Retrospective tax amendment on pachwai upheld where the law deemed prices exclusive of tax and removed Article 304(b) objection.

A retrospective amendment to the Bengal Excise Act, 1909 declared that the price of pachwai was always exclusive of tax, surcharge and similar imposts, removing any supposed restriction on dealers' ability to pass on the levy. In that setting, the sales tax and surcharge on pachwai under the West Bengal Taxation Laws (Amendment) Act, 1972 did not amount to a trade restriction and was not ultra vires Article 304(b). The retrospective operation also meant that a tax demand for the earlier period remained sustainable even though the dealer could not recover the tax from customers at the time.

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Issues: (i) Whether the levy of sales tax and surcharge on pachwai under section 3(5) of the West Bengal Taxation Laws (Amendment) Act, 1972 was ultra vires Article 304(b) of the Constitution. (ii) Whether demand of tax for the period before the retrospective amendment to the Bengal Excise Act, 1909 could be sustained when the dealer could not recover the tax from customers.

Issue (i): Whether the levy of sales tax and surcharge on pachwai under section 3(5) of the West Bengal Taxation Laws (Amendment) Act, 1972 was ultra vires Article 304(b) of the Constitution.

Analysis: Pachwai had initially been exempt, but the later excise amendment introduced an explanation to section 86 of the Bengal Excise Act, 1909 declaring that the price fixed for intoxicants was always to be treated as exclusive of any tax, surcharge, additional surcharge, or other impost. That amendment operated retrospectively from 6 June 1974 and removed the supposed restraint on dealers' ability to recover the tax from purchasers. In that legal setting, the levy did not create a trade restriction so as to offend Article 304(b).

Conclusion: The levy was not ultra vires Article 304(b) and was upheld.

Issue (ii): Whether demand of tax for the period before the retrospective amendment to the Bengal Excise Act, 1909 could be sustained when the dealer could not recover the tax from customers.

Analysis: The retrospective character of the excise amendment meant that the price of pachwai was deemed always to have been exclusive of tax. The inability to pass on the tax during the earlier period did not affect the power of the legislature to impose tax retrospectively. A retrospective levy may validly operate even if the dealer had no practical opportunity to recover the amount from consumers.

Conclusion: The demand for the earlier period was sustainable and the challenge failed.

Final Conclusion: The statutory amendments removed any constitutional objection to the levy, and retrospective operation did not invalidate the demand for the relevant period.

Ratio Decidendi: A retrospective fiscal amendment validly authorising tax recovery will not be struck down for want of opportunity to pass on the tax, and a levy does not violate Article 304(b) where the law, as retrospectively amended, leaves no trade restriction in substance.

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