The Kerala High Court has held that the amendment to the Kerala Value Added Act in the year 2018 after the introduction of the GST Act is invalid due to legislative incompetence.
The assessee contended that the new grounds now canvassed to trace competence to amend KVAT Act through Finance Act 5/2018 are considered in detail by the Gujarat and Telangana High Courts. It was further contended that the Supreme Court in M/s. Mohit Minerals Pvt. Ltd case has referred to the very conclusion now under challenge before this court in the intraCourt appeal. Therefore, any other view on legislative competence to amend the KVAT Act after CAA 10.09.2016 and GST Act 22.06.2017 is impermissible and would be contrary to two persuasive judgments of Gujarat and Telangana High Courts and the consideration by the Supreme Court in M/s.Mohit Minerals Pvt. Ltd case.
Justice S.V. Bhatti and Justice Basant Balaji observed that “It is not the case of appellants that the competence to legislate is directly derived from Entry 54 as it stood in 2018. But the attempt is to trace the power to Article 246A of the Constitution of India.”
Concluding the order, the High Court held that “We have taken note of the applicable amendments introduced by CAA to the Constitution of India, corresponding changes in the schedules, and taken note of the repeal of the KVAT Act and the extent of operation of Section 174 of Kerala Goods and Services Taxes Act. The legislative competence to amend KVAT Act through Finance Act 5/2018 is not established. In our view, and from the scope and scheme of powers enjoyed by the Centre and the State as regards the supply of goods and services, power to amend the KVAT Act is unavailable. The principle laid down in the A Hajee Abdul Shukoor and Company case is also applied by the Gujarat and Telangana High Courts. The amendment to KVAT Act by Finance Act 5/2018 is without competence. We are in complete agreement with the view taken in the judgment under appeal i.e., Baiju A A case.”
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