions
(supra). It is however submitted that the Petitioners in these petitions are
yet to file their appeals before the Appellate Authority/Tribunal and now
the Petitioners intend to file their respective appeals alongwith the delay
condonation applications as also applications for waiver of pre-deposit. In
view of the decision of the Supreme Court in The State of Telangana &
Ors. Vs. Tirumala Constructions (supra), it is submitted that the
Petitioners would take further steps to file the appeals within a period of
four weeks from today along with appropriate applications for
condonation of delay and for waiver of pre-deposit.
10. In the facts and circumstances of the case and considering the
finality now having reached in regard to the issue of pre-deposit being put
to rest by the decision of the Supreme Court in The State of Telangana &
Ors. Vs. Tirumala Constructions (supra), we are of the opinion that the
request of the Petitioners to approach the Appellate Authority/Tribunal
needs to be accepted. We accordingly dispose of these petitions by the
following order:-
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ORDER
(i) The Petitioners shall approach the Appellate
Authority/Tribunal by filing their respective appeals along
with applications praying for condonation of delay and
also waiver of pre-deposit within a period of four weeks
from today. If such appeal alongwith application are filed
as permitted such proceedings be considered by the
Appellate Authority/Tribunal in accordance with law and
appropriate orders be passed on the application as also on
the appeals.
(ii) All contentions of the parties on such proposed
proceedings are expressly kept open.
(iii) Petitions are disposed of in the aforesaid terms. No costs.
(iv) In view of disposal of these petitions, the above interim
applications do not survive and they are also disposed of.
11. At this stage, we are informed by Mr. Rastogi that there are
demand notices which are issued to some of the Petitioners, if that be so,
the Petitioner is free to move an appropriate application and seek
appropriate interim relief in the appeals which are proposed to be filed.
However, as we have permitted the Petitioners to file an appeal within a
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period of four weeks, we direct the department not to take any further
steps in regard to such demands for a period of four weeks from today.
Such limited protection as granted by us is merely to enable the
Petitioners to approach the Tribunal/Appellate Authority, which ought
not to be construed, in any manner, as an expression on the merits of the
case of the Petitioners, which would be for the Appellate
Authority/Tribunal to decide.
[JITENDRA JAIN, J.] [G. S. KULKARNI, J.]
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