1978 (12) TMI 177 - HC - VAT and Sales Tax

Summary

Issues:
Challenge against retrospective amendment of entry No. 34 of Schedule B of Punjab General Sales Tax Act, 1948 - Taxability of agricultural implements - Validity of retrospective operation of the amendment.

Analysis:

The case involves a challenge against the retrospective amendment of entry No. 34 of Schedule B of the Punjab General Sales Tax Act, 1948, as applicable to Haryana. The amendment substituted entry No. 34 to exclude certain items from the definition of agricultural implements. The retrospective effect of the amendment, dating back to 1949, is the primary issue in question.

The petitioner, a registered dealer of agricultural implements, contested the retrospective taxation of discs and harrow-frames under the amended entry. The argument focused on the unreasonableness and arbitrariness of such long retrospectivity, invoking violation of the fundamental right guaranteed under Article 19(1)(f) of the Constitution. However, the petitioner's contention was refuted based on established legal principles and precedents.

The court examined the legality of retrospective taxation in light of previous judgments and legal principles. It was established that a legislature competent to levy tax prospectively could also do so retrospectively. The court cited relevant Supreme Court decisions to support this position, emphasizing the legislative competence to enact retrospective tax laws.

Another argument raised by the petitioner was the undue hardship caused by the retrospective taxation of previously untaxed goods. The court reiterated that the power to tax retrospectively, though resulting in unexpected liabilities, was a valid exercise of legislative authority. The court dismissed the petitioner's contentions on this ground as well.

The court also addressed the argument regarding the constitutionality of long periods of retrospectivity in tax laws. Citing previous judgments, the court concluded that the duration of retrospectivity alone did not render a tax statute unconstitutional. Precedents upholding retrospective tax laws for extended periods were cited to support this conclusion.

Ultimately, the court found no merit in the writ petition and dismissed it, with each party bearing its own costs. The judgment was delivered unanimously by the judges, affirming the dismissal of the petition challenging the retrospective amendment of the tax law.