Retrospective sales tax validation upheld where the State cured earlier defects within constitutional limits.

The amended section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947 was treated as a valid retrospective validating provision, because the State Legislature could cure defects identified by earlier decisions so long as it remained within constitutional limits. The provision was upheld as a permissible exercise of the State's taxing power over intra-State sales, and section 15 of the Central Sales Tax Act, 1956 was read as regulating, rather than prohibiting, tax on declared goods by imposing restrictions and reimbursement conditions. The amendment was held consistent with article 286 of the Constitution and entry 54 of List II, and the levy and assessment were sustained.

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Issues: Whether the amended section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947, substituted with retrospective effect, was within the legislative competence of the State and validly sustained the levy on the transactions in question.

Analysis: The appeals concerned the validity of the amended sales tax provision as applied to purchases made on declarations in form No. XXXIV and later dealt with in a manner said to be inconsistent with those declarations. The reasoning accepted that the State Legislature, acting under its taxation power, could remove the infirmities pointed out by earlier judicial decisions and enact a validating amendment so long as it remained within constitutional limits. The Court accepted the view that section 15 of the Central Sales Tax Act, 1956 did not prohibit levy on declared goods, but regulated the tax by imposing restrictions and conditions, including reimbursement where applicable. The amended provision was treated as an exercise of the State's power to impose tax on intra-State sales and was held to be consistent with article 286 of the Constitution of India and entry 54 of List II of the Seventh Schedule.

Conclusion: The amended provision was held valid, and the levy and assessment under it were sustained.

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