TMI Blog1973 (8) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... not form any part of the business activities of the said firm, which consisted mainly of raising of coal from the said colliery and selling the same. It is further stated that such sales of the old and discarded machineries, equipments and stores are occasional, and the said firm does not deal in and/or purchases any old or discarded machineries, equipments and/or stores for the purpose of selling them with any intention of making any profit or gain thereby. It is stated that the firm does not carry on any business of selling such old machineries, equipments and/or stores. During the year 1964 the said firm sold old and discarded machineries, equipments and stores and realised a sum of Rs. 44,240. Out of the said sum of Rs. 44,240, a sum of Rs. 26,140 is stated to represent the sale of iron scrap. For the four quarters ending on Kartick Badi 15, 2021, which corresponded roughly the four quarters of the year 1964, the Commercial Tax Officer, Asansol Charge, being respondent No. 1, made an assessment under the Act and included in the taxable turnover the said sum of Rs. 44,240 in view of the amendment in section 2 of the Act by inserting the definition of business. The said sales w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was promulgated by the Governor of West Bengal on 9th January, 1968, known as the West Bengal Taxation Laws (Amendment) Second Ordinance, 1968, and similar provisions were introduced incorporating the definition of business in section 2(1a) of the Act with retrospective effect. The earlier West Bengal Taxation Laws (Amendment) Ordinance, 1967, was repealed but all proceedings commenced or things done or action taken under the said Ordinance shall continue to be in force and shall be deemed to have been validly commenced or done or taken under the Act as amended by the Second Ordinance. Thereafter the West Bengal Taxation Laws (Amendment) Act, 1968 (President's Act No. 6 of 1968) was enacted by the President of India. By section 4 of the said amending Act, the definition of "business" as introduced in the earlier Ordinance was re-enacted with the same retrospective effect and although the Second Ordinance was repealed by section 8 of the amending Act, proceedings commenced or action taken under the Act were deemed to have been taken or commenced under the Act as amended by the amending Act. The Presidential Act was thereafter replaced by the West Bengal Taxation Laws (Amendment) Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess of the restriction imposed by it. In the present case, no attempt has been made to question the legislative competence of the State Legislature to introduce for the first time the definition of the word "business" with retrospective effect. The argument has been confined mainly to the reasonableness of the restriction imposed by the retrospective operation of the newly inserted definition of "business". It is contended that by clause 2(1a)(ii) a transaction which is in connection with, or ancillary or incidental to, trade or commerce or manufacture even without any motive to make profit is now clothed with the character of business and by the retrospective operation of the definition of "business", transactions which were concluded several years back would now be liable to taxation under the Act as in respect of such a transaction, a person will be treated as a dealer for the purpose of his liability to tax under the Act. This, it is contended, imposes an unreasonable restriction upon a person's fundamental right to carry on business and to hold property under article 19(1)(f) and (g) of the Constitution. It is now well-settled that the taxing statutes are not beyond the cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mendment with retrospective operation a fresh tax is sought to be levied. In the case of Krishnamurthi Co. v. State of Madras[1973] 31 S.T.C. 190 (S.C.)., 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 1st April, 1964. It is in such circumstances that the amending Act was upheld by the Supreme Court. In the case of Hira Lal Rattan Lal v. Sales Tax Officer, Section III, Kanpur, and Another[1973] 31 S.T.C. 178 (S.C.)., the U.P. Sales Tax (Amendment and Validation) Act, 1970, was upheld as the amendment of the U.P. Sales Tax Act, 1948, was necessitated because of the Legislature's failure to bring out clearly in the principal Act, its intention to separate the processed or split pulses from unsplit or unprocessed pulses. Further, the retrospective amendment became necessary as otherwise the State would have to refund large sums of money. It is necessary, therefore, to enquire as to the circumstances under which the amendment in question was introduced. Neither the Ordinance nor the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expression "business" in a different way and levied tax on sales which were effected not in the course of business of a dealer and without any profit-motive. In fact, from the Manual of Sales Tax Laws and Administration (1958 Edition), Part V, it appears that while stating the legal principles and case laws, the Manual points out that casual sales and sales of goods not in relation to a business or trade are not liable to be taxed (page 124 of Part V of the Manual). The object of the present amending Act does not appear to remove and rectify any defect in phraseology or lacuna or to validate the proceedings, including realisation of tax which had taken place on the basis of the earlier enactment. Its object is to enlarge the scope and ambit of the expression "business" by including within it transactions which without the amendment could not be brought within the meaning of the word "business" as understood in a commercial sense and as interpreted by courts of law. As a result of the amendment, under both parts of the definition of "business" appearing in section 2(1a) of the Act, profit-motive is now immaterial and the concept of business as understood and judicially interprete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1952 S.C. 196. As stated by Mahajan, J., in Chintamanrao and Another v. The State of Madhya PradeshA.I.R. 1951 S.C. 118., the word "reasonableness" implies intelligent care and deliberation, that is the choice of a course which reason dictates. Legislation which arbitrarily or excessively invades the right cannot be said to contain the quality of reasonableness and unless it strikes a proper balance between the freedom guaranteed under article 19(1)(g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in that quality. Applying this test one has to examine whether there is any nexus between the retrospective operation of the amendment in question and the mischief sought to be remedied by such amendment. I have already stated that the amendment was not introduced to validate the proceedings which were taken on the basis of any enactment declared by court of law to be invalid. The object of the amendment is to widen the definition of business so as to include for the first time transactions which without the amendment fell outside the concept of business hitherto understood and judicially determined. The amendment for all intents and purposes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 19(1)(f) and (g). Learned counsel for the petitioner has also challenged the retrospective operation of section 2(1a) of the Act as it violates article 20 of the Constitution. Article 20 provides an injunction against conviction of a person or his subjection to a penalty under ex post facto laws. "The phrase 'law in force' as used in article 20 should be understood in its natural sense as being the law in fact in existence and in operation at the time of the commission of the offence as distinct from the law 'deemed' to have become operative by virtue of the power of the Legislature to pass retrospective laws": Shiv Bahadur Singh v. State of Vindhya Pradesh(1). The combined effect of section 2(1a), section 4, section 7 and section 22(1)(a) of the Act is that a contravention of the statutory obligation of a dealer to be registered in respect of the transactions which are now liable to be taxed will be treated as an offence punishable under section 22(1)(a) of the Act although such sales were not liable to be taxed under the Act at the time when such sales were effected. In my view, the retrospective operation of section 2(1a) of the Act also offends article 20 of the Constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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