1968 (9) TMI 111 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of the Madras General Sales Tax (Third Amendment) Act, 1967 regarding retrospective operation.
2. Alleged violation of Articles 14 and 19 of the Constitution.
3. Impact of retrospective imposition of single point tax on furnace oil and other non-lubricating oils.
4. Equality under the law and reasonableness of the restriction.
5. Practical difficulties and inequalities produced by the retrospective legislation.

Detailed Analysis:
1. The judgment concerns petitions under Article 226 challenging the Madras General Sales Tax (Third Amendment) Act, 1967, focusing on its retrospective operation. The Act introduced changes to the taxation of mineral oils, including furnace oil, and validated taxes collected prior to its enactment.

2. The petitioners argued that the retrospective imposition of a single point tax and the validation of prior levies violated Articles 14 and 19 of the Constitution. They contended that the retrospective operation and validation infringed on equality under the law and imposed unreasonable restrictions.

3. The retrospective imposition of a single point tax on furnace oil and non-lubricating oils was challenged as placing dealers in a difficult position to prove their transactions were not liable to tax. The petitioners highlighted the lack of a licensing system to track such transactions and the burden of proof on dealers.

4. The court referenced past judgments emphasizing the importance of a licensing system for single point taxation to prevent tax evasion. The petitioners argued that the retrospective provision made it challenging for them to demonstrate compliance with tax requirements, leading to an unreasonable restriction.

5. The judgment addressed the practical difficulties and inequalities arising from the retrospective legislation but concluded that these issues were not sufficient to render the retrospective effect unreasonable. The court held that the legislation was not confiscatory or oppressive, ultimately upholding the validity of the Amending Act.

In conclusion, the court dismissed the petitions challenging the Madras General Sales Tax (Third Amendment) Act, 1967, finding the retrospective provisions to be valid and not unconstitutional.