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1997 (2) TMI 530 - HC - VAT and Sales Tax
Issues:
Competence of Legislature to make enhanced retrospective levy of sales tax without justifying reasons in Statement of Objects and Reasons. Analysis: The writ petition questioned the Legislature's competence to increase the sales tax retrospectively without providing justification in the Statement of Objects and Reasons under the A.P.G.S.T. Act, 1957. The petitioner, a distributor of drugs and pharmaceuticals, argued that the enhancement from 9% to 10% was unjustified. The petitioner relied on the case of D. Cawasji & Co. v. State of Mysore [1985] 58 STC 1 (SC), emphasizing that retrospective levies must be justified on proper and cogent grounds. The Court, after hearing the Government Pleader for Commercial Tax Department, rejected the petitioner's objection. It emphasized the well-established power of the Legislature to impose retrospective taxes, citing the case of Rai Ramkrishna v. State of Bihar AIR 1963 SC 1667. The Court clarified that the Legislature has the constitutional authority to legislate prospectively or retrospectively, including tax levies, without the need to explain the necessity of the levy. The Court distinguished the case of D. Cawasji & Co. v. State of Mysore [1985] 58 STC 1, where a significant retrospective tax increase was deemed arbitrary and unreasonable. It referenced the case of Entertainment Tax Officer v. M/s. Ambae Picture Palace [1995] 96 STC 338, which highlighted that a change in policy by a succeeding government can justify retrospective amendments without requiring an explanation from the State. The Court concluded that the mere 1% increase in the tax rate did not compare to the arbitrary and unreasonable retrospective levy in the previous case. Therefore, the Court found no merit in the petitioner's arguments and dismissed the writ petition. The decision was based on the principles established in the aforementioned cases, affirming the Legislature's authority to enact retrospective tax amendments without detailed justifications.
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