1972 (12) TMI 65 - SC - VAT and Sales Tax

Validity of section 3-AB of the U.P. Sales Tax Act, 1948 challenged - Held that - Appeal dismissed. As this section as it now stands incorporates into itself the impugned notifications. Those notifications have now become part of that section. To find out the scope and effect of that section, we have not only to read the section but we have also to read the concerned notifications. If so read, as it should be, it is clear that the section not only levies tax on the bricks at the prescribed rates, it also provides for the quantification of tax. The law is given retrospective effect. The fact that in those notifications it is mentioned that they were issued in pursuance of the power conferred under section 3-A does not in any way take away the intended legal effect. The intention of the Legislature is clear.

Summary

Issues:
Challenge to assessment proceedings under the U.P. Sales Tax Act for multiple years, contesting the validity of section 3-AB of the Act.

Analysis:
The case involved brick manufacturers challenging assessment proceedings under the U.P. Sales Tax Act for several years and contesting the validity of section 3-AB of the Act. The history of the struggle between the State and brick manufacturers leading to the enactment of section 3-AB was outlined. Various notifications were issued under section 3-A, imposing sales tax on the turnover of brick sales. The validity of these notifications was challenged in previous cases, leading to legislative amendments to the Act.

The Allahabad High Court had previously held section 3-A unconstitutional due to delegation of legislative functions and violation of article 14 of the Constitution. Subsequent amendments were made to the Act, culminating in the incorporation of section 3-AB to validate previous tax impositions. The appellants contested the High Court decision on grounds including the lack of curing the previous defects, lack of power in section 3-AB, and the retrospective nature of the charging section.

The Supreme Court rejected the contentions raised by the appellants. It clarified that the impugned notifications were now part of the law enacted by the Legislature, eliminating excessive delegation concerns. The Court also addressed the issue of infringement of article 14, emphasizing the wide powers of classification available to the Legislature in taxing statutes. The Court highlighted that section 3-AB had effectively removed the defects identified in the previous High Court decision.

Regarding the lack of power contention, the Court explained that the Legislature had not encroached on judicial power but had retrospectively changed the law to nullify the High Court decision's basis. The Court concluded that section 3-AB was a charging section, incorporating the impugned notifications and providing for the quantification of tax with retrospective effect. Ultimately, the appeal was dismissed, with parties directed to bear their own costs due to the prolonged litigation history.