1970 (10) TMI 63 - HC - VAT and Sales Tax

Issues Involved:
1. Retrospective operation of the Amendment Act and its violation of fundamental rights under Article 19(1)(f) and (g).
2. Section 10 of the Amendment Act contravening Article 14.
3. Jurisdiction to rectify assessment orders under Section 25A of the Mysore Act.
4. Exemption of inter-State sales under Section 8(2A) of the Act.
5. Existence of a mistake apparent from the record for invoking Section 25A.

Issue-wise Detailed Analysis:

I. Retrospective Operation and Violation of Fundamental Rights:
The petitioner argued that the retrospective operation of the Amendment Act violates fundamental rights under Article 19(1)(f) and (g) of the Constitution of India due to its long period of over 12 years. The court held that while the power to make a law includes the power to give it retrospective effect, the reasonableness of such retrospective operation can be scrutinized. The court cited several Supreme Court decisions, including Rai Ramkrishna v. State of Bihar and Assistant Commissioner of Urban Land Tax, Madras v. Buckingham and Carnatic Co. Ltd., to establish that the length of the retrospective period alone does not render a statute unconstitutional. The court concluded that the retrospective operation of the Amendment Act, given the exemption provided under Section 10, does not impose unreasonable restrictions on the fundamental rights guaranteed under Article 19(1)(f) and (g).

II. Section 10 and Article 14:
The petitioner contended that Section 10 of the Amendment Act discriminates against dealers who effected sales before 10th November 1964 and did not collect any tax, thus violating Article 14. The court noted that the Legislature has broad discretion in matters of classification, especially in taxation statutes. The classification made by Section 10, based on the date of the Supreme Court's decision in Yaddalam Lakshminarasimhiah Setty & Sons, was found to be reasonable. The court held that the classification aimed to provide relief against undue hardship and did not result in hostile discrimination against any dealer. Therefore, the second ground was rejected.

III. Jurisdiction to Rectify Assessment Orders:
The petitioner argued that Section 25A of the Mysore Act is not a procedural provision and was not adopted under the Act, thus the respondent had no jurisdiction to rectify the assessment orders. The court held that Section 9(2) of the Act adopts the procedural provisions of the general sales tax law of the State, including provisions for review and rectification. The court referenced State of Kerala v. P.P. Joseph and Company and Mysore Electrical Industries Ltd. v. Commercial Tax Officer to support this interpretation. The court concluded that Section 25A, which provides for rectification of mistakes apparent from the record, is a procedural provision adopted by Section 9(2) of the Act. Therefore, the third contention was rejected.

IV. Exemption of Inter-State Sales:
The petitioner claimed that inter-State sales of cotton seeds are exempt from tax under Section 8(2A) of the Act. The court clarified that Section 8(2A) exempts transactions of sale only if they are wholly exempt from tax under the State law. The court rejected the petitioner's interpretation that sales taxable at the purchase point under the Mysore Act are exempt from tax generally. The court cited the Supreme Court's decision in State of Kerala v. P.P. Joseph and Company, which held that sales in the course of inter-State trade are taxable even if not taxable under the State law. Thus, the fourth ground was rejected.

V. Mistake Apparent from the Record:
The petitioner argued that there was no mistake apparent from the record to justify rectification of the order. The court held that the decision in Yaddalam's case being superseded by the Amendment Act constitutes a mistake apparent from the record. The first respondent's order, which exempted the petitioner's turnover based on Yaddalam's case, was thus found to suffer from a mistake apparent from the record. Consequently, the fifth ground was rejected.

Conclusion:
All the contentions raised by the petitioner were rejected, and the writ petition was dismissed without an order as to costs.

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