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TMI Blog2009 (7) TMI 1156X X X X Extracts X X X X X X X X Extracts X X X X ..... not overrule or reverse the decision of the court by amending section 2(17) of the Sales Tax Act. The Legislature only removed the flaw in the definition of "manufacture", on account of which lacquering of polyester films was held to be "not manufacture" by this court. It is settled principle of law that the Legislature cannot reverse or overrule a decision given by a court, but can amend the law so as to remove a flaw or lacuna in an Act which leads to a particular interpretation at the hands of the court. It is possible for the Legislature to alter the premise or the basis on which a decision is based and this is not impermissible under the Constitution. It is also a settled principle of law that such amendment can be made with retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meaning of section 2(17) of the Sales Tax Act. The Governor of Maharashtra thereafter issued an Ordinance bearing Ordinance No. 12 of 1996 dated September 4, 1996 retrospectively amending the definition of "manufacture" appearing in section 2(17) of the Act by adding clause (d) thereto. The Ordinance has been replaced by the Legislature of Bombay by passing Act No. 9 of 1997. The effect of the amending definition of "manufacture" appearing in section 2(17) of the Sales Tax Act is to bring the process of lacquering of polyester film within the definition of "manufacture". Consequently, the petitioner would be liable to pay sales tax retrospectively on the lacquered polyester films sold by it. The petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax) on February 2, 1995 See [1995] 99 STC 77 (Bom). whereby this court has specifically held that lacquering of polyester films does not amount to manufacture. Counsel for the petitioner submitted that the Legislature cannot amend the law so as to overrule a decision of the court and any attempt by the Legislature to overrule or reverse the decision of the court is unconstitutional. (ii) the petitioner contends that in any event, the amendment to section 2(17) of the Sales Tax Act could not have been made with retrospective effect. The petitioner was not liable to pay tax on sale of lacquered polyester films as this court held by lacquering of polyester films, no new commodity was brought into existence and the process of lacquering did n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a decision given by a court, but can amend the law so as to remove a flaw or lacuna in an Act which leads to a particular interpretation at the hands of the court. It is possible for the Legislature to alter the premise or the basis on which a decision is based and this is not impermissible under the Constitution. It is also a settled principle of law that such amendment can be made with retrospective effect unless it is specifically prohibited by a provision of the Constitution (like article 20 of the Constitution which prohibits a criminal law to be retrospective) or where the Legislature lacks the legislative competence. In Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality [1969] 2 SCC 283, the Supreme Court has held thus: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and under the re-enacted law. Sometimes the Legislature gives it own meaning and interpretation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon courts. The Legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the Legislature and legal and adequate to attain the object of validation. If the Legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transaction. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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