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TMI Blog2018 (9) TMI 1111X X X X Extracts X X X X X X X X Extracts X X X X ..... chedule-I and Schedule-II goods so manufactured. It is well settled law that validating act cannot validate and effect if it simply deem legal consequences, without amending law from which the said legal consequence could follow - As per Validation Act, it is clear that by a competent legislative provision, the substratum of foundation of a judgment has been removed with retrospectively, the said exercise is a valid legislative exercise and it does not suffer from any invalidity. Petition dismissed. - Writ Petition No.3236/2017 - - - Dated:- 12-7-2018 - Shri P.K. Jaiswal And Shri S.K. Awasthi, JJ. For the Ptitioners : Shri Anand Mohan Mathur, learned Senior Counsel along with Shri Abhinav P. Dhanodkar, learned counsel For the Respondent : Shri Vivek Patwa, learned Government Advocate ORDER PER P.K. JAISWAL, J. In this writ petition under Article 226 of the Constitution of India, 1950, the petitioners are challenging the constitutional validity of Madhya Pradesh Value Added Tax Amendment (Validation) Act, 2017; and prayed that the same be declared as ultra vires, unconstitutional and illegal. 2. The petitioners in this writ petition are regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court. The Division Benches of Madhya Pradesh High Court, Bench at Gwalior and Principal Seat at Jabalpur in the case of Ruchi Soya Industries v. State of MP reported in (2014) 24 STJ 235 and M/s. Shri Ram Agro Industries v. Commissioner of Commercial Tax reported in (2014) 24 STJ 498 and Indore Bench of Madhya Pradesh High Court in the case of M/s. Jindal Agro Oil v. Commissioner of Commercial Tax reported in (2014) 24 STJ 685 held that benefit of ITR is available on the entire amount of tax paid on raw material without any deduction on proportionate basis to the extent of generation of tax free commodity Oil Cake and the principle of apportionment cannot be invoked. The orders imposing liability was quashed by holding that on the purchase made by the manufacture with regard to raw material, he is entitled to the benefit of setoff on the entire amount of tax and the principle of apportionment cannot be invoked on the ground that during the process of manufacture of tax free by-product is also produced. Tax paid and amount refundable be refunded to the assessee, in accordance with law. 5. After the aforesaid judgment, the Governor of Madhya Pradesh has promulgated an Ordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay be prescribed towards the tax, interest and penalty payable by him under this Act or under the Central Sales Tax Act, 1956 (No. 74 of 1956). The balance, if any, may be carried over for adjustment in the subsequent year and if not carried over, shall be granted by way of refund after assessment of the relevant financial year. (iii) in sub-section (6), in clause (ix), for full stop, the semi colon shall be substituted and thereafter the following clause shall be inserted, namely, - (x) in respect of goods, the bill, invoice or cash memorandum of which does not indicate registration certificate number of the purchasing registered dealer as mentioned therein by the selling registered dealer. 8. Section 14 (1) (a) and Clause II of M.P. VAT Act, which deals with the rebate of input tax is relevant which reads as under :- Sec.14 : Rebate of input tax (1) Subject to the provisions of sub-section (5) and such restriction and conditions as may be prescribed, a rebate of input tax as provided in this Section shall be claimed by or be allowed to a registered dealer in the circumstances specified below, (a) Where a registered dealer purchases any goods s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ix) in respect of goods notified under Section 9-A 9. In Serial No.3 of Schedule I de-oiled cake including soyameal and cotton seed oil cake was substituted by VAT (Amendment) Act, 2011 w.e.f. 1.4.2011. Relevant part of Sr. No.3 of VAT Schedule I, reads as under :- 3. Aquatic feed, poultry feed and cattle feed including feed supplements, concentrates and additives, grass, hay, straw, [de-oiled cake including soyameal, cotton seed oil cake and mustard oil cake] 10. By VAT (Amendment) Act 2011 the word excluding cotton seed oil cake and mustard oil cake is substituted w.e.f 1.4.2011. Serial No.31 of VAT Schedule II is relevant which reads as under:- 31. Edible oils, oil cake, but [excluding cotton seed oil cake and mustard oil cake] In this particular case also the provisions regarding incidence of tax has not been amended. 11. That as already held in the case of Ruch Soya (supra), the benefit of ITR is available on the entire amount of tax paid on raw material without any reduction on proporti0nate basis to the extent of generation of tax free commodity oil cake and the plea of apportionment cannot hold good. 12. The Division Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke the explanation inserted by the Madhya Pradesh VAT (Second Amendment) Act, 2014. 15. In the statement of objects and reasons it has been stated: - In order to explain input tax rebate in case of manufacture of taxable as well as tax free goods from inputs, an explanation after second proviso to clause (a) of sub-section (1) of Section 14 of the Madhya Pradesh VAT Act, 2002 (No.20 of 2002) was inserted by the Madhya Pradesh VAT (Second Amendment) Act, 2014 (No.3 of 2015) with retrospective effect from 1st April, 2006. In Writ Petition No.8118/2015 M/s. Jindal Agro Oils, Balwada and 35 others versus State of Madhya Pradesh, Hon ble High Court of Madhya Pradesh Bench Indore has held that the said amendment shall be applicable prospectively and also that the Legislature has power to validate judicial invalid levy retrospectively by bringing validation Act. 2. There is belief that in case of manufacture of taxable as well as tax free goods proportionate input tax rebate on inputs is permissible, especially in view of specific provisions of admissibility of full amount of input tax rebate in case of taxable goods and of the amount which is in excess of 4 percent in case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emed to be and have always been validly done or taken in accordance with law; (b) no suit or other proceedings shall be maintained or continued in any court against the State Government or any person or authority whatsoever for the actions taken; (c) no court shall enforce any order annulling the actions so taken. 17. Shri Anand Mohan Mathur, learned Senior Counsel for the petitioners has submitted that the judgment of this Court in the case of M/s. Jindal Agro Oils Balwada others v. The State of Madhya Pradesh another (supra) covers the whole issue. There is no change and the Legislature has neither added any provision or substituted any provision by which the basis of the judgment has been removed by valid Validation Act. He further submitted that the Legislature has only made the Explanation retrospectively from 1st April, 2006 to 6th January, 2015. 18. To support the aforesaid contentions, he has drawn our attention to paragraphs No.9, 15, 16, 18, 21, 22, 25, 26, 27, 29 and 30 of the decision of this Court in the case of M/s. Jindal Agro Oils Balwada others v. The State of Madhya Pradesh another (supra); and submitted that Validation Act cannot take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the judgment in question, as well as alteration or substitution of provisions of the enactment on which such judgment is based, with retrospective effect ; and prayed for dismissal of the writ petition. 21. We have heard the learned counsel for the parties and perused the record. 22. The object and reason to bring the said Validation Act is that there is belief that in case of manufacture of taxable as well as tax free goods proportionate Input Tax Rebate on inputs is permissible, especially in view of specific provisions of admissibility of full amount of Input Tax Rebate in case of taxable goods and of the amount which is in excess of 4% in case of tax free goods, proportionate Input Tax Rebate was being allowed since beginning i.e. from 1st April, 2006. The decision of High Court in the case of M/s. Jindal Agro Oils Balwada others v. The State of Madhya Pradesh another (supra) shall give rise to series of litigation, as the manufacturers of taxable as well as tax free goods shall claim full Input Tax Rebate even in respect of tax free goods, resulting in refund as per their own calculation and assessment. Therefore, in order to obviate the difficulties, it is p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hers (supra), the Apex Court has held that, if the legislature has the power to enact law and that too with retrospective effect, the contention that the enactment is a colourable exercise of power must fail and should be rejected. In that context, the Apex Court held: - 26. The second issue that emanates for consideration is whether the base of the earlier judgment has really been removed. Before stating the factual score it is necessary to state how this Court has viewed the said principle. In Shri Prithvi Cotton Mills Ltd. and another v. Broach Borough Municipality and others [(1969) 2 SCC 283], the Constitution Bench while dealing with the legislation which intended to validate the tax declared by law to be illegal, opined that when a Legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the Legislature must possess the power to impose the tax, for if it does not, the action must ever remain ineffective and illegal. Granted legislative comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking Coal Mine was under the Management of the Custodian but had not credited the price for the quantity of the coal raised, which was lying in stock on the date prior to the date the said Coal Mine vested under the Central Government. The High Court allowed the writ petition and a direction was issued that account be recast and payment be made to the petitioner. The appeal before this Court by special leave was dismissed, as this Court was of the view that sale price of stock of extracted coal lying at the commencement of the appointed date had to be taken into account for determining the profit and loss during the period of management of the mine by the Custodian. After the appeal preferred by the Coal Fields was dismissed, Coal Mines Nationalisation Laws (Amendment) Ordinance, 1986 was promulgated and later on replaced by Coal Mines Nationalisation Laws (Amendment) Act, 1986 came into force. By Section 4 of the Amendment Act, sub-section (2) was introduced in Section 10 of the Coking Coal Mines (Nationalisation) Act, 1972. The said provision declared that the amounts specified in the fifth column of the First Schedule against any coking coal mines or group of coking coal mine s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the validation of statute the Court ruled that:- 26. It is therefore clear where there is a competent legislative provision which retrospectively removes the substratum of foundation of a judgment, the said exercise is a valid legislative exercise provided it does not transgress any other constitutional limitation. To arrive at the said conclusion, the two-Judge Bench reproduced from the decision in Constitution Bench in State of T.N. v. Arooran Sugars Ltd . [(1997) 1 SCC 326] which is to the following effect:- 28. . It is open to the legislature to remove the defect pointed out by the court or to amend the definition or any other provision of the Act in question retrospectively. In this process it cannot be said that there has been an encroachment by the legislature over the power of the judiciary. A court s directive must always bind unless the conditions on which it is based are so fundamentally altered that under altered circumstances such decisions could not have been given. This will include removal of the defect in a statute pointed out in the judgment in question, as well as alteration or substitution of provisions of the enactment on which such judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enact a particular law. If the legislature is competent to pass a particular law, the motives which impelled it to act are really inconsequential, unless they in the amended incarnation invite the frown of any Article of the Constitution. 29. From the decision of the Apex Court in the case of Cheviti Venkanha Yadav v. State of Telangana others (supra), it is settled that the legislature has the power to enact laws including the power to retrospectively amend laws and thereby remove causes of ineffectiveness or invalidity. If the legislature is competent to pass a particular law, the motive which implied it to act are really inconsequential, unless they in the amended incarnation invite the frown of any article of the Constitution. 30. In the case in hand, we have to see whether the base of earlier judgment has been removed. This Court in Writ Petition No.8118/2015 has held that Explanation to Section 14 of the VAT Act, 2002 is introduced by MP VAT Amendment Act, 2014 and amended in 2015, would apply prospectively. The legislature, after the decision of the High Court, has amended the provision. By such amendment, it has been held that the amendment would apply retrospecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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