1993 (10) TMI 305 - SC - VAT and Sales Tax

High Court struck down section 1 of Act No. 16 of 1985 the Andhra Pradesh Entertainments Tax (Amendment) Act, 1985 to the extent of its applicability retrospectively between 7th September, 1984 to 24th October, 1984 Held that - Appeal allowed. No judgment of any court was sought to be circumvented. The judgment under appeal of the High Court is set aside. The provisions of sub-section (2) of section 1 of Act No. 16 of 1985 are upheld.

Summary

Issues:
1. Retrospective applicability of the Andhra Pradesh Entertainments Tax (Amendment) Act, 1985.

Detailed Analysis:
The Supreme Court heard an appeal regarding the retrospective applicability of the Andhra Pradesh Entertainments Tax (Amendment) Act, 1985. The High Court had struck down section 1 of the Act to the extent of its retrospective applicability between September 7, 1984, and October 24, 1984. The case involved a history of amendments to the Andhra Pradesh Entertainments Tax Act, including changes in taxation methods and rates over the years. The issue primarily focused on the validity of making the amendment retrospective.

The High Court had ruled that the retrospective provision of the Amendment Act was arbitrary, unreasonable, and ultra vires the Constitution due to lack of explanation for the retrospectivity. However, the Supreme Court disagreed with this reasoning. The Court highlighted that the power of legislatures to enact laws, including taxation laws, both prospectively and retrospectively, is well-established. The Court cited various precedents to support the legislative competence to enact laws with retrospective effect.

The Court noted that the Statement of Objects and Reasons of the amending Act explained the rationale behind the retrospective change in taxation policy. It mentioned that the decision to restore the previous tax system was made after a review by the new Government, which had the authority to alter the tax laws. The Court emphasized that the successor Government could have different rules regarding taxation compared to its predecessor, without requiring a detailed explanation for the retrospective effect.

In contrast to a previous case where a retrospective amendment was made to avoid refunding excess tax collected, the Court found that the present case had different circumstances. There was no attempt to circumvent a court judgment or avoid refund obligations. Therefore, the Court concluded that the retrospective provision in the Andhra Pradesh Entertainments Tax (Amendment) Act, 1985, was valid. The appeal was allowed, setting aside the High Court's judgment and upholding the provisions of the Act. As the respondent did not appear during the hearing, no costs were awarded in the case.