1994 (1) TMI 253 - HC - VAT and Sales Tax

Summary

Issues:
- Petitioner's prayer for refund of tax deposited
- Validity of Haryana General Sales Tax (Second Amendment) Act, 1988
- Retrospective imposition of tax liability
- Legislative competence to enact the amending Act
- Unforeseen and unreasonable burden on the petitioner

Analysis:
The case involves a dispute regarding the petitioner's claim for a refund of tax deposited following the enactment of the Haryana General Sales Tax (Second Amendment) Act, 1988. The petitioner had initially been held liable to pay tax on the purchase of rice bran, but subsequent appeals resulted in the Tribunal quashing the levy of purchase tax. The amendment to the Act, which added an explanation excluding rice bran from the definition of fodder, was made effective retrospectively from May 5, 1973. The petitioner challenged this amendment on various grounds, leading to the present writ petition before the court.

The central issue before the court was whether the retrospective imposition of tax liability on the petitioner, following the enactment of the Amendment Act, was valid. The petitioner argued that the retrospective application of the amendment was unreasonable and sought a refund of the tax paid. On the other hand, the respondents contended that the legislative competence of the State justified the retrospective imposition of tax.

The court considered the unforeseen and unreasonable burden imposed on the petitioner by the retrospective application of the Amendment Act. It noted that while the legislature has the power to enact laws retrospectively, such legislation should not create unreasonable or unforeseen liabilities. In this case, the court found that the liability imposed on the petitioner was wholly unforeseen and confiscatory in nature. The petitioner had already been deemed entitled to a refund following the Tribunal's decision in its favor. Therefore, the court held that the provisions of the Amendment Act, insofar as they operated retrospectively against the petitioner, were not applicable.

Consequently, the court set aside the respondents' decision to refuse the refund and directed them to refund the tax amount paid by the petitioner, along with interest as per the provisions of the Act. The writ petition was allowed, and no costs were awarded in the circumstances of the case.