1966 (12) TMI 60 - HC - VAT and Sales Tax

Summary

Issues:
Validity of Kerala Sales Tax (Levy and Validation) Act, 1965; Constitutionality of Section 4 under Article 14; Scope and ambit of validation under Section 4.

Analysis:
The judgment by the Kerala High Court addressed the controversy surrounding the Kerala Sales Tax (Levy and Validation) Act, 1965, specifically focusing on the validity of Section 4. The Act aimed to address the non-liability to tax on the purchase of copra and cashew-nut kernel during a specific period due to prior court decisions. The court acknowledged the competence of enacting Section 3 to impose the tax liability retroactively. However, the challenge primarily targeted the validity of Section 4, which validated taxes levied under the General Sales Tax Act during a specified period. The petitioners argued that Section 4 violated Article 14 of the Constitution and encroached upon judicial power.

The crux of the matter revolved around the interpretation of the validation under Section 4. The court deliberated on whether the validation encompassed all levies, assessments, or collections during the specified period, irrespective of Section 3's provisions, or only those in line with Section 3's liability creation from April 1, 1958. The court leaned towards the latter understanding, emphasizing that Section 4 validated taxes in accordance with the legal foundation provided by Section 3. This interpretation ensured that assessments, whether fresh under Section 3 or old under Section 4, aligned with Section 3's liability framework.

Furthermore, the court clarified that Section 4 did not validate levies where natural justice principles were violated, limiting its scope to validating taxes within the confines of Section 3's liability. The judgment underscored the need to read Sections 3 and 4 together, ensuring no infringement of Article 14 or judicial power. Notably, no concrete instances of unconstitutional implications resulting from Sections 3 and 4 were presented during the proceedings, rendering the arguments theoretical.

In conclusion, the court outlined five propositions encapsulating the validity and enforcement of the liabilities created by Section 3, the retrospective effect, and the controlled validation under Section 4. The judgment ultimately dismissed the petitions, highlighting the harmonious reading of Sections 3 and 4 without violating constitutional provisions or judicial authority.