Goa Value Added Tax (12th Amendment) Act, 2020 Defies The Doctrine Of Separation Of Powers: Bombay High Court

The Bombay High Court has held that the Goa Value Added Tax (12th Amendment) Act, 2020, is an impermissible judicial override defying the doctrine of separation of powers.

The bench of Justice M. S. Sonak and Justice Bharat P. Deshpande has observed that by simply not issuing sanction orders or delaying the issue of sanctions indefinitely or unreasonably, the state cannot arbitrarily deprive the parties' interests by way of compensation. A deprivation would fall foul of Articles 14, 265, and 300-A of the Constitution of India.

The petitioner is a registered dealer in Panaji ward under the Goa Value Added Tax Act, 2005 (GVAT Act) involved in selling and purchasing iron ore in the State of Goa.

The Assessing Officer assessed the petitioner's returns for 2011–12 and, by an assessment order dated December 10, 2014, determined an amount of Rs. 3,08,24,730 as refundable to the petitioner due to the excess tax paid by the petitioner.

In an order dated December 6, 2017, the Commissioner of Commercial Taxes sanctioned a refund of Rs. 2,49,05,784, and the amount was actually refunded on December 14, 2017. However, no statutorily prescribed interest at the rate of 8% per year was paid to the petitioner.

After raising several demands for interest, the petitioner instituted a Writ Petition, which was allowed by a judgment and order dated November 19, 2019. Accordingly, the Court issued a mandamus directing the respondents to pay the petitioner an amount of Rs. 54,62,665 together with interest at the rate of 4% per annum to be computed from December 14, 2017 until the date of actual payment within eight weeks.

The respondents failed to honor the mandamus within the timeline or beyond. At the belated stage, the respondents filed a misc. Civil application seeking an extension, and an extension of four weeks was granted by order dated February 24, 2020.

A reference was made to the Goa Value Added Tax Act, 2005, and based on that, it was submitted that the Court's decision in the Writ Petition and the mandamus issued therein "has been rendered ineffective due to the removal of the bases on which the said order was rendered".

The petitioner contended that the amendment is an instance of impermissible legislative override and infringes the doctrine of separation of powers. The fundamental bases of the judicial decisions sought to be nullified or declared ineffective remain substantially untouched by the impugned Amendment Act. Even the Statement of Objects and Reasons to the Amendment Act admits that the Amendment Act was introduced simply because the interpretation in the decisions of this Court was "different from the interpretation or intentions of the government of the provisions of the Act, regarding payment of interest on refund of tax".

The petitioner contended that the doctrine of separation of powers is accepted as one of the essential facets of the rule of law under our constitutional scheme. Therefore, based upon the Amendment Act, the state cannot simply refuse to follow the binding judicial decisions of the Court, particularly after the Special Leave Petitions against it were dismissed by the Supreme Court.

The department submitted that the GVAT Act, 2005, was not entirely repealed by Section 174 of the Goa Goods and Services Tax Act, 2017. Therefore, its amendment was validly brought about by the Amending Act. The repeal provision contains a saving clause that continues to govern the party's rights after repeal. He offered that in such a situation, the state legislature could amend the repealed law with retrospective effect to govern the saved transactions.

The court held that even independent of the validity or applicability of the Amendment Act, a mandamus in terms of the earlier judicial decisions must be reissued for the payment of interest on delayed refunds.

"The respondents are directed to deposit in this court the amounts in terms of the referred earlier decisions together with interest within four weeks from today. Upon deposit, the petitioners would be at liberty to withdraw the said amounts after furnishing bank details to the Registry so that the amounts can be directly transferred to their bank accounts," the court said.

Case Title: Rohan Lobo Versus State Of Goa

Case No.: Writ Petition No. 23 Of 2021

Citation: 2023 LiveLaw (Bom) 210

Date: 20.04.2023

Counsel For Petitioner: Yogesh Nadkarni

Counsel For Respondent: Sudesh Usgaonkar

Click Here To Read The Order