Retrospective tax amendment for works contracts revived recovery powers and allowed enforcement under the amended sales tax law.

Retrospective substitution of the charging and recovery provisions under the Rajasthan Sales Tax framework was treated as curing the earlier unenforceability of tax on turnover of goods involved in works contracts. The amended section 5(3), effective from 1 April 1987, together with the substituted rule 29(2)(i), supplied the statutory basis that had previously been found lacking, so the revenue authorities could proceed to recover tax in accordance with the amended law. On that basis, the challenge to recovery failed and the order of the Single Judge was set aside.

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Issues: Whether, in view of the Rajasthan Sales Tax (Amendment) Act, 1994 and the substituted rule, the authorities were entitled to recover tax in relation to works contracts notwithstanding the earlier declaration that the levy and collection provisions were unconstitutional.

Analysis: The earlier legal position had been that no authority existed under the Rajasthan Sales Tax Act, 1954 to levy tax on the turnover of goods involved in execution of works contracts, and the relevant charging and recovery provisions had been struck down. The amended law substituted section 5(3) with retrospective effect from 1 April 1987, and rule 29(2)(i) was also substituted. The Court treated these subsequent statutory changes as relevant and held that, in light of the amended provisions, the previous order could not stand and the authorities could proceed to recover tax according to law.

Conclusion: The challenge failed and the amended provisions were held to permit recovery of tax by the authorities.

Final Conclusion: The appeals were allowed and the order of the learned single Judge was set aside, leaving the revenue authorities free to proceed under the amended law.

Ratio Decidendi: Where the legislature retrospectively supplies the charging and recovery machinery for a tax that had earlier been held unenforceable, the authorities may act under the amended provisions and recover tax in accordance with law.

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