1986 (9) TMI 395 - HC - VAT and Sales Tax

Summary

Issues:
1. Interpretation of the Forty-sixth Amendment of the Constitution regarding the definition of "sale."
2. Validity and applicability of the U.P. Sales Tax Act 25 of 1985 with retrospective effect.
3. Legislative competence to enact laws retrospectively for tax laws.
4. Impact of previous Supreme Court decisions on the interpretation of sales tax laws.

Detailed Analysis:

1. The judgment addressed the interpretation of the Forty-sixth Amendment of the Constitution, specifically focusing on the definition of "sale" as it pertains to the taxation of goods, including food and beverages. The petitioner, a hotel engaged in serving food to customers on-demand, was assessed for sales tax based on the amended definition of "sale" introduced by the Amendment Act. The court considered previous Supreme Court decisions, such as Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi and State of Himachal Pradesh v. Associated Hotels of India Ltd., which influenced the enactment of the Amendment Act to broaden the interpretation of "sale of goods."

2. The judgment examined the validity and applicability of the U.P. Sales Tax Act 25 of 1985, which altered the definition of "sale" with retrospective effect from the commencement of the Forty-sixth Amendment Act. The court analyzed the legislative power to enact laws retrospectively, citing precedents like Khyerbari Tea Company Ltd. v. State of Assam and Misrilal Jain v. State of Orissa, which upheld the authority of legislatures to legislate retroactively, especially concerning tax laws.

3. The court deliberated on the legislative competence to enact laws retrospectively, emphasizing that the power to legislate includes the authority to enact laws with retrospective effect. The judgment referenced cases like Tata Iron and Steel Co. Ltd. v. State of Bihar and J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh to support the argument that the legislature's ability to impose taxes retrospectively is a matter of policy and does not affect its competence.

4. The judgment considered the impact of previous Supreme Court decisions on the interpretation of sales tax laws, highlighting cases like Chittar Mal Narain Das v. Commissioner of Sales Tax, which addressed the applicability of sales tax based on statutory restrictions. The court concluded that the U.P. Act 25 of 1985 rectified any deficiencies identified in previous cases, thereby validating the legislative changes made to the definition of "sale."

In conclusion, the court dismissed the writ petition under Chapter XXII, rule 2 of the Rules of Court, affirming the validity and applicability of the U.P. Sales Tax Act 25 of 1985 with retrospective effect from the commencement of the Forty-sixth Amendment Act.