Retrospective tax validation and specific tariff classification governed the rate on acrylic knitting yarn.

Retrospective tax validation was upheld as within legislative competence, and the amendment was not rendered unconstitutional merely because it prevented dealers from passing on the tax burden. The validating enactment operated through a legal fiction and had to be given full effect once validly made. On classification, acrylic yarn sold as knitting yarn fell within the specific notification covering knitting yarn of woollen, acrylic or any other kind, so the specific entry prevailed over the later general rate. The correct incidence was the notified 6% rate plus 1% additional tax, not the higher 8% rate applied by the revenue.

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Issues: (i) Whether the retrospective amendment validating the notification altering the tax treatment of yarn was unconstitutional. (ii) Whether acrylic yarn sold as knitting yarn was taxable at 6% plus additional tax of 1%, or at the higher rate of 8% applied by the revenue.

Issue (i): Whether the retrospective amendment validating the notification altering the tax treatment of yarn was unconstitutional.

Analysis: The retrospective amendment was within the legislature's competence, and the inability of a dealer to pass on the tax burden to purchasers did not by itself attract invalidity under Article 19(1)(f) or 19(1)(g). A validating enactment can operate retrospectively by creating a legal fiction, and once so enacted it must be given full effect.

Conclusion: The challenge to the retrospective validating amendment failed.

Issue (ii): Whether acrylic yarn sold as knitting yarn was taxable at 6% plus additional tax of 1%, or at the higher rate of 8% applied by the revenue.

Analysis: Acrylic yarn marketed for knitting fell within the expression used in the relevant notification covering knitting yarn, whether woollen, acrylic or of any other kind. The general later notification did not displace the specific earlier notification as retrospectively amended, and the reasoning that the commodity had to be treated as knitting wool so as to attract a higher rate was not sustained. The applicable incidence was therefore the notified 6% rate together with the additional 1% tax.

Conclusion: The revenue could not lawfully assess the turnover at 8%; the applicable total rate was 7%.

Final Conclusion: The petition succeeded only to the extent that the assessments were set aside and the matter was remitted for fresh assessment on the correct tax rate, while the constitutional challenge to the validating amendment was rejected.

Ratio Decidendi: A retrospective tax validation enacted within legislative competence is not invalid merely because it prevents a dealer from passing on the tax burden, and a commodity specifically covered by a notification must be assessed under that specific entry rather than a higher general rate.

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