In Brief
The Supreme Court examined whether state legislatures retained power to amend state VAT laws after the Constitution (101st Amendment) Act, 2016 came into force. The Court held that Section 19 of the Amendment Act, read with Article 246A, expresses sovereign legislative power allowing states and Parliament to amend or repeal existing tax laws during a one-year transitional period. However, after July 1, 2017, when the GST regime commenced and Entry 54 of the State List substantially changed, state legislatures lost competence to amend VAT laws. Amendments to Telangana and Gujarat VAT Acts made after this date were void for lack of legislative competence. The Maharashtra amendment's pre-deposit requirement was similarly struck down. Retroactive amendments and curative legislation cannot restore competence lost by operation of the Constitution.
The lawyer headnote and full judgment text are available to registered users.