Retrospective penalty validation under sales tax law upheld, and constitutional vires challenge left outside tax reference jurisdiction.

Retrospective validation of section 17(3) of the Madhya Pradesh General Sales Tax Act, 1958 made the amended penalty provision part of the principal Act from its commencement, so delayed quarterly returns and late tax payment attracted penalty. The Article 20 objection was treated as a constitutional vires challenge, which could not be examined in a reference under section 44 because that jurisdiction required application of the law as enacted, not determination of statutory validity. On the retrospective footing of the amended provision, the default was punishable and the penalty was held lawfully imposable.

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Issues: Whether penalty for late submission of quarterly returns and late payment of tax was legally leviable in view of the retrospective amendment to the penalty provision and the challenge based on Article 20 of the Constitution of India.

Analysis: The penalty provision in section 17(3) of the Madhya Pradesh General Sales Tax Act, 1958 was amended by the validating legislation and given retrospective effect by section 10 of the amending Act, so that the amended provision was deemed to form part of the principal Act from its commencement. The objection founded on Article 20 was treated as a challenge to the constitutional validity of the amended provision. Such a vires objection could not be examined in a reference under section 44, because the Board and the Court in that jurisdiction had to apply the law as it stood and could not decide the constitutional validity of the statute. On the retrospective footing of the amended provision, the default committed by the assessee attracted the penalty.

Conclusion: The penalty was lawfully imposable and the question was answered against the assessee.

Final Conclusion: The reference was answered by upholding the levy of penalty for the delayed returns and delayed tax payment under the retrospectively amended provision.

Ratio Decidendi: A constitutional challenge to the vires of a statutory provision cannot be adjudicated in a tax reference limited to answering a question under the Act, and a retrospectively validated penalty provision governs the default when the law so enacted authorises the levy.

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