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2013 (8) TMI 606 - MADRAS HIGH COURTLegislative Competence to Amend Section 19(20) - Whether amendment by inserting Section 19(20) to Tamil Nadu Value Added Tax reversing the amount of the input tax credit over and above the output tax of those credit was not within the legislative competence of the State Legislature under Entry 54 of the State List and utravires the Constitution and the Statute - Held that:- There was no ambiguity in the provision, the provision does not go beyond the legislative power of the State legislature under Entry 54 of List II nor the provision was confiscatory as contended by the petitioner - The provision starts with non-obstante clause and would state that where any registered dealer has sold goods at a price lesser than the price of the goods purchased by him the amount of input tax credit over and above the output tax of those goods shall be reversed. Section 19(20) the only plausible meaning to the word 'price' used therein shall be the price /value as reflected in the tax invoice - Any other interpretation given would not be in consonance with the scheme of the VAT Act -Therefore, the correct manner in which sub-section (20) of Section 19 had to be read is that where any registered dealer had sold goods at a price lesser than the price of the goods purchased by him as reflected in the original tax invoice as defined under Section 2 (36) of the Act, then the amount of input tax credit over and above the output tax of those goods has to be reversed. Constitutional Validity of fiscal legislation - When there was a challenge to the constitutional validity of the provisions of a Statute, Court exercising power of judicial review must be conscious of the limitation of judicial intervention, particularly, in matters relating to the legitimacy of the economic or fiscal legislation - While enacting fiscal legislation, the Legislature was entitled to a great deal of latitude. Validity of Retrospective Amendment - Whether amendment to Section 19(20) of Tamil Nadu Value Added Tax Act by giving retrospective effect from 01.01.2007 was unreasonable and harsh and whether retrospective operation of the provision was liable to be struck down - There was no discrimination in the matter and the manner of giving effect to the legislation and it applies to all dealers covered under the VAT Act - Held that:- Section 19 (20) was inserted in order to safe guard the interest of the revenue - Section 19(20) as amended by Amendment Act 22 of 2010, was a valid piece of legislation and the amendment given retrospective effect with effect from 01.01.2007, by Amending Act 42 of 2010, cannot be struck down as being either unreasonable, discriminatory or causing any unforeseen or unforeseeable financial burden for the past period nor unduly oppressive or confiscatory - Accordingly Constitutional validity of the impugned enactment was upheld. The factors which are generally considered relevant for examining the reasonableness of retrospectivity - the context in which retrospectivity was contemplated, the period of such retrospectivity and the degree of any unforeseen or unforeseeable financial burden imposed for the past period - The taxing statute may arise in which retrospective operation of a taxing or other statute may introduce an element of unreasonableness and the same may be open to challenge as unconstitutional - But the test of length of time covered by the retrospective operation cannot by itself necessary be a decisive test. There was no intention on the part of the respondents to collect tax either from the vendor or from the consumers and it was aimed at recovery of tax available with the writ petitioner which was admitted by the petitioners to be retained by them, the amendment given effect to retrospectively does not cause any unforeseen or unforeseeable financial burden for the past period – Petition Dismissed.
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