Retrospective sales tax amendment upheld where statutory liability arose under the Act despite no consumer collection.

The Supreme Court of India upheld the demand for differential sales tax under the amended entry in the Andhra Pradesh General Sales Tax Act, 1957, holding that the Legislature had validly amended the statute and could bring the amendment into force from the notified date. The assessee's liability arose under the Act itself, and it was immaterial that the tax had not been collected from consumers. The Court also recognised that retrospective operation of taxing legislation is permissible where enacted by the Legislature. On that basis, the challenge to the amended provision and the resulting demand failed.

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Issues: Whether the demand of differential sales tax pursuant to the amendment of entry 37 in the First Schedule to the Andhra Pradesh General Sales Tax Act, 1957 was sustainable, and whether the amended provision could operate from the notified effective date.

Analysis: The legislative power of the State to amend the sales tax statute was not in dispute, and the validity of the amendment itself was not challenged. The amendment by the Andhra Pradesh General Sales Tax (Amendment) Act, 1996 was made by the Legislature, and the amended provisions were brought into force from the specified date under section 1(f). An assessee's liability to pay sales tax arises by virtue of the Act, and it is immaterial whether the tax has been collected from consumers. Authorities dealing with notification-based commencement or unrelated statutory contexts did not assist the petitioners. The principle that the Legislature may enact laws with retrospective operation also supported the demand.

Conclusion: The demand of differential sales tax based on the amended entry was valid, and the challenge to it failed.

Ratio Decidendi: Where a tax statute is validly amended by the Legislature and brought into force from a specified date, an assessee remains liable to pay the tax as amended, and the liability is not defeated by the absence of collection from consumers.

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