Retrospective sales tax on certified seeds upheld; legislative power, no promissory estoppel, and no arbitrariness found.

Retrospective taxation of certified seeds under the Karnataka Sales Tax Act was upheld because the State Legislature's power to enact fiscal laws included retrospective operation. The court rejected promissory estoppel, holding that an administrative clarification could not restrain a valid legislative amendment and that no representation contrary to statute could defeat the levy. It also found the levy neither arbitrary nor unreasonable merely because the taxpayer had not collected the enhanced tax from purchasers, noting that tax liability attached at the point of sale and assessment only quantified that liability. The retrospective inclusion of certified seeds in the tax schedule was therefore sustained.

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Issues: (i) Whether the Karnataka Legislature had competence to enact a retrospective amendment taxing certified seeds under the Karnataka Sales Tax Act, 1957; (ii) whether promissory estoppel could bar the retrospective levy based on the Commissioner's earlier clarification; (iii) whether the levy was arbitrary or unreasonable because the appellant had not collected the enhanced tax from purchasers.

Issue (i): Whether the Karnataka Legislature had competence to enact a retrospective amendment taxing certified seeds under the Karnataka Sales Tax Act, 1957.

Analysis: The power to legislate on sales tax is plenary under the relevant entry in the State List and includes the power to legislate both prospectively and retrospectively. A retrospective fiscal enactment is not invalid merely because it operates on past transactions, and the legislative classification adopted to bring seeds within the tax net was within legislative power.

Conclusion: The challenge to legislative competence failed and the retrospective amendment was upheld.

Issue (ii): Whether promissory estoppel could bar the retrospective levy based on the Commissioner's earlier clarification.

Analysis: Promissory estoppel cannot operate against the Legislature in the exercise of its legislative function. An administrative clarification cannot prevent the Legislature from enacting a valid retrospective law, and a representation contrary to statute cannot defeat a legislative amendment.

Conclusion: The plea of promissory estoppel was rejected.

Issue (iii): Whether the levy was arbitrary or unreasonable because the appellant had not collected the enhanced tax from purchasers.

Analysis: Sales tax attaches at the point of sale, and assessment only quantifies the liability. The fact that the appellant did not collect the higher amount from purchasers does not invalidate the levy or make the retrospective amendment arbitrary. The absence of ambiguity after the legislative amendment also defeated the appellant's reliance on the doctrine of resolving ambiguity in favour of the assessee.

Conclusion: The levy was held not to be arbitrary or unreasonable.

Final Conclusion: The retrospective inclusion of certified seeds in the tax schedule was sustained, and the writ appeals failed in entirety.

Ratio Decidendi: A valid taxing Legislature may enact retrospective fiscal legislation, and neither promissory estoppel nor the taxpayer's failure to pass on the tax can invalidate such a levy.

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