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TMI Blog1978 (8) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... es to advert to the facts in Civil Writ Petition No. 1648 of 1976 in which the main arguments have been addressed. Messrs. Birla Cotton Spinning and Weaving Mills Limited and another, the petitioners, mainly carry on the business of manufacture of cloth and yarn in cotton spinning and weaving mills and also operate a number of cotton ginning and pressing factories. The petitioners are registered dealers under the Punjab General Sales Tax Act and the writ petition was directed primarily against the sales tax assessment made against petitioner No. 2. The Assessing Authority, Hissar, by its order, annexure P-1 dated 18th December, 1975, assessed the total amount of tax against the petitioners at a little over two lakhs of rupees and after taking into account the tax already deposited had issued a demand notice for the balance. In the writ petition, two questions were initially raised, the first being with regard to the constitutionality of Schedule D read with section 17 of the Haryana General Sales Tax Act, 1973. Learned counsel for the petitioners, however, frankly concede that this question is now wholly covered against them by the recent Division Bench judgment in Civil Writ Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main place of business of such person is not in the State, includes the local manager or agent of such person in the State in respect of such business." It is evident from the above that this definition by and large adopted the definition contained in section 2(d) of the Punjab General Sales Tax Act as amended by the Haryana Ordinance No. 2 of 1971 with effect from 26th May, 1971, and made applicable to the State of Haryana. By the relevant item in section 1 of the Act, the aforequoted definition of "dealer" under section 2(c) has been made retrospective with effect from 7th September, 1955. Perhaps for academic interest, it may also be noticed that there have even been subsequent amendments of the same provisions, vide Haryana Act No. 9 of 1976 and Haryana Act No. 44 of 1976. Detailed reference to the changes introduced by these amendments is unnecessary because the counsel are agreed that these amendments are not attracted to the situation, as they are not retrospective and the relevant assessments under attack are not prior to the year 1973 and the statutory provisions applicable thereto are only those of the Haryana General Sales Tax Act, 1973, as originally enacted. Now, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what appears to us as the categoric observations of the final court. Mr. Sibal's first and primary argument was that at least so far as taxing statutes are concerned, retrospectivity to the provisions can be given only to the limited extent of either removing an ambiguity in the earlier legislation or to provide for a lacuna which may come to notice in the statute. To put it in the rather picturesque language of an American author, the legislature, according to him, was entitled to make only "small repairs" by way of an amending or a validating Act with retrospective effect. According to this stand, there was no power in the legislature to make an altogether fresh levy and tax retrospectively what was not so under the law at the relevant time. Reliance was placed by the learned counsel on the observations of Khanna, J., speaking for the Supreme Court, in Krishnamurthi and Co. v. State of Madras[1973] 31 S.T.C. 190 (S.C.). However, the main case relied upon by Mr. Sibal was the Division Bench judgment of the Calcutta High Court in Bengal Paper Mill Co. Ltd. v. Commercial Tax Officer, Calcutta[1976] 38 S.T.C. 163. The latter judgment whereby their Lordships struck down the retrospe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2(d) of the Punjab General Sales Tax Act, 1948. Aggrieved by this interpretation, the State appealed against the aforesaid judgment. The Letters Patent Appeal along with a number of other civil writ petitions remained pending for some time and were later disposed of by the Division Bench on 8th December, 1971, by the judgment reported in State of Punjab v. Aryavarta Industries Pvt. Ltd.[1972] 30 S.T.C. 200. It was during the pendency of the appeal and the connected writ petitions that the Haryana Government made the necessary amendment in the definition of "dealer" by omitting the material words "that are actually delivered for the purpose of consumption" by Haryana Ordinance No. 2 of 1971 dated 26th May, 1971. According to the learned Advocate-General, this was done to clear the ambiguity and fill in the lacuna which had surfaced in the law and also to meet the construction placed by the court in Usha Cotton Ginning and Pressing Factory's case(1), whereby the exported goods and ginned cotton had been taken out of the tax net. Then in the Haryana Government Gazette (Extraordinary) dated 1st August, 1971, whilst converting the Punjab General Sales Tax (Haryana Amendment) Ordinance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en wearing apparel is delivered in State E for being sold as dress in that State, it is delivery of wearing apparel for consumption in State E." Counsel submitted that by virtue of these observations, the issue of ginned cotton being taxable was still in favour of the revenue. However, in Civil Writ Petition No. 547 of 1971 decided on 30th November, 1972, Sharma, J., after referring to the said judgment, opined that ginning was not consumption within the State and, after referring to the conflict of authorities, followed Usha Cotton Ginning and Pressing Factory's case(1) and Aryavarta Industries' case(2) and held the ginning to be not exigible to tax. The learned Advocate-General of Haryana contends that it was the aforesaid judgment as also a number of others taking the same view, which was taken in Usha Cotton Ginning and Pressing Factory's case1970 P.L.R. 929. and Aryavarta Industries' case[1972] 30 S.T.C. 200., which necessitated the decision of the State Government to give retrospectivity to the definition of "dealer", which was enacted in section 2(c) of the Haryana General Sales Tax Act, 1973. This was done by virtue of section 1, sub-section (3), item 1 thereof. Learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity, even on the basis of the contentions raised by the learned counsel for the petitioners. On this ground, in the first instance, I am compelled to uphold its constitutionality. Nevertheless, it appears to me that the learned Advocate-General of Haryana is on equally firm ground that even an altogether fresh levy of tax with a retrospective effect is also wholly within the competence of the legislature. Reliance for this is primarily placed on Government of Andhra Pradesh v. Hindustan Machine Tools Ltd.(1) and, in particular, on two categoric Supreme Court decisions reported in Hira Lal Rattan Lal v. Sales Tax Officer, Section III, Kanpur(2), and District Controller of Stores, Northern Railway, Jodhpur v. Assistant Commercial Taxation Officer(3). A combined reading of these judgments appears to leave me in no manner of doubt that binding precedents have laid down that a legislature which is competent to levy a tax in prospect is equally capable of levying the same in retrospect. That being so, once it is conceded on behalf of the petitioners, as it was very fairly done at the outset, that the Haryana Legislature was competent to amend the definition of "dealer" prospectively, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 178 (S.C.). (7) [1961] 12 S.T.C. 429 (S.C.). (3) [1976] 37 S.T.C. 423 (S.C.). (8) [1962] Supp. 2 S.C.R. 1. (4) [1973] 31 S.T.C. 190 (S.C.). (9) [1963] 50 I.T.R. 171 (S.C.). (5) [1954] 25 I.T.R. 58 (S.C.). necessitated because of the legislature's failure to bring out clearly in the principal Act its intention to separate the processed or split pulses from the unsplit or unprocessed pulses. Further, the retrospective amendment became necessary as otherwise the State would have to refund large sums of money. The contention that the retrospective levy did not afford any opportunity to the dealers to pass on the tax payable to the consumers, has not much validity. The tax is levied on the dealer; the fact that he is allowed to pass on the tax to the consumers or he is generally in a position to pass on the same to the consumer has no relevance when we consider the legislative competence," I believe that the observations aforesaid are unequivocal and call for no elaboration. There is no gainsaying the fact that the observations of the Division Bench of the Calcutta High Court in Bengal Paper Mill's case[1976] 38 S.T.C. 163. do support the contention of Mr. Sibal, raised on behalf o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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