Sales tax exemptions challenge dismissed, retrospective legislation upheld. Constitutionality of Delhi Sales Tax Act confirmed.

The court dismissed the writ petitions challenging the assessment and recovery of sales tax, upholding the validity of the withdrawal of sales tax exemptions and the constitutionality of section 3 of the Delhi Sales Tax (Amendment and Validation) Act, 1976. The court found that the retrospective validation by Parliament effectively re-enacted relevant provisions, removing the basis of the Supreme Court decision. It was concluded that the retrospective legislation did not violate fundamental rights under the Constitution, specifically articles 19(1)(f) and 19(1)(g).

---

---

Issues Involved:
1. Validity of the withdrawal of sales tax exemptions on certain goods.
2. Constitutionality of Section 3 of the Delhi Sales Tax (Amendment and Validation) Act, 1976.

Detailed Analysis:

1. Validity of the Withdrawal of Sales Tax Exemptions:
- The petitioners argued that the goods sold by them were initially exempt from sales tax under the Second Schedule to the Bengal Finance (Sales Tax) Act, 1941, as applied to Delhi. They contended that these exemptions were illegally withdrawn by the Government.
- The Bengal Finance (Sales Tax) Act, 1941, was extended to Delhi under section 2 of the Part C States (Laws) Act, 1950, with necessary restrictions and modifications.
- Originally, section 6(2) required a notice of not less than three months before amending the Second Schedule to withdraw any exemption. However, this was amended by the Government in 1957 to allow "such previous notice as it considers reasonable."
- In Lachmi Narain v. Union of India, it was held that the modification of section 6(2) was ineffective, and the original requirement of three months' notice remained. Thus, the withdrawal of exemptions with less than three months' notice was invalid.
- The Supreme Court later upheld this view, stating that the power to amend or modify the Bengal Finance (Sales Tax) Act was exhausted when it was initially extended to Delhi and could not be exercised repeatedly.

2. Constitutionality of Section 3 of the Delhi Sales Tax (Amendment and Validation) Act, 1976:
- The petitioners argued that section 3 of the Validation Act was unconstitutional for circumventing articles 141 and 265 of the Constitution and violating article 19(1)(f).
- Section 3 of the Validation Act aimed to retrospectively validate the levy, assessment, and collection of sales tax on the commodities in question.
- The Government contended that even if the exemptions were initially invalid, they were retrospectively validated by the Validation Act of 1976.
- The court distinguished between two types of validation statutes: those altering the basis of judicial decisions and those enacting laws contrary to judicial decisions. The former is valid, while the latter is not.
- The court examined whether the Validation Act of 1976 removed the basis of the Supreme Court decision. It was argued that the repealed Bengal Finance (Sales Tax) Act could not be revived by the Validation Act unless re-enacted.
- The court noted that section 6 of the General Clauses Act preserves the effect of repealed statutes for enforcing past liabilities, and section 73 of the Delhi Sales Tax Act, 1975, expressed the legislature's intention to modify the effect of section 6.
- The court held that section 3 of the Validation Act effectively re-enacted the relevant provisions of the Bengal Finance (Sales Tax) Act by parliamentary legislation, thus removing the basis of the Supreme Court decision.
- The court concluded that the retrospective legislation in the form of the Validation Act did not violate the fundamental rights enshrined in articles 19(1)(f) and 19(1)(g) of the Constitution.

Conclusion:
The writ petitions challenging the assessment and recovery of sales tax and seeking a refund were dismissed. The court upheld the validity of the withdrawal of sales tax exemptions and the constitutionality of section 3 of the Delhi Sales Tax (Amendment and Validation) Act, 1976. The retrospective validation by Parliament was deemed effective and not contrary to the Constitution.

---