1993 (2) TMI 296 - HC - VAT and Sales Tax

Summary

Issues:
1. Challenge against levy of tax at 6% on purchase turnover of rubber.
2. Validity of retrospective effect given by Finance Act, 1987.
3. Power of State Legislature to enact laws retrospectively.

Analysis:
The judgment delivered by the High Court of Kerala pertains to a revision petition filed by a firm, the assessee under the Kerala General Sales Tax Act, against the Revenue regarding the levy of tax at 6% on the purchase turnover of rubber for the assessment year 1987-88. The firm contested the retrospective effect given by the Finance Act, 1987, which increased the tax from 5% to 6% on rubber purchased between July 1, 1987, and August 20, 1987. The main contention was that the retrospective application of the Act was illegal and ultra vires. The Tribunal, however, upheld the legality of the retrospective levy, stating that the State Legislature had the authority to enact laws prospectively and retrospectively. The Tribunal also distinguished a previous case related to a different item, asserting that the concession granted in that case did not apply to the current situation involving rubber. The High Court emphasized that challenging the provisions of a specific Act as ultra vires was impermissible in a revision under the Kerala General Sales Tax Act.

Moving on to the power of the State Legislature to enact laws retrospectively, the Court referenced two Constitution Bench decisions of the Supreme Court to establish the criteria for determining the reasonableness of such retrospective legislation. It was concluded that in this case, the Legislature did not overstep its limits or infringe upon any fundamental rights by giving retrospective effect to the Finance Act, 1987. The Court dismissed the revision petition, emphasizing that the plea against the retrospectivity of the Act was unfounded and without merit. The revision was consequently dismissed with costs, including advocate's fee.

In summary, the judgment addressed the challenge against the levy of tax on rubber, the validity of the retrospective effect granted by the Finance Act, 1987, and the State Legislature's power to enact laws retrospectively. The Court upheld the legality of the retrospective levy, emphasizing that it was within the legislative authority and did not violate any rights. The revision petition was dismissed, and costs were awarded to the respondent.