Retrospective tax liability rejected where a new statutory burden cannot be fastened after revocation of agency.

Section 19C of the Kerala General Sales Tax Act, 1963 could not be applied retrospectively to impose a new substantive liability on a person who had already ceased to be a power of attorney holder before the provision came into force. The Court held that a provision creating fresh obligations affecting property rights cannot operate on completed past transactions absent clear statutory language, so invocation of Section 19C against the 7th respondent was impermissible. It also held that revenue recovery and attachment could not stand without an independent assessment fastening liability on that person. The impugned orders, attachment and sale proceedings were quashed as illegal.

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Issues: (i) Whether Section 19C of the Kerala General Sales Tax Act, 1963 could be applied retrospectively to fasten liability on a person who had ceased to be a power of attorney holder before the provision came into force; (ii) Whether the revenue recovery proceedings and attachment of the property were valid in the absence of an independent tax assessment on such person.

Issue (i): Whether Section 19C of the Kerala General Sales Tax Act, 1963 could be applied retrospectively to fasten liability on a person who had ceased to be a power of attorney holder before the provision came into force?

Analysis: Section 19C created a new liability on agents, power of attorney holders and similar persons and was not merely procedural. A provision that imposes new obligations and affects substantive property rights cannot be applied retrospectively to completed transactions unless the statute clearly so provides. On the facts, the power of attorney had been revoked before Section 19C came into force, so the provision could not validly be invoked against the 7th respondent for prior dealings.

Conclusion: The retrospective invocation of Section 19C against the 7th respondent was impermissible and is held against the revenue.

Issue (ii): Whether the revenue recovery proceedings and attachment of the property were valid in the absence of an independent tax assessment on such person?

Analysis: The provision itself contemplated assessment and recovery from the persons brought within its fold. In the absence of a valid independent assessment fastening liability on the 7th respondent, the coercive steps taken under the revenue recovery machinery lacked legal basis. Once the foundational invocation of Section 19C failed, the attachment and sale proceedings based on that alleged liability could not stand.

Conclusion: The revenue recovery proceedings and attachment were invalid and are held against the revenue.

Final Conclusion: The impugned orders were quashed, the proceedings against the 7th respondent were declared illegal, and the petitioner was held entitled to seek land tax payment and transfer of registry if otherwise eligible.

Ratio Decidendi: A statutory provision that creates a new substantive liability cannot be applied retrospectively to completed past transactions, and coercive recovery cannot proceed without a valid assessment fastening such liability on the person proceeded against.

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