Validating tax legislation must cure the defect, not merely override an earlier judgment or retain unlawfully collected tax.

Retrospective enhancement of sales tax on arrack was held unconstitutional because it did not cure the defect that had invalidated the earlier levy; a mere steep increase in rate cannot sustain amounts already collected or erase the legal effect of the prior ruling. The provision purporting to nullify the earlier judgment and deny refund was also invalid, because a validating law must remove the basis of invalidity rather than simply override a binding judicial decision or retain unlawfully collected tax. A validating enactment is sustainable only when it cures the underlying illegality.

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Issues: (i) Whether the retrospective enhancement of the rate of sales tax on arrack from 6 1/2 per cent to 45 per cent, with effect from 1 April 1966, was arbitrary and unconstitutional. (ii) Whether the provision purporting to nullify the earlier High Court judgment and deny refund of tax already collected was valid.

Issue (i): Whether the retrospective enhancement of the rate of sales tax on arrack from 6 1/2 per cent to 45 per cent, with effect from 1 April 1966, was arbitrary and unconstitutional.

Analysis: The amendment did not remove the defect or lacuna identified by the earlier judgment. It did not cure the basis of invalidity in the levy; instead, it merely raised the rate steeply with retrospective effect so as to retain amounts already collected and avoid the refund consequence flowing from the binding earlier decision. A retrospective levy may be sustained when a valid legislative basis is created and the defect is removed, but a mere increase of rate, without curing the illegality, cannot justify nullifying the effect of the judgment.

Conclusion: The retrospective enhancement of the rate to 45 per cent was invalid and unconstitutional.

Issue (ii): Whether the provision purporting to nullify the earlier High Court judgment and deny refund of tax already collected was valid.

Analysis: A legislature may validate a levy by removing the defect on which the earlier invalidity rested, but it cannot simply declare a judicial decision ineffective or direct that amounts illegally collected be retained despite a concluded judgment. The impugned provision did not validate the levy by curing its legal defect; it attempted only to override the binding judgment and prevent refund. That amounted to an impermissible inroad into judicial power.

Conclusion: The provision seeking to nullify the earlier judgment and bar refund was invalid and unconstitutional.

Final Conclusion: The appeals succeeded to the extent that the retrospective enhancement and the validating clause were struck down, while the remainder of the judgment was left undisturbed.

Ratio Decidendi: A validating enactment is constitutionally sustainable only if it removes the defect that rendered the earlier levy invalid and does not merely override a binding judicial decision or impose a retrospective tax without curing the underlying illegality.

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