TMI Blog2007 (12) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... ds in question were taxable at six per cent under entry C-II-9 is also without any merit, because, by the retrospective amendment, none of the items set out in entry C-II-9 has been deleted. What is done by the retrospective amendment is to clarify that the items covered under entry C-II-61 were never covered under entry C-II-9. In other words, by retrospectively amending entry CII-9 it is clarified that the goods covered under entry C-II-61 were always intended to be excluded from entry C-II-9. Thus it is difficult to accept the arguments advanced on behalf of the petitioners regarding the constitutional validity of retrospective amendment to entries C-II-9 and C-II-61. W.P.fails. - Writ Petition No. 3458 of 1989 - - - Dated:- 17-12-2007 - REBELLO F.I. AND DEVADHAR J.P. , JJ. The judgment of the court was delivered by J.P. DEVADHAR J. This petition is filed basically to challenge the constitutional validity of section 25 of the Maharashtra Tax Laws (Levy, Amendment and Repeal) Act, 1989 ( the Amending Act , for short) in so far as it pertains to amending entry 9 and entry 61 in Part II of Schedule C to the Bombay Sales Tax Act, 1959 ( the BST Act , for short) with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tiles). (a) If they are roofing, floor or wall tiles made from any kind of plastic material Eight Three Eight 1-10-1972 to 30-6-1981 (b)(i) If they are laminates made from the thermo-setting plastic material Nine Three Nine 1-10-1972 to 30-6-1981 (ii) If they are other goods made from the thermosetting plastic material Eight Three Eight 1-10-1972 to 30-6-1981 (c) In other cases Five Three Five 1-10-1972 to 30-6-1981 Entry C-II-9 Sr. No. Description of goods Rate of sales tax Rate of purchase tax Period of Operation 1 2 3 4 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the BST Act from July 1, 1981 and sales tax at 12 per cent has been paid by the petitioners accordingly. On August 14, 1988, the CEGAT in the case of Collector of Central Excise v. Melamine Fibre Board Ltd. reported in [1988] 36 ELT 139 held that the paper based laminated sheets are not plastic sheets covered under tariff item 15A(2) of the Central Excise Tariff and, therefore, the paper based laminated sheets are classifiable under residuary item 68 of the Central Excise Tariff. In the light of the aforesaid decision of the CEGAT which relates to interpretation of the provisions under the Central Excise Tariff, the petitioners wrote to the Commissioner of Sales Tax on August 16, 1988 stating that the goods in question ought to have been assessed under entry C-II-9 as coated board at six per cent and not as plastic laminates under entry C-II-61 at 12 per cent. Accordingly, the petitioners sought refund of the excess amount of six per cent (12 per cent 6 per cent) paid by the petitioners erroneously during the period from October 12, 1979 to June 29, 1987 under mutual mistake. Moreover, the petitioners filed an application before the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of facts, we may note that during the pendency of the writ petition, the Commissioner of Sales Tax by his order dated October 30, 1991 has disposed of the application filed by the petitioners under section 52 of the BST Act by holding that in the light of retrospective amendment to entry C-II-61 which is clarificatory in nature, the goods in question would be covered under Schedule, entry C-II-61. Admittedly, the appeal filed against the said order is pending before the appellate authority. Similarly, the revision applications filed by the petitioners have also been dismissed by the Commissioner of Sales Tax by his order dated October 7, 2005 in the light of the retrospective amendment to entry C-II-61. Although, the present writ petition has been amended to challenge the said order dated October 7, 2005, as stated earlier, the learned counsel for the petitioners has restricted her arguments to the constitutional validity of the retrospective amendment to entry C-II-9 and C-II-61 and agreed to agitate other issues before the concerned appellate authority. Ms. Badheka, learned counsel appearing on behalf of the petitioners, submitted that the retrospective amendment to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective effect. In the present case, as per the entries existing at the relevant time, the goods in question were classifiable under entry C-II-9 at six per cent and not under entry C-II-61 at 12 per cent. By the impugned legislation, it is declared that the goods in question are taxable at 12 per cent under entry C-II-61 with retrospective effect from July 1, 1981 instead of six per cent under entry C-II-9. Such a legislation which imposes higher tax liability with retrospective effect is liable to be declared as unconstitutional. In support of the above submission, the learned counsel for the petitioners relied upon the following decisions: Shri Krishna Enterprises v. State of Andhra Pradesh [1990] 76 STC 67 (SC), Mega Traders v. State of Kerala [1991] 83 STC 59 (Ker), Shamanur Kallappa and Sons v. State of Karnataka [2004] 136 STC 132 (Karn) and V. J. Suraiya v. Additional Commissioner [2002] 127 STC 575 (WBTT). Ms. Badheka further submitted that the impugned legislation is arbitrary and discriminatory, because, it purports to exclude a category of paper board/coated board from entry C-II-9, retrospectively and place the same in a newly inserted entry C-II-61(ii) with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct that the Legislature chose to amend entry C-II-9 with retrospective effect from July 1, 1981 clearly shows that up to the date of amendment, the goods in question were taxable at six per cent under entry C-II-9. If the goods in question were not covered under entry C-II-9, then, there would not have been any necessity to amend entry C-II-9. Therefore, having realised the mistake that the goods in question were taxable at six per cent, but erroneously taxed at 12 per cent, the Legislature, instead of refunding the excess tax has chosen to enhance the tax from six per cent to 12 per cent retrospectively. Accordingly it is submitted that the impugned legislation enacted to defeat the refund claim of a single individual, namely, petitioner No. 1, who was the pioneer in the manufacture of the goods in question, cannot be said to be a legislation enacted in public interest. Ms. Badheka further submitted that the customers to whom the 12 per cent tax assessed erroneously was passed on, started demanding from the petitioners refund of six per cent in the light of the decision of CEGAT in the case of Melamine Fibre Board Ltd. [1988] 36 ELT 139. In view of the trade constraints and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y classified as plastic laminates under entry C-II-61. He submitted that the retrospective amendment merely clarifies the original intention of the State Legislature and the same has been accepted by manufacturers such as Bombay Trading Corporation and M/s. Greenply Industries, Calcutta and they are paying tax at 12 per cent on sale of similar goods manufactured by them. In this connection, he relied upon a judgment of the apex court in the case of State of Tamil Nadu v. Pyarelal Malhotra reported in [1976] 37 STC 319 and a decision in the case of Commissioner of Sales Tax v. Dunken Coffee Manufacturing Co. [1975] 35 STC 493 (Bom). Mr. Nair further submitted that since 1979 the petitioners themselves have been classifying the goods in question as plastic laminates and paying sales tax at 12 per cent on the said goods. However, it is only after the decision of CEGAT in the year 1988 delivered under the Central Excise Act, the petitioners, as well as other manufacturers, started filing refund claims/ revision claiming that the goods in question were classifiable under entry C-II-9 at six per cent and not at 12 per cent under entry C-II-61 and sought refund of six per cent sales ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Legislature thought it fit to clarify retrospectively the items covered under entry C-II-61. He submitted that such a legislation which is clarificatory in nature cannot be said to be unconstitutional merely because it is retrospective. Mr. Nair further submitted that the argument of the petitioners that the impugned legislation is arbitrary and discriminatory cannot be accepted because, by the impugned legislation all the dealers dealing in laminated plastic or plastic sheets are treated at par and taxed equally at 12 per cent. In other words, according to Mr. Nair since the petitioners as well as other manufacturers who have been manufacturing the goods in question have been uniformly taxed at 12 per cent under entry C-II-61, it cannot be said that the impugned legislation is discriminatory. Relying upon the decisions of the apex court in the case of ITW Signode India Ltd. v. Collector of Central Excise [2004] 3 SCC 48 and Gujarat Ambuja Cements Ltd. v. Union of India [2005] 1 VST 1; [2005] 274 ITR 194; [2005] 4 RC 508; [2005] 182 ELT 33, Mr. Nair submitted that the State Legislature is empowered to retrospectively amend the entries in the Schedule to the BST with a v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her entry C-II-9 nor entry C-II-61, prior to its amendment specifically covered the goods in question. In such a case, how the product was known in the trade at the relevant time assumes importance. It is an undisputed fact that since inception the goods in question were considered to be laminated sheets covered under entry C-II-61. The petitioners have sold the goods in question since inception to various customers as laminated sheets covered under entry C-II-61 attracting tax at 12 per cent. Various customers of the petitioners to whom said liability was passed on, have accepted that liability and paid tax at 12 per cent. Other manufacturers who started manufacturing similar goods subsequent to the petitioners have also sold the goods in question under entry C-II-61 and even their customers have accepted that the goods in question are laminated sheets covered under entry C-II-61 and paid tax at 12 per cent. Accordingly, the returns filed by the petitioners and other manufacturers were accepted and assessment orders were passed from time to time. Thus, it cannot be disputed that since inception for nearly a decade, the goods in question were known in the trade as laminated sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continue to be taxed at 12 per cent under entry C-II-61. By the impugned legislation, laminated sheets impliedly included in the word plastic laminates are expressly brought out by amending the entries retrospectively. The concluded assessments are not at all affected by the retrospective amendment. In fact, by the retrospective amendment, the tax liability at 12 per cent already incurred on the goods in question is reiterated. Therefore, the argument of the petitioners that the amendment purports to levy new impost or create new liability with retrospective effect is devoid of any merit. It is contended that prior to the retrospective amendment, the goods in question were classifiable as paper board/coated board under entry C-II-9 at six per cent and not as plastic laminates under entry C-II-61. It is contended that merely because the petitioners and other manufacturers have erroneously accepted the assessment of the goods in question under entry No. C-II-61 at 12 per cent instead of entry C-II-9 at six per cent, the Legislature cannot retrospectively amend the entries so as to enhance the tax liability of the goods in question from six per cent to 12 per cent retrospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion filed by the State, the apex court held that since the incidence of sales tax is ordinarily passed on to the customer, by a retrospective amendment liability cannot be created without affording any opportunity to pass on the incidence of the tax. The above decision has no relevance to the facts of the present case, because the tax liability as per assessment was at 12 per cent and even after amendment the tax liability continues to be at 12 per cent. There is no additional liability imposed by the retrospective amendment. Hence, the decision of the apex court in the case of Shri Krishna Enterprises [1990] 76 STC 67 is distinguishable on facts. Similarly, the decision of the Kerala High Court in the case of Mega Traders v. State of Kerala [1991] 83 STC 59, decision of the Karnataka High Court in the case of Shamanur Kallappa and Sons [2004] 136 STC 132 and the decision of the West Bengal Sales Tax Tribunal in the case of V. J. Suraiya [2002] 127 STC 575, are all distinguishable on facts because in all these cases additional liability was sought to be created by the retrospective amendment, whereas in the case in hand additional liability is not created by the retrospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs or other manufacturers have been uniformly taxed at 12 per cent under entry C-II-61. Similarly, sale of the goods in question whether used for surface lamination of table tops, furniture, panels, etc., or not, they are taxed uniformly at 12 per cent. Hence, the decision of the apex court in the case of Arya Vaidya Pharmacy 1989] 73 STC 346 does not support the case of the petitioner. Strong reliance was placed on the decision of the Andhra Pradesh High Court in the case of Srinivasa Poultry Cattle Feed Pvt. Ltd. [1999] 114 STC 67. In that case, a notification issued under the Andhra Pradesh General Sales Tax Act, 1957, granted exemption of tax on sale of poultry feed manufactured from out of the ingredients which have suffered tax in the State or which were exempt from tax in the State. The effect of the notification was that there were two different prices for the very same poultry feed depending upon the ingredients used in the manufacture of the said poultry feed. It was held that the poultry feed should be subjected to the same rate of tax irrespective of the manner in which it is manufactured. In the present case, the rate of tax on sale of the goods in question, is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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