TMI Blog1972 (9) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... H.R. JJ. M.C. Setalvad, Senior Advocate (Mrs. A.K. Verma, Advocate, and Ravinder Narain, Advocate of J.B. Dadachanji and Co., with him), for the appellant. S.T. Desai, Senior Advocate (A.V. Rangam and A. Subhashini, Advocates, with him), for the respondents. -------------------------------------------------- The judgment of the court was delivered by KHANNA, J. -This judgment would dispose of four Civil Appeals Nos. 471 to 474 of 1969 which have been filed on certificate granted by the Madras High Court and are directed against the common judgment of that court, whereby petitions under article 226 of the Constitution of India filed by the appellants were dismissed. The crucial question which arises for determination in these appeals is whether the provisions of the Madras 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 li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nserted a new entry 47-A. Section 2 reads as under: "2. Amendment of First Schedule to Madras Act 1 of 1959.-In the First Schedule to the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959) (hereinafter referred to as the principal Act),- (a) during the period commencing on the 1st April, 1964 and ending with the 30th November 1965, for item 47 and the entries relating thereto, the following shall be deemed to have been substituted, namely: '47 Lubricating oils (not otherwise Do. 6 provided for in this Act), quenching oils and greases. 47-A All kinds of mineral oils (other Do. 6' " than those falling under item 47 and not otherwise provided for in this Act) including furnace oil. (b) during the period commencing on the 1st December 1965 and ending with the 17th June 1967, for item 47 and the entries relating thereto, the following shall be deemed to have been substituted, namley: '47 Lubricating oils (not otherwise Do. 6 provided for in this Act), quenching oils and greases. 47-A All kinds of mineral oils (other Do. 6 than those falling under item 47 and not otherwise provided for in this Act) including furnace oil. (c) with effect on and from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his contention of the appellants was repelled by the High Court and their writ petitions, as mentioned earlier, were dismissed. Mr. Setalvad in appeal before us has assailed the validity of the provisions of sections 2 and 4 of the amending Act on the ground that the retrospective operation of those provisions is violative of article 19(1)(g) of the Constitution inasmuch as it constitutes unreasonble restriction on the right of the appellants to carry on their trade and business. As against that, Mr. Desai on behalf of the respondents contends that there has been no unreasonable restriction on the exercise of the right of the appellants and the impugned provisions cannot be struck down on the ground that the Legislature has given retrospective operation to 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sales tax already realised on the assumption that the words "all kinds of mineral oils" also covered mineral oils of non-lubricating nature that the amending Act was passed. It would be pertinent in this context to reproduce the statement of objects and reasons append- ed to the Madras General Sales Tax (Third Amendment) Bill, 1967, as under: "In Tax Case Nos. 108 to 110 of 1967 the Madras High Court has held that the expression 'all kinds of mineral oils (not otherwise provided for in this Act)' occurring in entry 47 of the First Schedule to the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959) as amended by the Madras General Sales Tax (Amendment) Act, 1964 (Madras Act 7 of 1964) will cover only such of the mineral oils as are lubricants and not furnace 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd validating Act. The object of such an enactment is to remove and rectify the defect in phraseology or lacuna of other nature and also to validate the proceedings, including realisation of tax, which have taken place in pursuance of the earlier enactment which has been found by the court to be vitiated by an infirmity. Such an amending and validating Act in the very nature of things has a retrospective operation. Its aim is to effectuate and carry out the object for which the earlier principal Act had been enacted. Such an amending and validating Act to make "small repairs" is a permissible mode of legislation and is frequently resorted to in fiscal enactments. As observed in 73 Harvard Law Review 692 at page 705: "It is necessary that the legislature should 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act of 1961 was challenged on the ground that the retrospective operation of the provisions of the Act changed its character and took it outside the legislative competence of the Legislature. It was further argued that the retrospective operation was so unreasonable that it could not be saved under clauses (5) and (6) of article 19 of the Constitution. Both these contentions were repelled and it was held that the test of the length of time covered by the retrospective operation could not by itself be treated as a decisive test. In the case of Epari Chinna Krishna Moorthy v. State of Orissa [1964] 15 S.T.C. 461 (S.C.); [1964] 7 S.C.R. 185., this court dealt with the validity of the Orissa Sales Tax Validation Act, 1961. The petitioner in that case was a merchant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the amending Act. There is, in our opinion, no force in this contention. The fact that a dealer is not in a position to pass on the sales tax to others does not affect the competence of the Legislature to enact a law imposing sales tax retrospectively because that is a matter of legislative policy. A similar argument was advanced in the case of M/s. J.K. Jute Mills Co. Ltd. [1961] 12 S.T.C. 429 (S.C.); [1962] 2 S.C.R. 1., and was repelled in the following words: "And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the consumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in consequence, an incident inconsistent 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 selle ..... X X X X Extracts X X X X X X X X Extracts X X X X
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