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of <h1>Interpretation of Tax Law: Prospective Application, Clarity Needed on Pricing Guidelines</h1> The court held that sections 2(1)(s)(ii) and 14-B of the Andhra Pradesh General Sales Tax Act, 1957, are prospective and not applicable to periods before ... - Issues Involved:1. Vires, scope, and ambit of section 2(1)(s)(ii) and section 14-B of the Andhra Pradesh General Sales Tax Act, 1957.2. Prospective application of section 14-B.3. Validity of reassessment for periods prior to 1st July 1985.4. Allegation of arbitrary and unbridled power under section 14-B.5. Validity of reassessment notices under section 14(4).6. Alternative remedy argument by the State.Summary of Judgment:1. Vires, Scope, and Ambit of Section 2(1)(s)(ii) and Section 14-B:The main question was the vires, scope, and ambit of section 2(1)(s)(ii) and section 14-B of the Andhra Pradesh General Sales Tax Act, 1957. Section 14-B allows reassessment if prices shown are abnormally low compared to prevailing market prices. Section 2(1)(s)(ii) defines 'turnover' to include the total amount of consideration if the bill does not correctly set out the sale amount.2. Prospective Application of Section 14-B:Section 14-B affects vested rights and is prospective from 1st July 1985. The court held that 'no retrospectivity can be given to such substantive provisions affecting the vested rights of the assessees unless the legislature specifically or by necessary implication conferred retrospectivity on such provisions.'3. Validity of Reassessment for Periods Prior to 1st July 1985:The Government of Andhra Pradesh issued G.O. Ms. No. 938, clarifying that assessments prior to 1st July 1985 cannot be reopened under section 14-B. The court agreed, stating, 'Indisputably the said two provisions are substantive in nature and the same can be invoked only in respect of the transactions relatable to the period subsequent to 1st July, 1985 and not for the period anterior thereto.'4. Allegation of Arbitrary and Unbridled Power under Section 14-B:Section 14-B was challenged as ultra vires for conferring unbridled power without guidelines, leading to arbitrary assessments. The court noted, 'The scheme of assessment contemplated under section 14-B(1) of the Act is so vague and uncertain that there is abundant scope and vulnerability for each assessing authority to take a different view and adopt a different yardstick for different assessees with different consequences, resulting in drawing invidious discrimination between similarly placed dealers.'5. Validity of Reassessment Notices under Section 14(4):Reassessment notices under section 14(4) were treated as issued under section 14-B, as they were based on price variations with market prices. The court stated, 'If only the aforesaid material is excluded from consideration, there is no other material mentioned in any show cause notices from which the assessing authority could form the belief that any turnover had escaped assessment to tax under the Act.'6. Alternative Remedy Argument by the State:The State's contention that writ petitions should not be entertained due to alternative remedies was rejected. The court held, 'It is settled law now that the writ petitions cannot be rejected on the ground of availability of alternative remedy when the writ petitions had already been admitted, and rule nisi was issued and the writ petitions have been pending for quite some time in the High Court.'Conclusion:The court declared sections 2(1)(s)(ii) and 14-B of the Act prospective and not applicable to periods before 1st July 1985. It also held these sections must be read down until the legislature prescribes guidelines for determining 'prevailing market prices' and 'abnormally low.' The impugned notices were quashed, and the authorities were restrained from reopening assessments based on price variations.
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