TMI Blog2002 (5) TMI 639X X X X Extracts X X X X X X X X Extracts X X X X ..... Pramod B. Agrawala, Sanjay R. Hegde and N. Ganpathy, for the parties. Senior Advocates: Raju Ramachandran and S.S. Javali, for the Parties. -------------------------------------------------- The judgment of the Court was delivered by BISHESHWAR PRASAD SINGH, J.- In this batch of appeals by special leave common questions arise for consideration and therefore the appeals have been heard together and are being disposed of by this common judgment. 2.. The questions which arise for consideration are whether sub- section (6) of section 17 of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as "the Act") as amended by Act No. 5 of 1996 is unconstitutional, and secondly, whether the amendment brought in clause (i) of sub-section (6) of section 17 of the Act by Act No. 7 of 1997 retrospectively is also unconstitutional. The High Court of Karnataka has answered both these questions in the negative and against the appellants. The main judgment was rendered in the writ petition preferred by the appellant in Civil Appeal No. 902 of 1999. The remaining matters were disposed of by the High Court following the aforesaid judgment. 3.. To determine the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in lieu of the amount of tax payable by him during the year under this Act, by way of composition an amount at the rates specified in the corresponding entries in column (3) of the table on his total turnover relating to transfer of property in goods (whether as goods or in some other form) involved in the execution of such works contracts." 7.. Again by Act No. 5 of 1996 sub-section (6) of section 17 was amended to read as follows: "Notwithstanding anything contained in section 5-B, but subject to such conditions and in such circumstances as may be prescribed, the assessing authority of the area may, if a dealer liable to tax under section 5-B so elects, accept in lieu of the amount of tax payable by him during the year, under this Act, by way of composition an amount on the total consideration for the works contracts executed by him in that year in the State in respect of works contract specified in column (2) of the Sixth Schedule at the rates specified in the corresponding entries in column (4) of the said Schedule." 8.. Sub-section (6) was further amended by Act No. 7 of 1997 with effect from April 1, 1997. Clause (i) of sub-section (6) of section 17 of the Act as amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it violated the rights guaranteed to the petitioners under articles 14, 19(1)(g) and article 265 of the Constitution of India. The petitioners and others like them, who had opted for the composition scheme, as it stood prior to April 1, 1996, could not be saddled with additional burden of tax by the amended provision which was given effect retrospectively from April 1, 1988. In the facts and circumstances of the case the retrospective operation of the amended provision was arbitrary, violating the right guaranteed to the petitioners under article 14 of the Constitution of India. 11. The State of Karnataka on the other hand relied upon the decision of this Court in State of Kerala v. Builders Association of India (1997) 2 SCC 183* and contended that the question was no longer res integra and the validity of sub-section (6) of section 17 as amended must be upheld. As to the retrospective operation of the amended provision, it was submitted that the Legislature had competence not only to enact a law prospectively, but also retrospectively, subject to its being consistent with the constitutional provisions. It was submitted that the rights of the petitioners guaranteed under artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad opted for composition under section 17(6) of the Act. For this purpose petitioners were required to make an application to the concerned assessing authority and the assessing authorities were directed to proceed to assess the petitioners and all others who were not before the court, under section 5-B of the Act, if they so opted. 14.. Appeals preferred before a division Bench of the High Court were also dismissed. Since the division Bench of the High Court found itself in complete agreement with the learned Judge and was also of the view that the judgment of this Court in the State of Kerala v. Builders Association of India (1997) 2 SCC 183 [1997] 104 STC 134 (SC). fully covers the case. The judgment of the division Bench is impugned before us by special leave in Civil Appeal No. 902 of 1999. In the remaining appeals the High Court followed its aforesaid judgment, and dismissed the writ petitions. 15.. Mr. Raju Ramachandran, Senior Advocate appearing on behalf of some of the appellants placed before us the judgment of this Court in State of Kerala v. Builders Association of India (1997) 2 SCC 183*. We have carefully read the aforesaid judgment. Fairly Mr. Raju Ramachandran s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... If he thinks it is beneficial for him to so opt, he will opt; otherwise, he will be governed by the normal method of taxation provided by section 5(1)(iv). Sub-section (8) provides that the option to come under sub-section (7) or (7A) has to be exercised by the contractor 'either by an express provision in the agreement for the contract or by an application to the assessing authority, to permit him to pay the tax in accordance with any of the said sub-sections'. In these circumstances, it is evident that a contractor who had not opted to this alternate method of taxation cannot complain against the said sub-sections, for he is in no way affected by them. Nor can the contractor who has opted to the said alternate method of taxation, complain. Having voluntarily, and with the full knowledge of the features of the alternate method of taxation, opted to be governed by it, a contractor cannot be heard to question the validity of the relevant sub-sections or the rules. Sub-sections (8), (11) and (12) of section 7 are incidental and ancillary to sub-sections (7) and (7A) and cannot equally be faulted. Secondly, it is true that the goods transferred in the course of execution of the works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it optional for the assessee. The object of sub-sections (7) and (7A) is the same as that of section 5(1)(iv); it is only that they follow a different route to arrive at the same destination." 16.. We are of the considered view that principles laid down by this Court in the aforesaid decision squarely apply to the facts of this case having regard to the similarity of the provisions in the two Acts. We therefore find ourselves in complete agreement with the High Court and hold that sub-section (6) of section 17 of the Karnataka Sales Tax Act is constitutionally valid and the challenge on the ground of lack of legislative competence of the State Legislature must be repelled. 17.. Learned counsel then submitted that even while evolving a simplified method for assessment of tax, such as the scheme of composition in the instant case, the law cannot give an option to the assessees which is in the teeth of constitutional provisions. This argument does not survive in view of the principles laid down by the Supreme Court in State of Kerala v. Builders Association of India (1997) 2 SCC 183*. He made a faint attempt to draw a distinction between the Kerala Act and the Karnataka Act by r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel submitted that this was not factually correct. We have perused the judgment and we find that though the submission of the counsel for the State to this effect was noticed, the judgment of the High Court is not based on this assumption. The judgment of the High Court would not have been different even if the fact was otherwise. 19.. Mr. S.S. Javali, learned Senior Advocate, appearing for the appellants in Civil Appeals Nos. 7575-77 of 1999 submitted that the appellants had opted under the composite scheme and enjoyed the benefit for almost 9 years. It would be unreasonable to relegate them to the same position that they occupied before they exercised the option for assessment under the composition scheme. He submits that considerations of equity must persuade this Court to pass an appropriate direction so that the assessments made on the basis of the option already given are not affected in any manner. Having held that the retrospective operation of the amended provision is constitutional, and having noticed that the assessees are at liberty to opt for regular assessment under section 5-B of the Karnataka Sales Tax Act, it would not be appropriate to make such a d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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