Retrospective tax validation upheld where Legislature cured defects, covered pending assessments, and passed equality and fundamental rights scrutiny.

A retrospective validating amendment to the U.P. Sales Tax Act was upheld because the Legislature cured the defects in earlier notifications by incorporating them into the statute as its own command, rather than usurping judicial power. The provision validly applied to pending assessments and past periods, as retrospective fiscal legislation can extend to inchoate proceedings and earlier liability. It also survived article 14 challenge because the brick tax classification was based on a rational policy distinction. The amendment was further held consistent with articles 19(1)(f) and 19(1)(g) and not repugnant to the earlier charging provision.

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Issues: (i) Whether section 3-AB of the U.P. Sales Tax Act was invalid as an encroachment on judicial power and as an ineffective form of validation of earlier notifications; (ii) whether section 3-AB could validly operate on pending assessment proceedings and past periods by reason of its retrospective character; (iii) whether section 3-AB offended article 14 of the Constitution of India by creating an arbitrary tax classification and rate structure for bricks; (iv) whether section 3-AB violated articles 19(1)(f) and 19(1)(g) of the Constitution of India or was repugnant to the old section 3-A.

Issue (i): Whether section 3-AB of the U.P. Sales Tax Act was invalid as an encroachment on judicial power and as an ineffective form of validation of earlier notifications.

Analysis: Section 3-AB did not merely set aside judicial decisions or usurp adjudicatory power. It incorporated the specified notifications into the statutory text and operated as a fresh legislative enactment with retrospective effect. Where the Legislature removes the defects identified by the court and validates the position by enacting a new law, there is no unconstitutional intrusion into the judicial domain. The validation provision was treated as substantive legislation and not as a bare legislative command to disregard judgments.

Conclusion: Section 3-AB was held to be a valid legislative validation and not an impermissible exercise of judicial power.

Issue (ii): Whether section 3-AB could validly operate on pending assessment proceedings and past periods by reason of its retrospective character.

Analysis: Section 3-AB was enacted to operate retrospectively and to deem the specified notifications to have formed part of the section from the relevant earlier dates. The provision used the expressions imposed, assessed, levied and collected, and levy was understood to include inchoate proceedings taken for determining liability. Pending assessment proceedings relating to earlier assessment years were therefore within the protective ambit of the validation provision. The amended charging scheme was also read as continuing those pending matters, since the new and old charging provisions were substantially similar in material effect for the controversy before the Court.

Conclusion: Section 3-AB was held to apply to pending proceedings and past assessments.

Issue (iii): Whether section 3-AB offended article 14 of the Constitution of India by creating an arbitrary tax classification and rate structure for bricks.

Analysis: The Court held that tax legislation enjoys a wide field of legislative discretion and that classification need only rest on a rational basis. Bricks were treated as part of a broader legislative scheme concerning scheduled goods and building materials, and the higher rate was supported by factors such as the policy of taxing building materials differently, the economic capacity of consumers, the effect of coal price control, and administrative convenience in collection. The existence of different tax treatments for different commodities did not by itself amount to hostile discrimination, and the challenged provision did not produce overlapping or unequal treatment in the case of bricks.

Conclusion: Section 3-AB was held not to violate article 14.

Issue (iv): Whether section 3-AB violated articles 19(1)(f) and 19(1)(g) of the Constitution of India or was repugnant to the old section 3-A.

Analysis: Retrospectivity alone was not enough to attract invalidity under articles 19(1)(f) and 19(1)(g), particularly where the provision was enacted to protect revenue already collected and was supported by settled principles sustaining retrospective fiscal legislation. On repugnancy, section 3-AB merely incorporated and validated the earlier notifications and did not conflict with the earlier section 3-A in relation to bricks or the other covered notifications. The old provision did not authorise the notifications concerning bricks in their invalidated form, and the new validation provision removed any practical inconsistency.

Conclusion: Section 3-AB was held not to violate articles 19(1)(f) and 19(1)(g) and not to be repugnant to the old section 3-A.

Final Conclusion: The validating amendment was upheld in full, and the challenge to the assessments and recoveries based on the incorporated notifications failed.

Ratio Decidendi: A retrospective validating statute is constitutionally valid where the Legislature cures the defects identified in the earlier law, reenacts the substantive basis of taxation as its own command, and applies a rational classification that does not offend equality or fundamental rights.

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