2010 (9) TMI 995 - HC - VAT and Sales Tax

whether the impugned notification dated June 8, 2010 to the extent of retrospectivity can be sustained with reference to article 14 of the Constitution? Held that - The retroactivity is not intended to give effect to intention of Legislature already manifested. No other reason for giving retrospective effect has been shown except that there is a power to make a rule retrospectively. Mere existence of power cannot justify exercise of power without any reasonable ground. In view of the above, we allow the writ petition and quash impugned notification to the extent the same is operative for the period prior to issuance

Summary

Issues:
Challenge to retrospective levy of higher tax rates prior to notification date.

Analysis:
The petitioners, running brick kilns, challenged a notification imposing higher tax rates even for the period before its issuance. The respondents justified the retrospective levy based on section 60(1) of the Haryana Value Added Tax Act, 2003. The petitioners argued that a previous court order held that higher tax rates apply from the date of notification. The State relied on precedents, including a Supreme Court case, to support retrospective legislation. The central issue was whether the retrospective aspect of the notification was constitutional under article 14.

The court examined section 60(1) of the Act, which allows rules to have prospective or retrospective effect. While legislative power includes retrospective laws, such exercise must align with article 14. Citing legal precedents, the court emphasized that any retrospective amendment must be reasonable and not arbitrary, ensuring it does not violate fundamental rights. The court highlighted that retrospective legislation should be justifiable, clarificatory, or for validation purposes.

Referring to a specific case, the court noted that the retroactivity in the present matter did not serve to manifest the Legislature's intention. Without a reasonable justification beyond the power to make rules retrospectively, the court found the retrospective levy arbitrary. Consequently, the court allowed the writ petition, quashing the notification's retrospective application before its issuance date.