Retrospective tax validation fails where the legislature does not cure the defect underlying the earlier judicial ruling.

Retrospective validation of Haryana sales tax provisions was ineffective because the amendments did not cure the statutory defect underlying the earlier Supreme Court ruling on purchase tax on paddy. A legislature may validate a levy only if it has competence and removes the basis of the prior judicial decision; a bare attempt to override judgments and bar refunds by declaration is impermissible legislative nullification. On that basis, the validating clauses and retrospective amendment were held ultra vires to the extent they sustained levy and denied refund for the period ending 31 March 1991, and the demand notices under them were quashed.

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Issues: Whether the validating provisions and retrospective amendments to the Haryana sales tax law were within legislative competence and could nullify the effect of the Supreme Court judgment on levy and refund of purchase tax on paddy for the period ending 31 March 1991.

Analysis: The challenged amendments sought to make section 6 subject only to sections 15 and 27, while leaving section 9(1)(b) unamended in substance. The validating clauses in the 2003 and 2004 amending enactments were framed to override judgments, decrees and orders and to bar refund claims for tax collected on paddy purchased from 1 April 1981 onwards. The governing principle is that a legislature may enact retrospectively and validate a levy only if it possesses competence and removes the defect or basis on which the earlier judicial decision rested. A mere declaration that a judicial decision shall not operate, without curing the underlying statutory infirmity, amounts to legislative overreach and impermissible nullification of a binding judgment. On that footing, the attempted validation did not alter the statutory foundation that had entitled the assessees to relief for the relevant pre-1991 period.

Conclusion: The validating clauses and the corresponding retrospective amendment were held ultra vires to the legislative power of the State insofar as they sought to sustain levy and deny refund for the period ending 31 March 1991.

Final Conclusion: The petitions succeeded, the impugned amendments were struck down to the stated extent, and the demand notices issued under them were quashed, leaving the State free to proceed only in accordance with law on refund matters.

Ratio Decidendi: A validating statute is effective only when the legislature removes the legal defect underlying the earlier decision and not when it merely attempts to override that decision by fiat.

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