1972 (12) TMI 74 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Deduction of excise duty under the Central Sales Tax Act.
2. Application of Section 10 of Central Act 28 of 1969.
3. Retrospective amendment of the Madras General Sales Tax Rules.
4. Legislative competence and constitutional validity of retrospective amendments.

Detailed Analysis:

1. Deduction of Excise Duty under the Central Sales Tax Act:
The petitioner, a partnership firm dealing in matches, claimed a deduction of Rs. 1,91,400 paid as excise duty for the assessment year 1964-65 under the Central Sales Tax Act, citing Rule 6(f) of the Madras General Sales Tax Rules, 1959. The assessing authority rejected this claim, stating that Section 9(3) of the Central Act only attracted the procedure for assessment under the State Act but did not extend to exemptions provided under the State Act. This decision was upheld by the Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal, referencing multiple case laws including Mariappa Nadar v. State of Madras and State of Mysore v. Mysore Paper Mills.

2. Application of Section 10 of Central Act 28 of 1969:
The petitioner argued for exemption under Section 10 of Central Ordinance 4 of 1969, later replaced by Central Act 28 of 1969, on the grounds that they did not collect tax from customers, believing no tax was leviable on excise duty. The Tribunal found that the department had not verified if the petitioner collected tax but concluded that the second condition of Section 10 was not met. The Tribunal held that tax could be levied and collected on excise duty under the Central Act even before its amendment by Central Ordinance 4 of 1969, thus denying the exemption.

3. Retrospective Amendment of the Madras General Sales Tax Rules:
The Madras General Sales Tax Rules, 1959, originally allowed deduction of excise duty, but Rule 6(f) was deleted retrospectively from 1st April, 1959, by Madras Ordinance 5 of 1968, later replaced by Madras Act 3 of 1969. This retrospective deletion meant that no provision for deduction of excise duty existed from 5th January, 1957, to 31st March, 1966. Consequently, the Supreme Court's interpretation in Yaddalam's case and Pothan Joseph's case, which allowed such deductions, was superseded by the retrospective amendment.

4. Legislative Competence and Constitutional Validity of Retrospective Amendments:
The petitioners contended that the retrospective amendment by Madras Act 3 of 1969 was invalid, arguing it imposed a fresh tax liability for an anterior period and was unreasonable under Article 19(1)(f) of the Constitution. The court rejected this contention, affirming the State Legislature's competence to enact retrospective laws under entry 54, List II, Schedule VII of the Constitution. The court held that the retrospective nature of Madras Act 3 of 1969 did not make it unreasonable or unconstitutional, citing precedents like Krishnamurthi and Company v. State of Madras and J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh.

Conclusion:
The court dismissed all the tax cases and the writ petition, concluding that:
- The petitioners were not entitled to deduct excise duty under the Central Sales Tax Act.
- They did not qualify for exemption under Section 10 of Central Act 28 of 1969.
- The retrospective amendment by Madras Act 3 of 1969 was valid and within legislative competence.
- The legislation was not unconstitutional or unreasonable under Article 19(1)(f) of the Constitution.

Petitions dismissed with costs.