State Legislature's Retrospective Tax Amendments Ruled Unconstitutional

The Tribunal held that the State Legislature lacked legislative competency to retrospectively amend the Entry Tax Act after the deletion of Entry 52, deeming the amendments unconstitutional. The amendments were found to violate constitutional provisions, creating discrimination and infringing on fundamental rights. Consequently, the Tribunal declared Sections 5 and 6 of the West Bengal Finance Act, 2017, ultra vires and unconstitutional, impacting pending appeals against the original Entry Tax Act, 2012.

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Issues Involved:
1. Legislative Competency
2. Validity of Retrospective Amendment
3. Compliance with Constitutional Provisions
4. Impact of Pending Appeals
5. Discrimination and Violation of Fundamental Rights

Issue-wise Analysis:

1. Legislative Competency:
The primary issue was whether the State Legislature had the legislative competency to amend the Entry Tax Act (2012) after the deletion of Entry 52 from List II of the Seventh Schedule of the Constitution by the 101st Constitutional Amendment Act (2016). The Tribunal held that the deletion of Entry 52 resulted in the State losing its plenary power to legislate on entry tax matters. The Tribunal concluded that the State Legislature could not amend the Entry Tax Act with retrospective effect, as it had lost its legislative competency with the omission of Entry 52.

2. Validity of Retrospective Amendment:
The Tribunal examined whether the retrospective imposition of entry tax by Sections 5 and 6 of the West Bengal Finance Act, 2017, was permissible. It was argued that the State Legislature had attempted to revive the Entry Tax Act, which had been declared unconstitutional by the Single Bench of the Calcutta High Court on 24.06.2013. The Tribunal concluded that the retrospective amendment was unconstitutional, as the State Legislature had lost its power to amend the Entry Tax Act after the deletion of Entry 52.

3. Compliance with Constitutional Provisions:
The Tribunal analyzed whether the amendments complied with Articles 14, 19(1)(g), 301, and 304(a) of the Constitution. The petitioners argued that the amendments created new classes of assessees retrospectively, which was discriminatory and violated the equality clause of the Constitution. The Tribunal held that the amendments were manifestly arbitrary and created hostile discrimination, thus violating Article 14. Additionally, it was noted that the amendments failed to achieve the ostensible purpose of removing defects pointed out by the Single Bench.

4. Impact of Pending Appeals:
The Tribunal considered the impact of the pending appeals against the Single Bench's judgment that declared the Entry Tax Act unconstitutional. It was argued that the Division Bench's interim order allowing assessment proceedings to continue did not imply a stay of the Single Bench's judgment. The Tribunal held that the State Legislature should not have amended the Entry Tax Act during the pendency of the appeal, as the Act was still considered void and unconstitutional.

5. Discrimination and Violation of Fundamental Rights:
The petitioners contended that the amendments imposed entry tax on new classes of assessees retrospectively, which was unreasonable, unjust, and unconstitutional. The Tribunal agreed with the petitioners, stating that the amendments created new liabilities and discriminated against certain assessees. It was also noted that the amendments violated Article 19(1)(g) by imposing unreasonable restrictions on the right to carry on trade and business.

Decision:
The Tribunal declared Sections 5 and 6 of the West Bengal Finance Act, 2017, ultra vires and unconstitutional. The judgment emphasized that the State Legislature lacked the legislative competency to amend the Entry Tax Act after the deletion of Entry 52 and that the retrospective amendments were discriminatory and violated fundamental rights. The judgment applied to all pending applications challenging the West Bengal Finance Act, 2017, but did not cover applications challenging the original Entry Tax Act, 2012.

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