Retrospective sales tax assessment upheld where section 17B was treated as a procedural mechanism, not an invalid levy.

Section 17B of the Kerala General Sales Tax Act, inserted by the Kerala Finance Act, 2005, was upheld as a special procedural mechanism for completing assessments on purchases made during the interim period between 1 April 2004 and 27 July 2004. The provision was treated as addressing assessment of an existing tax liability arising under the declared rate regime, not as imposing an impermissible retrospective levy. The possibility of a refund claim under the provisional collection statute did not negate the tax incidence or the power to assess. The Article 265 challenge failed, and the assessment and consequential notice were not liable to be quashed.

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Issues: Whether section 17B of the Kerala General Sales Tax Act, 1963, inserted by the Kerala Finance Act, 2005, was unconstitutional or ultra vires, and whether the assessment made under that provision and the consequential notice were liable to be quashed.

Analysis: The disputed provision was enacted to provide a special method for completing assessment in respect of purchases made during the interregnum between 1 April 2004 and 27 July 2004, when the declared Finance Bill provisions operated by virtue of the Kerala Provisional Collection of Revenues Act, 1985. The assessee had purchased goods after availing the declared rate and making the declaration that it was the last seller, and the later retrospective enactment did not erase the liability arising during that period. The existence of a possible refund claim under the provisional collection statute did not negate the tax incidence or the power to complete assessment. The provision was treated as a special procedural measure for assessment and not as an impermissible retrospective levy. The challenge based on Article 265 of the Constitution of India also failed.

Conclusion: The challenge to section 17B failed and the assessment was not liable to be interfered with.

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