9911796707
TMI Blog1972 (9) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... dras General Sales Tax (Third Amendment) Act, 1967 (Act No. 19 of 1967) are invalid on the ground that they seek to impose sales tax with retrospective effect in an unreasonable manner. According to entry 47 of the First Schedule to the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959) (hereinafter referred to as the principal Act), the sale of "lubricating oils and greases" was liable to sales tax at the point of first sale in the State at 6 per cent. With effect from April 1, 1964, entry 47 was amended by Madras Act 7 of 1964 and instead of the words "lubricating oils and greases" in that entry, the following words were substituted: "Lubricating oils, all kinds of mineral oils (not otherwise provided for in this Act), quenching oils and greases." Till September 30, 1965, it is stated, the assessments were made on the assumption that the amendment of entry 47 had made no difference to sales of furnace oil and they were liable to multi-point tax at 2 per cent. The dealers paid and collected tax on that basis and the department accepted it. The Board of Revenue, on being moved by a dealer, passed a resolution on August 28, 1965, wherein it expressed the view that entry 47 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r item 47 and the entries relating thereto, the following shall be deemed to have been substituted, namley: '47 Lubricating oils (not otherwise Do. 6½ provided for in this Act), quenching oils and greases. 47-A All kinds of mineral oils (other Do. 6½ than those falling under item 47 and not otherwise provided for in this Act) including furnace oil. (c) with effect on and from the 18th June 1967, for item 47 and the entries relating thereto, the following shall be deemed to have been substituted, namely: '47 Lubricating oils (not otherwise Do. 7 provided for in this Act), quenching oils and greases. 47-A All kinds of mineral oils (other Do. 7'." than those falling under item 47 and not otherwise provided for in this Act) including furnace oil. It would thus appear that according to the amendment the sales tax would be payable during the period from April 1, 1964 to November 30, 1965, on items mentioned in entries 47 and 47-A at the rate of 6 per cent. The rate for the period from December 1, 1965, to June 17, 1967, has been fixed at 6½ per cent. and with effect from June 18, 1967, the rate has been fixed at 7 per cent. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those provisions. In our opinion, the contention of Mr. Desal is well founded. We may at the outset state that though the Legislature can pass a law and make its provisions retrospective, it would be relevant to consider the effect of the said retrospective operation of the law both in respect of the legislative competence of the Legislature and the reasonableness of the restriction imposed by it. It would thus be open to a party affected by the provisions of an Act to contend that the retrospective operation of the Act so completely alters the character of the tax imposed by it as to take it outside the limits of the entry which gives the Legislature competence to enact the law or it may be open to the party to contend in the alternative that the restrictions imposed by the Act are so unreasonable that they should be struck down on the ground that they contravene the fundamental rights granted under article 19(1)(f) and (g) of the Constitution. At the same time, we have to bear in mind that the legislative power conferred on the appropriate Legislatures to enact laws in respect of topics covered by the several entries in the three lists can be exercised both prospectively and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urnace oil, etc., which are not lubricants. It is therefore proposed to make a separate entry in the First Schedule to the Act so as to cover all kinds of mineral oils (other than those falling under entry 47 and not otherwise provided for in the Act) including furnace oil the rate being the same as for entry 47 and to validate the past levy and collection of tax in respect of all kinds of mineral oils (other than lubricating oils, quenching oils and greases) including furnace oil with effect from the 1st April, 1964. Existing entry 47 is also proposed to be amended to cover only lubricating oils (not otherwise provided for in the Act), quenching oils and greases." It would thus appear that the amending Act was intended, to cure an infirmity as revealed by the judgment of the High Court and to validate the past levy and collection of tax in respect of all kinds of non-lubricating mineral oils, including furnace oil, with effect from April 1, 1964. The Legislature for this purpose split the original entry 47 into two entries, 47 and 47-A. The new entry 47 related to lubricating oils (not otherwise provided for in the Act), quenching oils and greases, while entry 47-A covered all ki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be able to cure inadvertent defects in statutes or their administration by making what has been aptly called 'small repairs. Moreover, the individual who claims that a vested right has arisen from the defect is seeking a windfall since had the legislature's or administrator's action had the effect it was intended to and could have had, no such right would have arisen., 'Thus, the interest in the retroactive curing of such a defect in the administration of government outweighs the individual's interest in benefiting from the defect....The court has been extremely reluctant to override the legislative judgment as to the necessity for retrospective taxation, not only because of the paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government among those who benefit from it." The above passage was quoted with approval by the Constitution Bench of this Court in the case of Assistant Commissioner of Urban Land Tax v. The Buckingham & Carnatic Co. Ltd.[1970] 75 I.T.R. 603 (S.C.); [1970] 1 S.C.R. 268. The period from April 1, 1964, to Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt carrying on business in "bullion and specie" and gold and silver ornaments. He was a registered dealer under the Orissa Sales Tax Act, 1947. The petitioner claimed exemption from payment of sales tax in respect of certain gold ornaments on the basis of a notification issued on July 1, 1949, under section 6 of that Act. The sales tax authorities disallowed the petitioner's claim who thereupon filed writ petitions in the High Court. The High Court upheld the petitioner's claim and issued writs directing the Sales Tax Officer to allow the petitioner's claim for exemption. After the judgment of the High Court, the impugned Act was passed by the Legislature on August 1, 196 1, and was published on September 18, 196 1. Section 2 of the impugned Act sought to put a meaning on the notification of July 1, 1949, and stated that the notification shall always be deemed to have meant like that. One of the contentions raised in that case was that the retrospective operation of the impugned section should be struck down as unconstitutional because it imposed unreasonable restrictions on the petitioner's fundamental right under article 19(1)(g). This contention did not find favour with this cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consistent with the true character of a sales tax law, and that the Validation Act is therefore not a law in respect of tax on the sale of goods, as recognised, and it is ultra vires entry 54. We see no force in this contention. It is no doubt true that a sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the Legislature. This question is concluded by the decision of this court in The Tata Iron & Steel Co. v. State of Bihar [1958] 9 S.T.C. 267 (S.C.); [1958] S.C.R. 1355." In the case of Jaora Sugar Mills (P.) L ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
