Retrospective sales tax amendment upheld as valid, but assessments depended on declaration timing and declared-goods protection.

A retrospective amendment to section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act was analysed as a fiscal measure within the State's legislative competence; it was found not to tax inter-State or export sales directly, not to offend article 286, not to conflict with sections 4 and 5 of the Central Sales Tax Act, and not to violate article 301, so the provision was upheld as valid. The article also notes that assessments could not be sustained where declarations had been made in the pre-amendment form or where declared goods attracted statutory protection, because dealers could not be penalised for using the then-applicable form and statutory relief could not be defeated by timing issues. Assessments were sustained only where declarations were made after the amended form came into force.

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Issues: (i) Whether the amended section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947, as retrospectively introduced, was unconstitutional or repugnant to the Central Sales Tax Act, 1956 and the Constitution of India; (ii) whether assessments made on the basis of the amended provision were sustainable in cases where declarations were furnished in the unamended form or where declared goods were involved.

Issue (i): Whether the amended section 5(2)(A)(a)(ii) of the Orissa Sales Tax Act, 1947, as retrospectively introduced, was unconstitutional or repugnant to the Central Sales Tax Act, 1956 and the Constitution of India.

Analysis: The amended provision did not purport to tax sales in the course of inter-State trade or export, but operated on the dealer's declaration and the consequent liability arising on breach of that undertaking. The State Legislature was competent to enact the measure under entry 54 of List II, and the retrospective feature did not by itself invalidate the law. The provision was held not to offend article 286, not to be repugnant to sections 4 and 5 of the Central Sales Tax Act, 1956, and not to infringe article 301, since the amendment did not directly and immediately restrict the free flow of trade.

Conclusion: The amended section 5(2)(A)(a)(ii) was upheld as constitutionally valid and intra vires.

Issue (ii): Whether assessments made on the basis of the amended provision were sustainable in cases where declarations were furnished in the unamended form or where declared goods were involved.

Analysis: Where the declarations were furnished before amendment in the original form, the assessees could not be faulted for not using a subsequently amended form; the law did not compel the impossible. In cases involving declared goods, the Court applied the scheme of section 15 of the Central Sales Tax Act, 1956 and section 14-B of the Orissa Sales Tax Act, 1947, read with rule 42-A of the Orissa Sales Tax Rules, 1947, and held that the assessees should not be denied the statutory benefit merely because the assessment machinery operated after the period for refund had expired. However, where declarations were furnished after the amended form came into force, the assessments based on breach of the new undertaking were sustained.

Conclusion: The assessments were quashed in the first two categories and were sustained in the cases falling under the amended-form category.

Final Conclusion: The amendment itself was sustained, but its application was limited by the timing of the declarations and by the statutory protection available for declared goods, resulting in partial relief to the assessees.

Ratio Decidendi: A retrospective fiscal amendment is valid if it remains within legislative competence and does not directly tax constitutionally protected transactions, but its application cannot operate so as to penalise a dealer for non-compliance with a declaration that could not legally have been made in the amended form, nor defeat statutory relief governing declared goods.

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