Retrospective sales tax validation sustained where the amendment cured the earlier defect without violating equality or trade freedoms.

Retrospective sales tax validation was upheld where the legislature cured the defect identified in the earlier judgment by enhancing the rate with retrospective effect, thereby removing the basis of the prior challenge. The amendment was not colourable because legislative competence existed and no constitutional limit was transgressed. The retrospective levy did not amount to hostile discrimination under Article 14, nor was it shown to be oppressive or confiscatory so as to breach Articles 19(1)(f) and 19(1)(g). Previous presidential sanction under Article 304(b) was also unnecessary because the non-discriminatory tax did not directly and immediately restrict trade.

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Issues: (i) whether the impugned amendment was a colourable piece of legislation; (ii) whether the amendment failed to remove the basis of the earlier judgment and was ineffective in validating the collections; (iii) whether the retrospective enhancement of sales tax offended Article 14 of the Constitution; (iv) whether the retrospective levy was oppressive or confiscatory and violated Articles 19(1)(f) and 19(1)(g) of the Constitution; (v) whether the Act required previous presidential sanction under the proviso to Article 304(b) of the Constitution.

Issue (i): whether the impugned amendment was a colourable piece of legislation.

Analysis: A law is colourable only if the legislature lacks competence or transgresses constitutional limits while disguising the true nature of the enactment. Where legislative competence exists and no constitutional restriction is violated, motive alone does not invalidate the law.

Conclusion: The challenge failed and the Act was not colourable.

Issue (ii): whether the amendment failed to remove the basis of the earlier judgment and was ineffective in validating the collections.

Analysis: The earlier decision had proceeded on the footing that the State was collecting sales tax in excess of the rate legally authorised. By retrospectively enhancing the rate from six and a half per cent to forty-five per cent from 1 April 1966, the legislature altered the legal basis on which the excess collection had been questioned, thereby curing the defect that had supported the earlier judgment.

Conclusion: The basis of the earlier decision was removed and the validation was effective.

Issue (iii): whether the retrospective enhancement of sales tax offended Article 14 of the Constitution.

Analysis: The classification did not pick out any class of licensees for hostile treatment. The mere fact that tax rates varied between periods did not amount to arbitrary discrimination, and taxation statutes enjoy wide legislative discretion unless the classification is palpably arbitrary.

Conclusion: The challenge under Article 14 failed.

Issue (iv): whether the retrospective levy was oppressive or confiscatory and violated Articles 19(1)(f) and 19(1)(g) of the Constitution.

Analysis: The grievance rested on the mistaken assumption that the enhanced rate applied to price plus excise duty and cesses. The levy was only on the basic sale price, and retrospective curative taxation is permissible if it removes the defect found in prior proceedings. The retrospective operation was not shown to impose an unreasonable restriction on the protected freedoms.

Conclusion: The Act did not infringe Articles 19(1)(f) or 19(1)(g).

Issue (v): whether the Act required previous presidential sanction under the proviso to Article 304(b) of the Constitution.

Analysis: A non-discriminatory tax offends Part XIII only if it directly and immediately restricts the free flow of trade. In the context of arrack, which was under strict State control and in respect of which the State enjoyed a monopoly, the enhanced sales tax did not directly impede trade or movement so as to attract the proviso to Article 304(b).

Conclusion: Previous presidential sanction was not required.

Final Conclusion: All constitutional challenges to the retrospective enhancement and validation of sales tax on arrack failed, and the writ petitions were dismissed with costs.

Ratio Decidendi: A retrospective taxing statute is valid if it removes the legal basis of an earlier adverse decision, does not result in hostile discrimination, and does not directly and immediately restrict trade.

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