1959 (9) TMI 33 - HC - VAT and Sales Tax

Summary

Issues Involved
1. Validity of assessments under the Madras General Sales Tax Act, 1939.
2. Applicability of subsequent retrospective legislation.
3. Jurisdiction and powers of the revisional court under section 12-B of the Madras General Sales Tax Act.

Detailed Analysis

1. Validity of Assessments Under the Madras General Sales Tax Act, 1939
The respondent, the owner of a spinning mill, was assessed to sales tax by the Deputy Commercial Tax Officer for turnovers in the years 1951-52 and 1952-53. The Commercial Tax Officer revised these turnovers suo moto, increasing the assessable amounts. The Sales Tax Appellate Tribunal reduced these turnovers, excluding the price of cotton purchased outside the State of Madras, relying on the decision in Bengal Immunity Co. Ltd. v. State of Bihar, which held that such inter-State sales were not taxable under Article 286(2) of the Constitution.

2. Applicability of Subsequent Retrospective Legislation
The Government Pleader argued that the assessments were validated by Ordinance III of 1956 and the subsequent Sales Tax Validation Act VII of 1956, which removed the ban imposed by Article 286(2) for the period from 1st April 1951 to 6th September 1955. The Tribunal's decision was rendered before the Ordinance came into force, but the retrospective nature of the legislation validated the assessments. The court noted that the Ordinance and Act did not impose a new tax but removed the constitutional ban, thus validating existing state legislation like section 22 of the Madras Act, which included such sales in the taxable turnover.

3. Jurisdiction and Powers of the Revisional Court Under Section 12-B of the Madras General Sales Tax Act
The respondent contended that the revisional court could not apply the provisions of a subsequent retrospective enactment, arguing that the revisional jurisdiction should be confined to the law as it existed at the date of the Tribunal's order. However, the court held that revisional jurisdiction is akin to appellate jurisdiction, allowing the court to take note of subsequent changes in law. The court referred to various precedents, including decisions by the Federal Court and the Supreme Court, which supported the view that appellate and revisional courts have the authority to apply retrospective legislation.

The court concluded that the powers under section 12-B of the Madras General Sales Tax Act were broad enough to include taking cognizance of retrospective laws. It emphasized that the revisional jurisdiction was not limited to correcting errors apparent on the face of the record but included the authority to apply subsequent legal changes. The court cited the Supreme Court's decision in Venkatachalam v. Bombay Dyeing and Manufacturing Co. Ltd., which upheld the application of retrospective amendments to completed assessments.

Conclusion
The High Court held that the assessments, initially deemed invalid by the Tribunal, were validated by the retrospective operation of the Sales Tax Validation Act VII of 1956. The court had the jurisdiction to apply this subsequent legislation and rectify the Tribunal's order. Consequently, the court set aside the Tribunal's decision and directed that the disputed turnovers be included in the assessable turnover. The revision petitions were allowed without any order as to costs.

Petitions Allowed