Kerala High Court has held that Kerala VAT Act does not stand fully repealed with the 101st constitutional amendment and that the State has legislative powers to enact saving clause under Section 174 of the Kerala GST allowing department to levy and recover VAT for transactions prior to GST.

It rejected the plea that States have been denuded of the legislative power to enact Section 174 because of the amendment to Entry 54 of List II of the Constitution of India. It observed that there is always a presumption in favour of the constitutionality and where the validity of a statute is in question, the interpretation which makes the law valid is preferred.

Court in Sheen Golden Jewels v. STO hence upheld the constitutional validity of Section 174 providing for repeal and savings and rejected as inapplicable the petitioners’ other propositions: the survival of the sunset clause, the impact of a temporary statute, and inapplicability of Section 6 of the General Clause Act vis-à-vis a repealed enactment.