TaxTMI 
TaxTMI 
1972 (9) TMI 111
X X X X Extracts X X X X
X X X X Extracts X X X X
....f 1967) are invalid on the ground that they seek to impose sales tax with retrospective effect in an unreasonable manner. 2. According to entry 47 of the First Schedule to the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959) (hereinafter referred to as the principal Act), the sale of "lubricating oils and greases" was liable to sales tax at the point of first sale in the State at 6 per cent. With effect from April 1, 1964, entry 47 was amended by Madras Act 7 of 1964 and instead of the words "lubricating oils and greases" in that entry, the following words were substituted: "Lubricating oils, all kinds of mineral oils (not otherwise provided for in this Act), quenching oils and greases." Till September 30, 1965, it is stated, the assessments were made on the assumption that the amendment of entry 47 had made no difference to sales of furnace oil and they were liable to multi-point tax at 2 per cent. The dealers paid and collected tax on that basis and the department accepted it. The Board of Revenue, on being moved by a dealer, passed a resolution on August 28, 1965, wherein it expressed the view that entry 47, as amended, included furnace oil and transforme....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mely: It would thus appear that according to the amendment the sales tax would be payable during the period from April 1, 1964 to November 30, 1965, on items mentioned in entries 47 and 47-A at the rate of 6 per cent. The rate for the period from December 1, 1965, to June 17, 1967, has been fixed at 6½ per cent. and with effect from June 18, 1967, the rate has been fixed at 7 per cent. Section 4 of the amending Act is the validating section and reads as under: "4. Validation.-Notwithstanding anything contained in any judgment, decree or order of any court or other authority, all taxes levied or collected or purporting to have been levied or collected under the principal Act on the sale of the goods specified in item 47-A of the First Schedule to the principal Act as amended by this Act for the period commencing on the 1st April 1964 and ending with the date of the publication of this Act in the Fort St. George Gazette shall for all purposes be deemed to be, and to have always been validly levied or collected in accordance with law as if section 2 had been in force at all material times when such tax was levied or collected and accordingly,- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ative that the restrictions imposed by the Act are so unreasonable that they should be struck down on the ground that they contravene the fundamental rights granted under article 19(1)(f) and (g) of the Constitution. At the same time, we have to bear in mind that the legislative power conferred on the appropriate Legislatures to enact laws in respect of topics covered by the several entries in the three lists can be exercised both prospectively and retrospectively. Where the Legislature can make a valid law, it may provide not only for the prospective operation of the material provisions of the said law, it can also provide for the retrospective operation of the said provisions. The legislative power, in addition, includes the subsidiary or auxiliary power to validate laws which have been found to be invalid. If a law passed by a Legislature is struck down by the court as being invalid for one infirmity or another, it would be competent to the appropriate Legislature to cure the said infirmity and pass a validating law so as to make the provisions of the said earlier law effective from the date when it was passed: (see Rai Ramkrishna v. State of Bihar [1963] 50 I.T.R. 171 (S.C.); [....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as intended, to cure an infirmity as revealed by the judgment of the High Court and to validate the past levy and collection of tax in respect of all kinds of non-lubricating mineral oils, including furnace oil, with effect from April 1, 1964. The Legislature for this purpose split the original entry 47 into two entries, 47 and 47-A. The new entry 47 related to lubricating oils (not otherwise provided for in the Act), quenching oils and greases, while entry 47-A covered all kinds of mineral oils (other than those falling under item 47 and not otherwise provided for in the Act) including furnace oil. The tax levied by entry 47-A, in our opinion, was not a fresh tax. It seems, as mentioned earlier, that the Legislature had intended as a result of the change made in entry 47 by Act 7 of 1964 to levy tax on sale of mineral oils of all kinds, including non-lubricants, at the rate mentioned in that entry. As the language used by the Legislature in that entry was found by the High Court to be not appropriate for levying tax on sale of non-lubricant mineral oils, the amending Act was passed by the Legislature to rectify and remove the defect in the language found by the High Court, so that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....paramount governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of a penalty or a contractual obligation but rather a means of apportioning the costs of government among those who benefit from it." The above passage was quoted with approval by the Constitution Bench of this Court in the case of Assistant Commissioner of Urban Land Tax v. The Buckingham & Carnatic Co. Ltd. [1970] 75 I.T.R. 603 (S.C.); [1970] 1 S.C.R. 268. 9. The period from April 1, 1964, to September 13, 1965, during which the sales tax authorities charged multi-point tax on sale of furnace oil at the rate of 2 per cent. was, in our opinion, very short and did not give rise to some kind of vested right in favour of the appellants. It may well be that the matter had not till then been examined by the higher authorities. It was only when the Board of Revenue was moved that the opinion was expressed by the Board as per resolution dated August 28, 1965, that entry 47 covered furnace oil. 10. In the case of Rai Ramkrishna [1963] 50 I.T.R. 171 (S.C.); [1964] 1 S.C.R. 897., this court dealt with the validity of the Bihar Taxation on Passengers and Goods (Carried by Pub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ature on August 1, 196 1, and was published on September 18, 196 1. Section 2 of the impugned Act sought to put a meaning on the notification of July 1, 1949, and stated that the notification shall always be deemed to have meant like that. One of the contentions raised in that case was that the retrospective operation of the impugned section should be struck down as unconstitutional because it imposed unreasonable restrictions on the petitioner's fundamental right under article 19(1)(g). This contention did not find favour with this court and it was observed that a legislation could not be struck down although the retrospective operation might operate harshly in some cases. 12. In the case of M/s. J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh [1961] 12 S.T.C. 429 (S.C.); [1962] 2 S.C.R. 1., this court referred to the earlier case of Union of India v. Madan Gopal Kabra [1954] 25 I.T.R. 58 (S.C.); [1954] S.C.R. 541., and held that the power to make retrospective legislation in cases relating to tax on sale of goods was the same as in the case of income-tax. It was observed: "The power of a Legislature to enact a law with reference to a topic entrusted to it is, a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wer of the Legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the Legislature. This question is concluded by the decision of this court in The Tata Iron & Steel Co. v. State of Bihar [1958] 9 S.T.C. 267 (S.C.); [1958] S.C.R. 1355." 14. In the case of Jaora Sugar Mills (P.) Ltd. v. State of Madhya Pradesh [1966] 1 S.C.R. 523., this court dealt with the validity of section 3 of the Sugar- cane Cess (Validation). Act, 1961 (Central Act 38 of 1961). The said section concerned the levy of sugarcane cess and provided that "all cesses imposed, assessed or collected or purported to have been imposed, assessed or collected under any State Act before the commencement of this Act, shall be deemed to have been validly imposed, assessed or collected in accordance with law as if the provisions of the said Act and of notifications, orders and rules issued or made thereunder in so far as such provi....