1971 (3) TMI 108 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the retrospective effect of the notification under section 3-AA of the U.P. Sales Tax Act.
2. Whether the entire notification becomes invalid if the retrospective part is invalid.
3. Assessment of tax for the years 1958-59, 1959-60, and 1960-61.

Detailed Analysis:

1. Validity of the Retrospective Effect of the Notification:
The petitioner challenged the assessment orders for the years 1958-59, 1959-60, and 1960-61, arguing that the notification issued on 1st August 1958 was invalid because it was made operative from a back date (30th November 1957). The court noted that the U.P. Sales Tax (Amendment) Act, 1964, retrospectively validated the power of the State Government to issue such notifications. However, it was held that section 3-AA, even after the 1964 amendment, does not empower the State Government to authorize the levy of sales tax from a date anterior to the notification's issuance. The court referenced the decision in Shri Hari Kishan v. Commissioner of Sales Tax, which held that the State Government has no power to authorize a levy from a back date, making clause (b) of the notification invalid to the extent it authorized retrospective levy.

2. Whether the Entire Notification Becomes Invalid if the Retrospective Part is Invalid:
The petitioner argued that if the retrospective part of clause (b) of the notification is invalid, the entire clause (b) should fall, rendering the notification inoperative even from 1st August 1958. The court distinguished the present case from Shri Hari Kishan's case by noting that the notification in question did not operate "with retrospective effect" but was prospective from 1st August 1958, with only clause (b) authorizing a retrospective levy. The court emphasized that the expression "with effect from November 30, 1957" in clause (b) has a double meaning, authorizing the levy both retrospectively and prospectively. The court adopted a liberal construction, holding that the valid prospective operation of the notification is severable from the invalid retrospective operation. The court concluded that the notification remains operative from 1st August 1958, despite the invalidity of the retrospective levy.

3. Assessment of Tax for the Years 1958-59, 1959-60, and 1960-61:
The court directed that for the assessment year 1958-59, the tax on dressed hides and skins should be assessed in accordance with the notification from 1st August 1958, and for the earlier period, tax should be assessed as per other provisions of the Act. For the assessment years 1959-60 and 1960-61, the tax will be assessed in accordance with the notification, as it was in force during these years until it was deleted on 15th November 1961. The petition was partly allowed, quashing the assessment order for the year 1958-59 and directing reassessment as indicated, while the assessments for 1959-60 and 1960-61 were upheld.

Conclusion:
The court held that the retrospective part of the notification is invalid, but the prospective part remains valid. The assessment for 1958-59 should be done from 1st August 1958 onwards, and the assessments for 1959-60 and 1960-61 were upheld. The petition was partly allowed, with no order as to costs.