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2012 (10) TMI 961 - HC - VAT and Sales Tax
Issues:
Challenge to the validity of the amendment to sub-section (4) of section 4 of the Karnataka Value Added Tax Act, 2003 on the ground that it should have been given retrospective effect. Comprehensive details: The petitioner challenged the validity of the amendment to sub-section (4) of section 4 of the Karnataka Value Added Tax Act, 2003, arguing that it should have been given retrospective effect from October 2, 2006. The amendment Act came into force prospectively from April 1, 2007. The petitioner contended that the definition of "maximum retail price" in the Drugs Control Amendment Order inclusive of all taxes should have been considered. The petitioner relied on judgments of the Supreme Court to support the argument (Nagpur Improvement Trust v. Vasantrao AIR 2002 SC 3499 and State of Kerala v. Attesee (Agro Industrial Trading Corporation) [1989] 72 STC 1 (SC)). The learned Additional Government Advocate for the respondents argued that the payment of tax as per the amended sub-section (4) of section 4 of the KVAT Act is optional, therefore the amendment cannot be deemed arbitrary. He cited the judgment of the Supreme Court in State of Kerala v. Builders Association of India [1997] 104 STC 134 (SC) to support this argument. The court held that the contention that the amendment should have been retrospective from October 2, 2006 lacks merit. It emphasized that it is for the Legislature to decide whether a law should be prospective or retrospective, as long as it does not offend any constitutional limitations. The court found no grounds to hold the amendment as arbitrary for not being retrospective. Since the method of taxation under the amended sub-section (4) is optional for dealers, it does not violate any Constitutional limitations. Dealers have the choice to opt for the normal method of taxation under section 4 of the KVAT Act or the alternate method under sub-section (4). The court referenced the Supreme Court judgment in State of Kerala v. Builders Association of India [1997] 104 STC 134 (SC) to support the legality of providing an alternate method of taxation. The court concluded that the writ petition lacked merit and dismissed it.
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