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of <h1>Court upholds retrospective tax amendment, emphasizing legislative authority to rectify flaws.</h1> <h3>Technova Imaging Systems Ltd. Versus State of Maharashtra and others</h3> Technova Imaging Systems Ltd. Versus State of Maharashtra and others - [2009] 25 VST 277 (Bom) Issues:Challenge to the retrospective amendment of the definition of 'manufacture' in the Bombay Sales Tax Act, 1959.Contentions regarding overruling a court decision and retrospective effect of the amendment.Analysis:The petitioner, engaged in lacquering polyester films, challenged the retrospective amendment to the definition of 'manufacture' in the Sales Tax Act, which now includes lacquering. The challenge arose after a court decision held that lacquering did not amount to manufacture. The petitioner argued that the Legislature cannot overrule a court decision and that retrospective taxation is impermissible. However, the court held that the amendment was necessary to rectify the flaw in the definition of 'manufacture' and safeguard revenue collected on lacquered films. The court emphasized that the Legislature can amend laws to remove flaws leading to specific court interpretations, even with retrospective effect, unless prohibited by the Constitution or lacking legislative competence.In the case of Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, the Supreme Court outlined principles for validating taxes declared illegal by courts. The court's decision binds unless circumstances fundamentally change. Validation requires removing grounds of illegality and making the tax legal. The Legislature can provide jurisdiction, re-enact valid provisions retrospectively, or interpret laws differently to neutralize court decisions. The validity of a validating law depends on legislative competence and adequacy in rectifying defects found by courts. This principle was reiterated in the ITW Signode India Ltd. v. Collector of Central Excise case.Ultimately, the court dismissed the petition, stating that the amendment was necessary to correct the flaw in the definition of 'manufacture' and protect revenue collected on lacquered films. The court found no merit in the petitioner's contentions against overruling a court decision and retrospective taxation, emphasizing the Legislature's authority to amend laws to rectify flaws and interpretations, even with retrospective effect.
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