Retrospective cure of tax law defect upheld State sales tax levy on agricultural machinery as valid from inception.

Retrospective amendment cured the defect in the Punjab sales tax law by inserting an upper limit on the rate and deeming it part of the original enactment. The State levy on agricultural machinery therefore remained valid from inception, and the later central restriction on new State laws taxing essential goods did not apply to invalidate an existing enactment whose defect had been retrospectively removed. The sales tax law was held intra vires, and the challenge to the levy failed.

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Issues: Whether the levy of sales tax on agricultural machinery under the Punjab sales tax law was invalid because the statute was said to confer excessive discretion in fixing the rate and because the later central law exempted agricultural machinery from state taxation.

Analysis: The levy was made under the East Punjab General Sales Tax Act as amended retrospectively by Punjab Act 19 of 1952, which inserted an upper limit of two pice in the rupee and deemed that limit to have always been part of the original enactment. The later Central Act 52 of 1952 barred only post-commencement State laws taxing goods declared essential for the life of the community unless reserved for and assented to by the President. Since the State tax law had been in force since 1948 and the defect in the rate-fixing provision was cured retrospectively, the Act could not be treated as having been enacted only in 1952. The retrospective amendment removed the alleged defect from the beginning and did not invalidate the earlier law.

Conclusion: The sales tax law was held to be valid and intra vires, and the levy on agricultural machinery was not illegal.

Final Conclusion: The challenge to the tax failed, and the levy was sustained.

Ratio Decidendi: A statutory defect cured retrospectively by amendment does not render the original taxing law invalid, and a later central restriction on new State laws does not invalidate an existing State tax enactment whose defect has been retrospectively removed.

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