Unguided executive tax ination power under disputed-rate provisions was held arbitrary and unconstitutional, with all orders quashed.

Section 59A of the Kerala General Sales Tax Act, 1963 was held unconstitutional because it conferred unguided executive power to determine disputed tax rates without adequate standards, procedural safeguards, or limits on scope and effect. The provision was found to operate as a quasi-judicial adjudication without the protections normally associated with assessment, appeal, revision, and judicial scrutiny, and its working was held to be arbitrary and inconsistent with the requirement that tax be imposed only by authority of law. The section was declared ultra vires Article 14, and all orders passed under it were quashed.

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Issues: Whether section 59A of the Kerala General Sales Tax Act, 1963, empowering the Government to determine the rate of tax in disputed cases, was constitutionally valid and whether orders passed under it were liable to be quashed.

Analysis: Section 59A vested the executive with power to decide disputed questions relating to rate of tax without adequate guidance, procedural safeguards, or limits on the scope and effect of the decision. The provision enabled a governmental determination that functioned in substance as a quasi-judicial adjudication, yet it lacked the institutional safeguards normally attendant upon such adjudication, including hearing of parties, rational standards, and protection against arbitrary or retrospective effect. The Court found that the provision disrupted the established statutory scheme of assessment, appeal, revision, and judicial scrutiny, and that its actual working disclosed patent arbitrariness and excessive executive intrusion into adjudicatory functions. The impugned power was held to offend the guarantee against arbitrariness and the constitutional requirement that tax be imposed only by authority of law.

Conclusion: Section 59A was held unconstitutional, violative of Article 14 of the Constitution of India, and ultra vires the Constitution; all orders passed in exercise of that provision were quashed.

Final Conclusion: The writ petitions succeeded, and the impugned executive clarifications and determinations under section 59A could not survive.

Ratio Decidendi: A taxing provision that confers unguided and uncontrolled adjudicatory power on the executive, without adequate standards and safeguards, is arbitrary and unconstitutional.

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