Retrospective validating tax law upheld after curing defect in sales tax exemption and surviving constitutional challenge.

A Legislature may retrospectively validate and modify a taxing exemption by curing the underlying legal defect on which an earlier writ judgment rested, and such enactment is not an impermissible legislative overruling merely because it alters the basis of the prior decision. Retrospective taxation or validation is not unconstitutional by itself; absent material showing confiscatory effect or arbitrary deprivation, the measure does not offend Articles 14 or 19(1)(g). The sales tax restriction was therefore upheld as a valid curative law, and the challenge to the exemption failed.

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Issues: (i) whether the State Legislature could validly enact retrospective legislation restricting the sales tax holiday earlier granted under the Government Order and thereby neutralise the effect of the prior writ judgment; (ii) whether the retrospective restriction was arbitrary, unreasonable, confiscatory, or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Issue (i): Whether the State Legislature could validly enact retrospective legislation restricting the sales tax holiday earlier granted under the Government Order and thereby neutralise the effect of the prior writ judgment.

Analysis: The earlier judgment had struck down the attempted limitation introduced by a mere memo because the Government Order could be altered only by a valid notified order under Article 166(2) of the Constitution of India, and not by an executive instruction. The impugned enactment cured that defect by incorporating the restriction through legislation. A Legislature may enact a validating law retrospectively and may remove or alter the legal basis of an earlier decision, so long as it does not merely declare the earlier judgment invalid but instead changes the underlying law. No vested right can be claimed from a defect in the earlier regime, and there is no estoppel against the Legislature.

Conclusion: The retrospective validating legislation was within legislative competence and did not amount to impermissible legislative overruling of the earlier judgment.

Issue (ii): Whether the retrospective restriction was arbitrary, unreasonable, confiscatory, or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: Retrospective taxation or validation is not unconstitutional merely because it imposes a burden for the past. The inability of the assessees to pass on the tax to consumers does not make a sales tax law invalid, since it is not an essential characteristic of sales tax that the seller must be able to recover it from the purchaser. The Court found no material to show that the levy was confiscatory or that the retrospective effect created such unfairness as to violate constitutional guarantees. The legislation was treated as a curative measure designed to remove the earlier legal defect, not as a punitive or arbitrary measure.

Conclusion: The retrospective restriction was neither arbitrary nor confiscatory and did not violate Articles 14 or 19(1)(g) of the Constitution of India.

Final Conclusion: The impugned enactment was upheld as a valid retrospective validating law, and the challenge to the restriction on the sales tax holiday failed in entirety.

Ratio Decidendi: A Legislature may retrospectively validate and modify a taxing exemption by removing the legal defect on which an earlier judgment rested, and such a law is constitutional unless it merely nullifies the judgment without curing the underlying infirmity or otherwise infringes constitutional limits.

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