1994 (1) TMI 253

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.... Taxation Commissioner, the assessment proceedings against the petitioner in respect of payment of purchase tax were reopened under section 40 of the Haryana General Sales Tax Act, 1973 (hereinafter referred to as "the Act"). The Assessing Authority vide its order dated October 30, 1981, held the petitioner liable to pay tax on the purchase of rice bran at 7 per cent in respect of the assessment year 1977-78. The petitioner's appeal having been dismissed, it approached the Sales Tax Tribunal. Vide order dated April 15, 1987, a copy of which has been produced as annexure P3 with the writ petition, the Tribunal found that rice bran used by the petitioner for extraction of oil "would be classified as fodder ..... under entry No. 34 of Schedule....

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....of the State of Haryana in levying the purchase tax retrospectively is unreasonable and that the order of the Tribunal having attained finality, the amount paid by the petitioner deserves to be refunded. On the other hand, Mr. S.S. Khetarpal, learned counsel for the respondents, has contended that the Act being within the legislative competence of the Legislature, the petitioner is not entitled to the relief claimed by it. In this case, it is the admitted position that the petitioner is extracting oil from rice bran. It purchases the material from different dealers. It is also the admitted position that in view of the existing provisions in the statute, it did not pay the purchase tax and consequently it must have worked out its cost of ....

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....so because in a case where liability is created without affording an opportunity to the citizen to pass on the incidence of tax, the legislation partakes of the character of a confiscatory provision and imposes an unreasonable burden on the assessee. Consequently, in a case where a dealer collects the tax but succeeds in avoiding its payment on account of some lacuna in the statute and the Legislature makes the amendment retrospectively, the courts uphold the provision because no unreasonable or unforeseen liability is created. Such a legislation avoids undue enrichment. However, in a case where a totally unforeseen burden is sought to be imposed, the courts intervene. In the present case, it is clear that the liability which was sought ....