Retrospective tax exemption and writ remedy: alternative appeal did not bar relief where statutory amendment changed the assessment position.

The Karnataka HC noted that an alternative appellate remedy does not, by itself, bar writ jurisdiction under Article 226, particularly where a retrospective statutory amendment affects the legal position and could not be effectively addressed through the ordinary appellate route. It also stated that Explanation II to the Fourth Schedule of the Karnataka Sales Tax Act, 1957, as inserted retrospectively by the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1982, exempted steel products manufactured from tax-paid raw materials from sales tax for the covered period. On that basis, the assessment view contrary to the amendment was set aside and the matter was remitted for fresh assessment.

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Issues: (i) whether the availability of an appellate remedy barred the exercise of writ jurisdiction under Article 226 of the Constitution of India in the circumstances of the case; (ii) whether, in view of the retrospective amendment introducing Explanation II to the Fourth Schedule of the Karnataka Sales Tax Act, 1957, steel products manufactured from tax-paid raw materials were exempt from sales tax.

Issue (i): Whether the availability of an appellate remedy barred the exercise of writ jurisdiction under Article 226 of the Constitution of India in the circumstances of the case.

Analysis: The existence of an alternative remedy is only one factor in deciding whether to entertain a writ petition and does not oust writ jurisdiction. The retrospective amendment altered the legal position in a manner that the appellate authority could not have effectively considered if the ordinary appellate route had been pursued immediately after assessment.

Conclusion: The writ petition was maintainable despite the non-availment of the appellate remedy, and the objection based on alternative remedy failed.

Issue (ii): Whether, in view of the retrospective amendment introducing Explanation II to the Fourth Schedule of the Karnataka Sales Tax Act, 1957, steel products manufactured from tax-paid raw materials were exempt from sales tax.

Analysis: Explanation II, inserted by the Karnataka Taxation and Certain Other Laws (Amendment) Act, 1982, provided that where tax had been paid on the raw materials used for manufacture of steel products, such steel products were exempt from sales tax. As the amendment operated retrospectively from the commencement of the Act up to 1 April 1978, the contrary view taken in the assessment order could not stand.

Conclusion: The steel products were exempt from sales tax for the relevant period, and the assessment order was liable to be quashed.

Final Conclusion: The appeal succeeded, the writ petition was allowed, the assessment was set aside, and the matter was remitted for fresh assessment in accordance with law.

Ratio Decidendi: A retrospective tax exemption enacted by amendment must be applied to pending and concluded assessments for the covered period, and the existence of an appellate remedy does not bar writ relief where the legal issue turns on such retrospective statutory change.

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