Retrospective sales tax validation under constitutional amendment upheld, with rate, exemption, and hotel-based levy rules clarified.

Section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 was treated as a valid constitutional validating provision within Parliament's amending power under article 368, and its retrospective effect was recognised to support sales tax on supply of food and drinks in hotels and restaurants under the Tamil Nadu General Sales Tax Act, 1959. Entry No. 150 was held unavailable only for the period between 23 March 1987 and 19 September 1987, after which it revived until later deletion. The levy on ice-cream depended on the category and rate in force for the relevant period, entry No. 150 applied by reference to the classified hotel as the place of sale, and exemption under section 6(2) had to be examined at assessment stage.

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Issues: (i) Whether section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 was constitutionally valid and within the Parliament's amending power under article 368 of the Constitution of India; (ii) Whether section 6 retrospectively validated the levy of sales tax on supply of food and drinks in hotels and restaurants under the Tamil Nadu General Sales Tax Act, 1959, including entry No. 150 of the First Schedule; (iii) Whether entry No. 150 of the First Schedule remained unavailable for levy during the period between March 23, 1987 and September 19, 1987; (iv) Whether the levy on ice-cream had to be made only at the concessional rate applicable to the particular category of ice-cream and entry in force from time to time; (v) Whether the applicability of entry No. 150 depended on the place of sale in a classified hotel and not on the status of the person running the catering outlet; (vi) Whether the eligibility for exemption under section 6(2) had to be examined at the stage of assessment itself.

Issue (i): Whether section 6 of the Constitution (Forty-sixth Amendment) Act, 1982 was constitutionally valid and within the Parliament's amending power under article 368 of the Constitution of India.

Analysis: Section 6 was treated as part of the constitutional amendment process and not as an ordinary law. It was held that the amending power under article 368 includes the power to enact validating and consequential provisions needed to give effect to a constitutional amendment. The challenge that such a provision could not be enacted unless incorporated into the body of the Constitution was rejected.

Conclusion: The provision was held constitutionally valid and within the Parliament's amending power.

Issue (ii): Whether section 6 retrospectively validated the levy of sales tax on supply of food and drinks in hotels and restaurants under the Tamil Nadu General Sales Tax Act, 1959, including entry No. 150 of the First Schedule.

Analysis: The expanded meaning of sale under article 366(29-A)(f) was held to enlarge the scope of the existing charging scheme of the Act. The Court held that no fresh charging section was required after the constitutional amendment and the State authorities could assess, levy and collect tax on the transactions covered by the amended definition, subject to the applicable provisions in force from time to time.

Conclusion: The retrospective validating effect of section 6 was upheld and the levy under the Act and entry No. 150 was sustained in principle.

Issue (iii): Whether entry No. 150 of the First Schedule remained unavailable for levy during the period between March 23, 1987 and September 19, 1987.

Analysis: The notification omitting entry No. 150 was held to be subject to the statutory consequence under section 59(2) of the Act. As no effective legislative implementation followed within the stipulated period, the omission notification ceased to have effect after the statutory period and the entry revived until its later deletion by legislation.

Conclusion: Entry No. 150 was not available for levy between March 23, 1987 and September 19, 1987.

Issue (iv): Whether the levy on ice-cream had to be made only at the concessional rate applicable to the particular category of ice-cream and entry in force from time to time.

Analysis: The Court held that the applicable levy depended on the actual category of ice-cream and the entry or notification in force during the relevant period. Where a concessional rate applied, reassessment had to be made on that basis.

Conclusion: The levy on ice-cream had to be aligned with the applicable entry and rate in force for the relevant category and period.

Issue (v): Whether the applicability of entry No. 150 depended on the place of sale in a classified hotel and not on the status of the person running the catering outlet.

Analysis: Entry No. 150 was construed as attaching to sales made in a hotel of the specified class. The decisive factor was the nature and place of the transaction in the classified hotel, not the internal arrangement by which the restaurant was run or the personal status of the lessee or operator.

Conclusion: The entry applied on the basis of the classified hotel as the place of sale and not on the identity of the person running the outlet.

Issue (vi): Whether the eligibility for exemption under section 6(2) had to be examined at the stage of assessment itself.

Analysis: Section 6(2) was treated as a true exemption provision with a statutory burden on the assessee to prove non-collection of tax. The Court held that the assessment authority must consider that claim during assessment and quantification of liability, and the levy could not be kept in abeyance merely because a request for general waiver was pending before the Government.

Conclusion: Exemption under section 6(2) had to be determined at the assessment stage itself.

Final Conclusion: The constitutional challenge failed, the levy on hotel food and drinks was broadly upheld, but limited relief was granted for the period when entry No. 150 was not in force and for reassessment on the correct applicable rates and exemption claims.

Ratio Decidendi: A constitutional validating provision enacted under article 368 may retrospectively enlarge the scope of an existing sales tax regime, and the assessee bears the burden of proving entitlement to statutory exemption where such exemption is expressly conditioned on non-collection of tax.

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