1970 (10) TMI 71 - SC - VAT and Sales Tax

power of the assessing authority to re-assess the receipts that had escaped assessment under the Madras Entertainments Tax Act. A court s decision must always bind unless the conditions on which it is based are so fundamentally altered by legislature that the decision could not have been given in the altered circumstances.

Summary

Issues:
Validity of provisions of Madras Entertainments Tax (Amendment) Act, 1966; Power of assessing authority to re-assess receipts; Validity of reassessments protected by Section 7 of the Act; Effect of Section 7 on previous assessments; Legislative power to validate assessments; Impact of legislative interference with court decisions.

Analysis:
The Supreme Court was tasked with examining the validity of certain provisions of the Madras Entertainments Tax (Amendment) Act, 1966, specifically in relation to the power of the assessing authority to re-assess receipts. The case involved a cinema theatre where unauthorized tickets were sold, leading to a dispute over the assessment of entertainment tax and surcharge. The High Court had quashed the reassessments, citing the incomplete nature of the power to re-assess under the Act. The Supreme Court, however, found Section 7 of the Act invalid as it attempted to validate assessments without addressing their underlying invalidity.

The Court highlighted the legislative intent behind Section 7, emphasizing that it aimed to overrule a previous decision of the Madras High Court regarding reassessment under the Madras Entertainments Tax Act, 1939. The Court clarified that the provision did not retroactively change the law but sought to deem invalid reassessments as valid, a move deemed beyond the legislative authority. Drawing parallels with a previous case involving the Municipal Corporation of Ahmedabad, the Court underscored the limits of legislative power to interfere with court decisions, emphasizing the need to remove the grounds of invalidity before validating assessments effectively.

Further, the Court referenced legal principles articulated in various judgments to elucidate the boundaries of legislative action in validating statutes. It stressed that while legislatures could enact retrospective laws within constitutional limits, they could not undermine court decisions or compel state entities to disregard judicial orders. The Court reiterated that legislative competence did not extend to nullifying court decisions or altering their effects, emphasizing the separation of powers between the legislature and the judiciary.

Ultimately, the Supreme Court held that the impugned assessments could not be upheld in light of the legislative overreach in attempting to validate assessments without addressing their underlying flaws. Consequently, the Court dismissed the appeals, affirming the High Court's decision to quash the reassessments and highlighting the importance of upholding the rule of law and respecting judicial pronouncements.