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TMI Blog2000 (11) TMI 1198X X X X Extracts X X X X X X X X Extracts X X X X ..... 1992, w.e.f. April 1, 1992): "Milk whole or separated or reconstituted" was exempt from payment of sales tax. 3.. The High Court of Gujarat in the case of Chunilal Mayachand v. State of Gujarat [1992] 86 STC 105 interpreted sub-entry (i) of entry 10 relating to "milk, whole or separated or reconstituted" to include within those words "milk powder" as well. 4.. The State Legislature in promulgating the impugned Ordinance No. 1 of 1997 followed by the impugned Gujarat Act No. 8 of 1997 has amended sub-entry (i) of entry 10 of Schedule I retrospectively to add in the said entry words "except milk powder". The objects and reasons for promulgating the Ordinance and the Act with retrospective effect are contained in the statement annexed to the Ordinance which reads thus: "STATEMENT: Since the inception of the Gujarat Sales Tax Act, 1969, sales tax was levied and collected on milk powder. The High Court of Gujarat in the case of Chunilal Mayachand v. State of Gujarat [1992] 86 STC 105 interpreted the entry relating to milk, whole or separated or reconstituted as appearing in sub-entry (i) of entry 10 of Schedule I to the Act as it existed prior to 1st April, 1992. In the contex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and puts the dealer in a situation where they are unable to legitimately pass on the burden of tax to its purchasers, i.e., retailers and the ultimate consumers. It is submitted that the Commissioner of Sales Tax as Head of the Sales Tax Department had issued impugned circular (annexure A-1) to nullify the judgment of the High Court by advising all the lower sales tax authorities not to refund the sales tax collected on milk powder. The Legislature by enacting the Ordinance and the Act has similarly made an attempt to sit over the judicial verdict of this Court. It is submitted that such retrospective legislation is beyond the legislative power of the State. 8.. Learned counsel Shri M.G. Doshit, appearing for the State of Gujarat, in supporting the Ordinance and Act submits that the power of the State Legislature to legislate prospectively or retrospectively is unquestionable. The power of Parliament and the State Legislature to make laws is derived from articles 245, 246 and 248 of the Constitution. The commentaries on the Shorter Constitution of India by Durgadas Basu was relied which reads as under: "There is nothing in the articles to provide that Indian Legislatures do n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mayachand [1992] 86 STC 105, had created a doubt on legislative intent which necessitated its removal by impugned legislation. 11.. On the other hand on behalf of the petitioner, it is contended that in the garb of removal of a doubt said to have been created by a decision of the court, attempt has been made to nullify the effect of the judicial verdict. 12.. In order to examine the merits of the above contention, we have allowed the learned counsel for the parties to address us on the meaning and intent of sub-entry (i) of entry 10 of Schedule I as it existed originally, before it was amended by the Ordinance and the Act to exclude "milk powder" from the entry. Books on Dairy Technology including a Book titled "Outlines of Dairy Technology" by Sukumar De in its relevant parts were read before us. One of the petitioner-companies', expert in dairy technology appeared before us to explain the meaning of the word "milk, whole or separated or reconstituted". Learned counsel appearing for the petitioner is right in submitting that entries concerning goods in the Sales Tax Law should be assigned meaning as commonly understood in commercial sense and to ascertain its commercial meani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14.. The legislative device to validate even retrospectively the laws found by the Court to be defective or expressing a different intention is well-recognised and approved even by the Courts. In the instant case, the relevant entry in Schedule I of exempting "milk, whole, separated or reconstituted" was interpreted to include milk in solid form such as milk powder. The view of the Legislature is that the exemption was intended only for milk in liquid form as sold in the market or used by the common man. As is the stand taken on behalf of the State, the Legislature never intended to exempt from sales tax milk in powder form which is a product associated with the milk industry. On the basis of the existing entry and before its interpretation by the division Bench of the Gujarat High Court to include within the entry milk powder, various sales tax authorities had subjected "milk powder" to assessment and levy of sales tax. The division Bench decision of the Gujarat High Court in the case of Chunilal [1992] 86 STC 105, had created a situation whereby the assessment and levy of tax on milk powder were rendered invalid requiring the State, in majority of cases, to make refunds of sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment disappeared, then it could not be said that the judgment was still in force and will have to be given effect to even though the Legislature had specifically laid down that the amended law will operate notwithstanding any judgment or decision or decree by the court to the contrary." (Underlining by us) 16.. On the case in hand, the Legislature found that the exemption entry Schedule I of milk to convey its meaning as milk in various forms, due to unclear expression used by Legislature, came to be interpreted by the court to include in the said entry milk in solid or semi-solid form. The Legislature thought it necessary to bring in retrospective legislation to make the legislative intent clearer and validate its all previous proceedings for assessment and collection of tax on item "milk powder" which was never intended to be exempted from levy of sales tax. 17.. We, therefore, find no constitutional infirmity in the impugned Ordinance and the Act which have been brought on the statute book with retrospective effect to validate the assessment and levy of tax on milk powder. 18.. The ancillary question which arises for consideration is more important in the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impugned Ordinance has become an Act by the same name with no variation. We, will, therefore consider the provisions of the impugned Validation Act. Section 3 retrospectively amends sub-entry (i) of entry 10 of Schedule I to insert in the said entry words "except milk powder" with a purpose to exclude from the entry of exemption "milk powder". Clause (b) of section 3(1) intends to validate the levy, assessment and reassessment or collection of any sales tax on milk powder which reads as under: "3(1). Notwithstanding any judgment, decree or order of any court, Tribunal or authority to the contrary- (a) in sub-entry (i) of entry 10 of Schedule I to the Gujarat Sales Tax Act, 1969 as in force before the date of the commencement of the Gujarat Sales Tax (Second Amendment) Act, 1992 (hereinafter referred to as 'the said date'), the words 'except milk powder' shall be and shall be deemed always to have been added at the end and formed part of the said sub-entry (i) before the said date; (b) a tax on milk powder levied, assessed, reassessed or collected or purported to have been levied, assessed, reassessed or collected under the Act before the said date shall be and shall be de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and closed prior to the coming into force of the Validation Act where the turnover of milk powder was treated as exempt from tax and no tax was assessed or collected on it. 22.. The general rule is "every statute which takes away or impairs vested right acquired under existing laws, or creates a new obligation or imposes a new duty or attaches a new disability in respect of transactions already passed, must be presumed to be intended not to have a retrospective effect. A construction of the statute that affects vested right should never be adopted if the words are open to another construction". See Sri Vijayalakshmi Rice Mills, New Contractors Co. v. State of Andhra Pradesh reported AIR 1976 SC 1471. 23.. The logical corollary of the general rule, that retrospective operation is not to be intended unless that intention is manifested by express words or necessary implication, a statute or a section in it is not to be construed so as to have larger retrospective operation than its language renders necessary. (See Delhi Transport Corporation v. D.T.C. Mazdoor Congress AIR 1991 SC 101 and Deputy Collector v. S. Venkata Ramanaiah AIR 1996 SC 224). 24.. The above rule of not to g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egislation has no effect on cases of the dealers in which milk powder was neither assessed nor subjected to tax on the assumption that being included in the unamended sub-entry (i) of entry 10 of Schedule I, it was exempt from sales tax. 27.. As a result of the detailed discussion of several legal aspects of the case, we do not find any constitutional infirmity in the impugned Ordinance/Act, we find it a perfectly valid piece of legislation. On interpretation of the provisions of the impugned Act and Ordinance, we have come to the conclusion that the provisions of the impugned legislation have limited retrospective operation so as to affect the cases of dealers in which on the basis of sub-entry (i) of entry 10 of Schedule I, as it existed prior to its amendment by the impugned legislation-the turnover of milk powder was assessed and subjected to tax. We hold that the impugned legislation has no retrospective operation on cases of the dealers in which on the unamended sub-entry (i) of entry 10 of Schedule I-the turnover of milk powder was not assessed and subjected to tax and to all such proceedings of assessments completed or closed and also those which may be pending at the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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