1973 (8) TMI 132 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the retrospective operation of the West Bengal Taxation Laws (Amendment) Act.
2. Constitutionality of the retrospective amendment under Article 19(1)(f) and (g).
3. Potential violation of Article 20 of the Constitution due to retrospective penal provisions.

Detailed Analysis:

1. Validity of the Retrospective Operation of the West Bengal Taxation Laws (Amendment) Act:
The petitioner challenged the inclusion of Rs. 44,240 in the taxable turnover, arguing against the retrospective application of the definition of "business" under the West Bengal Taxation Laws (Amendment) Act. The Court noted that the Legislature has the plenary power to enact laws with retrospective effect. However, it is open to the affected party to argue that such retrospective operation imposes unreasonable restrictions on fundamental rights under Article 19(1)(f) and (g) or alters the character of the tax beyond the legislative competence.

2. Constitutionality of the Retrospective Amendment under Article 19(1)(f) and (g):
The Court examined whether the retrospective amendment of the definition of "business" imposed an unreasonable restriction on the petitioner's fundamental rights. The amendment included transactions ancillary or incidental to trade, commerce, or manufacture, regardless of profit motive. The Court found that the amendment imposed an unexpected liability on transactions that were not taxable at the time they occurred. This retrospective imposition was deemed an unreasonable restriction on the petitioner's rights to carry on business and hold property, thus violating Article 19(1)(f) and (g).

3. Potential Violation of Article 20 of the Constitution:
The petitioner argued that the retrospective operation of the amendment violated Article 20, which prohibits ex post facto laws imposing penalties. The Court agreed, noting that the combined effect of the amended sections could criminalize past actions that were not offenses when committed. Therefore, the retrospective amendment also offended Article 20.

Judgment:
The Court ruled that the retrospective amendment to the definition of "business" under section 2(1a) of the Act, as introduced by section 4 of the amending Act, was ultra vires the Constitution. It violated Articles 19(1)(f) and (g) and Article 20. Consequently, the orders of the Commercial Tax Officer and the Assistant Commissioner of Commercial Taxes, which imposed tax on sales amounting to Rs. 44,240, were quashed. The respondents were commanded to refrain from enforcing these orders concerning the said amount. The rule was made absolute, with no order as to costs.