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TMI Blog2008 (9) TMI 906X X X X Extracts X X X X X X X X Extracts X X X X ..... Acts the petitioner used to purchase rab locally and also from outside West Bengal for sale as importer and also as a consignment agent and used to file returns accordingly nil as there was no tax on sale of rab. The assessment of the petitioner for four quarters ending on March 31, 2001 was completed on June 25, 2003 by the concerned assessing officer, i.e., respondent No. 2, by levying tax at four per cent as per entry under serial No. 210A of the Fourth Schedule made taxable by insertion of amendment with retrospective effect from January 1, 2000 on the strength of the impugned notification dated August 1, 2001 and hence this application for declaring the notification as ultra vires and order of assessment as bad, illegal and inoperative. Mr. S.K. Chakraborty, learned Advocate appearing on behalf of the petitioner, has submitted that the item rab was exempted from payment of tax under the West Bengal Sales Tax Act, 1994, as an item under serial No. 41 of the First Schedule. By a Notification No. 2598-F.T. dated August 1, 2001 rab was brought as item No. 210A under the Fourth Schedule of the 1994 Act and the said insertion of serial No. 210A was made with retrospective eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Advocate that prior to issuance of Notification No. 2598-F.T. dated August 1, 2001 both the assessing authorities and the members of the association were of the view that gur and rab are same and no tax is payable either on the sale of gur or rab . It is categorically denied that any representation was made by the association before the Government, to reduce the rate of tax on rab from twelve per cent to four per cent prior to issuance of the aforesaid notification. It has been asserted that there was no question of submitting any such representation as the assessing authorities in West Bengal never treated rab as something different from gur and a taxable item before August 1, 2001. Mr. T.N. Banerjee, learned State Representative, has opposed the contention of the petitioner as well as respondent No. 4. It is claimed that rab is a different commercial commodity in relation to gur and was taxable as serial No. 228 (subsequently renumbered as 253) of Schedule IV being the item of goods not specified by name or description other than those specified in Schedule I or Schedule VIIIA . It is pointed out that rab, other than those specified elsewhere i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'khandsari' in the dry powder/ crystallized form and the waste of 'rab' which is obtained in the liquid form is known as molasses. There are also two kinds of 'rab' 'rab-galawat' and 'rab-salawat'. 'Rab-salawat is of inferior quality to 'rab-galawat'. It is, therefore, clear that the contention of the petitioner that in Hindi-speaking States 'rab' is known as 'gur' is not correct. It is, of course, correct that the Revenue authorities in this State have no idea about 'rab' before 2000. The argument of learned State Representative that even before the impugned notification, 'rab' was treated as a taxable item under entry No. 253 of Schedule IV cannot also be accepted because when 'molasses' was transferred from Schedule I to Schedule IV, there was no mention of 'rab' either in Schedule I or in Schedule IV. Had the concept of 'rab' been known at that point of time, then 'rab' would have been included categorically either in Schedule I or in Schedule IV. In fact, the learned State Representative was requested by the Bench to produce some documentary evidence that even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and imposed unreasonable restrictions on the fundamental rights guaranteed by article 19(1)(f) and (g) of the Constitution. Therefore, it was held that the amending provision should be struck down. In the said case it was also submitted that the amending provision offends against article 14 because assessees whose assessments are pending were subjected to discrimination as against those whose assessments were completed. It was held by the honourable court that the retrospective operation of the amendment did not seek to make any hostile discrimination between persons or classes of persons. That it affected only those cases where assessment had not been finally closed and not others was a fortuitous circumstance. Therefore, it was concluded that the amended provision did not offend article 14 of the Constitution. The fact in the case of D. Cawasji Co. v. State of Mysore [1985] 58 STC 1 (SC) was that with effect from April 1, 1966, the State Government, started collecting sales tax on the sale price of arrack as well as on excise duty and cesses. The applicant filed a writ petition challenging the validity of the collection of sales tax on excise duty and cesses and the High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 368, the Calcutta High Court considered the West Bengal Taxation Laws (Amendment) Act of 1969, in so far as it gave retrospective operation to a new definition of 'business' incorporated retrospectively by virtue of the amendment. The court observed that the object of the amendment was not to remove or rectify any defect in phraseology or lacuna or to validate proceedings which had taken place on the basis of the earlier enactment. The object was to enlarge the scope and ambit of the expression 'business' by including within it transactions which without the amendment could not be brought within the meaning of the word 'business' as understood in the commercial word and as interpreted by courts of law. The effect of such retrospective operation of the amendment would be to impose an unexpected liability in respect of transactions which, when they took place, were not subject to any charge or liability under the Act. The retrospective amendment, the court said, imposed an unreasonable restriction upon a person's fundamental right guaranteed under article 19(1)(f) and (g) of the Constitution and was, therefore, invalid. By amendment to entry 155 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) that a fresh levy of tax could be imposed retrospectively, (ii) that by enacting the Amending Act, the Legislature had not usurped legislative power but had only made its legislative intent clear and (iii) that the fact that the retrospective levy did not afford an opportunity to the dealers to pass on the tax to the consumers had no relevance in considering the legislative competence of the levy. The tax liability of gur, rab and molasses underwent several changes during the period from 2000 to 2004 by way of several amendments. At the beginning serial No. 41 of Schedule I covered gur and molasses . Subsequently, the words and molasses appearing in entry 41 were omitted with effect from January 1, 2000 and the item molasses was shifted to Schedule IV as item No. 210 from the same date. With effect from August 1, 2001 the entry 41 of Schedule I became as follows by inclusion of jaggery: Serial No. 41: Gur and jaggery, other than those specified elsewhere in this Schedule or in any other Schedule. By Notification No. 2598-F.T. dated August 1, 2001, the item rab was brought as item No. 210A under Schedule IV with retrospective effect from January 1, 2000. The e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trospective operation of the amendment and has relied on the decision of the Supreme Court of India in the case of Hira Lal Rattan Lal v. Sales Tax Officer, Section III, Kanpur [1973] 31 STC 178. In the cited case the honourable court held that the retrospective operation of the amendment was legal because the Legislature had only made its legislative intent clear (underline Here italicised. supplied). In other words, the retrospective operation of the amendment was held legal on the ground that the amendment was in the nature of explanatory. It has already been stated before that the learned State Representatives were asked by the Division Bench as well as by this Larger Bench to produce some copy of assessment order to show that even before impugned amendment assessment was being made and tax was levied on sale of rab , but no such assessment order had/has been produced by the learned State Representatives. As such, the argument that the item rab was taxable before the amendment and by way of impugned amendment the item inserted in Schedule IV is nothing but explanatory in nature appears not acceptable to us. Mr. Chakraborty, learned Advocate of the petitioner, on the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Government and Government may legitimately exercise the said power by reference to the objects to which it is applicable to the utmost extent to which Government thinks it expedient to do so. The objects to be taxed so long as they happen to be within the legislative competence of the Legislature can be taxed by the Legislature according to the exigencies of its needs, because there can be no doubt that the State is entitled to raise revenue by taxation. The quantum of tax levied by the taxing statute, the conditions subject to which it is levied, the manner in which it is sought to be recovered, are all matters within the competence of the Legislature and in dealing with the contention raised by a citizen that the taxing statute contravenes article 19, courts would naturally be circumspect and cautious. Where for instance it appears that the taxing statute is plainly discriminatory, or provides no procedural machinery for assessment and levy of the tax, or that it is confiscatory, courts would be justified in striking down the impugned statute as unconstitutional. In such cases, the character of the material provisions of the impugned statute is such that the court would feel j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laws Validation Act, 1956, was rejected in the case of M.P.V. Sundararamier Co. v. State of Andhra Pradesh [1958] 9 STC 298 (SC); [1958] SCR 1422. This Larger Bench in its judgment in RN 136(T) of 1989 (Board of Trustees for the Port of Calcutta v. State of West Bengal) observed that: It is true that the Supreme Court has held that it is not an essential characteristic of a sales tax that the seller must have right to pass it on to the consumer (vide J.K. Jute Mills Co. Ltd. v. State of Uttar Pradesh [1961] 12 STC 429 (SC)). Such observation was made in the context of judging the competence of the Legislature and it was not considered whether the impact of such levy denying any opportunity to pass on the tax to the consumer would be arbitrary, unreasonable and violative of articles 14 and 19(1)(g) of the Constitution. The Constitution Bench in Ujagar Prints v. Union of India [1989] 74 STC 401 (SC) pointed out that: (page 430) In testing whether a retrospective imposition of a tax operates so harshly as to violate the fundamental rights under article 19(1)(g), the factors considered relevant include the context, in which retroactivity was contemplated such as whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001, cannot be said to have been enacted to validate a law which had been declared invalid by courts provided the infirmities or vitiating factors are removed or cured. Admittedly, both the Revenue and sellers of rab had no conception that rab is different from gur and rab is a taxable goods. As such, it is to be examined the reasonableness of the above referred notification with a view to consider the question whether the retrospective effect of the said amendment amounts to contravention of fundamental rights. On the point of reasonableness this Larger Bench in the case of Board of Trustees for the Port of Calcutta v. State of West Bengal [RN 136(T) of 1989] quoted from the Calcutta High Court's judgment in Shew Bhagwan Goenka [1973] 32 STC 368 (Cal): The test of reasonableness should be applied to each individual statute impugned and no abstract standard or general pattern of reasonableness can be laid down as applicable to all cases. 'The nature of the rights alleged to have been infringed, the underlying purpose of the restriction imposed, the extent and urgency of the evils sought to be remedied thereby, the disproportion of the imposition, the prevailing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e retrospective amendment, in my view, imposes an unreasonable restriction upon the petitioner's fundamental rights guaranteed under article 19(1)(f) and (g) of the Constitution and as such is not protected by article 19(5) and (6). In my view section 2(1a) of the Act, in so far as it has been given retrospective operation by section 4 of the amending Act, is ultra vires the Constitution as it offends article 19(1)(f) and (g). Though respondent No. 2 contested the application filed by the petitioner by filing a separate affidavit-in-opposition, no definite reasons have been placed before us to justify the retrospective effect of the amendment. Respondent No. 2 only affirmed that the State Government has the power to make rules with prospective as well as retrospective effect. The relevant portion of the affidavit-in-opposition at page 3 is as follows: I like to state that under section 104 of the West Bengal Sales Tax Act, 1994 the State Government may, by notification, make rules, with prospective or retrospective effect, for carrying out the purposes of this Act. As such I respectfully state and submit that there is no illegality, unreasonableness and also not unconst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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