Retrospective tax validation upheld where legislature cured a drafting defect and clarified the scope of an edible oil exemption.

A competent Legislature may retrospectively amend and validate a fiscal law to cure a drafting defect and clarify the intended scope of a tax exemption, and such retrospective operation will not be invalid merely because it creates hardship or prevents the tax burden from being passed on. The Bombay HC accepted that the amendment defining an edible oil unit and validating past assessments under the Bombay Sales Tax Act had a rational basis as a legislative correction following earlier judicial interpretation. It held that the retrospective amendment was neither arbitrary nor unreasonable and did not violate Article 14.

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Issues: Whether the retrospective operation of the amendment defining "edible oil unit" and validating past assessments under the Bombay Sales Tax Act was unconstitutional as arbitrary, unreasonable, or violative of Article 14.

Analysis: The challenge was confined to the retrospective reach of the amending legislation. The controlling principle was that a Legislature competent to enact a tax law may validate past transactions and cure defects by retrospective amendment, provided it does not transgress constitutional limits. The Court relied on the settled distinction between mere hardship and constitutional invalidity, and held that the fact that the tax burden might not have been passed on by the dealers does not by itself make retrospective taxation unreasonable. The Court further accepted that the State had identified a rational basis for withdrawing the exemption from edible oil units and for clarifying the definition after the earlier judicial interpretation had revealed an omission in the drafting. The retrospective amendment was therefore treated as a permissible legislative correction of the earlier definition and validating provision, not as an arbitrary imposition.

Conclusion: The retrospective amendment was upheld and was not found to violate Article 14 or to be otherwise arbitrary or unreasonable.

Ratio Decidendi: A competent Legislature may retrospectively amend and validate a fiscal law to cure a drafting defect and clarify its intended scope, and such retrospective operation will not be struck down merely because it causes hardship or prevents the incidence of tax from being passed on, unless it is shown to be plainly arbitrary or confiscatory.

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