Retrospective withdrawal of tax exemption and extended limitation upheld for sales tax assessment
Retrospective withdrawal of a sales tax exemption for dhabas was treated as a valid legislative change, because it did not create a new charging provision but restored the enforceability of the existing tax liability for the earlier period specified in the amending Act. The court also noted that the dealer's inability to pass the tax on to customers did not prevent legal recovery. On limitation, the amendment extending best judgment assessment from three years to four years applied where the original limitation had not already expired, and the assessment was held to be within time and not barred.
Issues: (i) Whether the retrospective amendment withdrawing the exemption for dhabas under the sales tax law rendered the petitioner liable to sales tax from the earlier date specified in the amendment. (ii) Whether the assessment was barred by limitation under the amended period applicable to best judgment assessment.
Issue (i): Whether the retrospective amendment withdrawing the exemption for dhabas under the sales tax law rendered the petitioner liable to sales tax from the earlier date specified in the amendment.
Analysis: The exemption previously available to dhabas under the Schedule was withdrawn by the amending Act and that amendment was expressly made operative from an earlier date by the deeming provision. The withdrawal of an exemption does not amount to creating a second charging provision; it merely revives the existing charging provisions that had been kept in abeyance by the exemption. Retrospective withdrawal of an exemption is within legislative competence, and the fact that the dealer could not pass on the tax to customers did not prevent the tax from becoming legally recoverable.
Conclusion: The retrospective withdrawal of the exemption was valid, and the petitioner was liable to sales tax for the relevant period.
Issue (ii): Whether the assessment was barred by limitation under the amended period applicable to best judgment assessment.
Analysis: Before the original period of limitation expired, the amending Act extended the time for best judgment assessment from three years to four years. The extended period applied to assessments not already time-barred, and the quarterly period could not be split for the purpose of computing limitation from the middle of the quarter. Since the assessment was made within the extended period, it was within time.
Conclusion: The assessment was not time-barred and was validly made within the extended limitation period.
Final Conclusion: The legal effect of the decision is that the challenge to the sales tax assessment failed on both merits and limitation, and the petition was dismissed.
Ratio Decidendi: A legislature may retrospectively withdraw a tax exemption, and where the charging provision already exists, the withdrawal merely restores the enforceability of the tax for the relevant period; an assessment made within the extended limitation period is not barred if the original bar had not already attached.
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