Retrospective sales tax validation upheld for paper; enhanced rate and liability survived challenge to ordinance-based levy.

Paper remained taxable at 8% under entry 106 of the Kerala General Sales Tax Act after the rate increase from 4% through Ordinance No. 37 of 2001, which operated until it ceased under Article 213(2)(a). A later ordinance with retrospective effect from 31 December 2001, followed by the Amendment Act, preserved the enhanced levy. Gazette publication was produced, so non-publication was not established, and ignorance of the change did not excuse liability. Collection from buyers under section 22 was only a facility, not a condition of tax liability, so the retrospective validation and demand were sustained.

---

---

Issues: Whether the demand of differential sales tax at 8% on paper from 1 January 2002 was valid, including the effect of the promulgated Ordinances, the operation of Article 213(2)(a) of the Constitution of India, and the challenge to retrospective validation by the Amendment Act.

Analysis: Paper was taxable under entry 106 of the First Schedule to the Kerala General Sales Tax Act, 1963. The rate stood increased from 4% to 8% by Ordinance No. 37 of 2001 with effect from 1 January 2002, and that Ordinance had the force of law until it ceased to operate under Article 213(2)(a) for want of laying before the Legislature. Before that consequence took effect, Ordinance No. 4 of 2002 was promulgated and given retrospective effect from 31 December 2001 to continue the increased rate. The later Amendment Act merely retained that position. The Court held that non-publication was not established because the Gazette publication was produced, and ignorance of the amendment by the dealers or departmental officers did not create immunity from tax. It further held that inability to collect tax from buyers did not invalidate the levy, since collection under section 22 of the Kerala General Sales Tax Act, 1963 is only a privilege and not a condition of liability. The retrospective validation was not treated as oppressive or arbitrary on the facts, and the demand was sustained.

Conclusion: The demand for tax at 8% was upheld and the challenge to the levy failed.

---