1999 (2) TMI 640 - HC - VAT and Sales Tax

Summary

Issues:
1. Validity of amendments to Schedule C and Schedule D under the Punjab General Sales Tax Act, 1948.
2. Retroactive effect of the notifications issued by the State Government.
3. Interpretation of sections 31 and 5(3)(b) of the Act regarding the power to amend schedules.

Analysis:

Issue 1: Validity of amendments to Schedule C and Schedule D
The petitioner, a registered dealer under the Punjab General Sales Tax Act, challenged the amendments made to Schedule C and Schedule D by the State Government. The amendments were related to the taxation of specific goods, including groundnut, peanut, and sesamum. The petitioner argued that the State Government did not have the power to make these amendments with retrospective effect. The court examined the relevant provisions of sections 31 and 5(3)(b) of the Act, which empower the State Government to amend the schedules but do not explicitly allow for retrospective amendments. Citing precedent cases, the court held that the State Government exceeded its authority by making the amendments retroactive, as the delegatee cannot claim the same sovereign authority as the Legislature itself.

Issue 2: Retroactive effect of the notifications
The court further analyzed the notifications issued by the State Government, which indicated that the amendments would be effective from a date prior to their publication in the official Gazette. The court emphasized that while the retrospective effect was not permissible under the law, the entire amendment would not be invalidated solely on that ground. The court highlighted that the retrospective part of the operation of the notifications would be ineffective, protecting the petitioner from being retrospectively assessed for tax liability during the disputed period.

Issue 3: Interpretation of sections 31 and 5(3)(b) regarding retrospective amendments
The court clarified that the State Government could issue notifications prospectively but not retrospectively, as the Act did not grant the power to legislate retrospectively. The court emphasized that draft notifications do not hold the same legal force as final notifications, and dealers cannot be penalized for failing to comply with draft notifications. Therefore, the court allowed the writ petition, declaring that the notifications would be operative prospectively from the date of their publication in the official Gazette, and not from the earlier retrospective dates mentioned in the notifications.

In conclusion, the court held that the amendments to Schedule C and Schedule D were invalid to the extent that they sought to have a retrospective effect. The court clarified that the notifications would be effective only prospectively from the date of their publication, ensuring that the petitioner was not unfairly subjected to retrospective tax assessments.