Retrospective tax amendment validated penalty, while vires challenge was held outside reference jurisdiction.

A retrospective amendment to section 17(3) of the M.P. General Sales Tax Act, 1958 was treated as part of the principal Act from its commencement, so the penalty for default was tested on the amended law and sustained notwithstanding the Article 20(1) objection. The constitutional challenge to the amended provision could not be examined by the Board of Revenue or in reference proceedings, as vires could not be gone into in that forum. On that footing, the penalty under the retrospectively amended provision was upheld and the reference was answered against the assessee.

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Issues: (i) Whether the retrospective amendment to section 17(3) of the M.P. General Sales Tax Act, 1958, validated the penalty imposed for default notwithstanding article 20(1) of the Constitution of India; (ii) Whether the Tribunal or the reference court could examine the constitutional validity of the amended provision.

Issue (i): Whether the retrospective amendment to section 17(3) of the M.P. General Sales Tax Act, 1958, validated the penalty imposed for default notwithstanding article 20(1) of the Constitution of India.

Analysis: Section 17(3) was amended by the M.P. General Sales Tax (Amendment and Validation) Act, 1971, and the amendment was expressly given retrospective effect by section 10 so as to form part of the principal Act from its commencement. In view of that retrospective operation, the penalty order was to be tested on the amended law. The contention based on article 20(1) was rejected in the reference, and the retrospective amendment was treated as curing the basis of the penalty.

Conclusion: The retrospective amendment validly supported the penalty, and the answer was in favour of the department.

Issue (ii): Whether the Tribunal or the reference court could examine the constitutional validity of the amended provision.

Analysis: The Board of Revenue was held to have no jurisdiction to entertain a challenge to the vires of a provision of the Act. That constitutional objection could not be gone into in the reference proceedings before the Court either. The only question was whether the penalty order stood under the amended and retrospectively operating provision.

Conclusion: The Tribunal could not examine the constitutional validity of the amended provision, and the answer was in favour of the department.

Final Conclusion: The reference was answered against the assessee and the penalty imposed under the retrospectively amended provision was upheld.

Ratio Decidendi: Where a taxing amendment is expressly made retrospective, the validity of an order passed under the amended provision is judged on that retrospective footing, and a reference court will not entertain a vires challenge to the statutory provision in such proceedings.

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