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TMI Blog1983 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... adesh. In 1959, the Andhra Pradesh Legislature passed an Amending Act, Act 21 of 1959, under which the tax on bus operators was raised from 5 paise to 20 paise. The rise in rate came into effect on May 8, 1959. Some of the bus operators affected by the rise in the rate of tax filed writ petitions in the Andhra Pradesh High Court. They impugned the validity of the Act on the score that the Legislature had not obtained the previous sanction of the President for that measure. Accepting this plea, the Andhra Pradesh High Court struck down this Act as void. This judgment was rendered on January 17, 1961. Some time later, the Andhra Legislature enacted Act 34 of 1961. This Act came into force on October 31, 1961. Under this Act, the tax on bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Act 21 of 1959, but not for long. He knew that with the passage of the Act 34 of 1961, he could no longer resist the liability. The motor vehicles tax authorities came with a notice of demand dated November 7, 1962, for Rs. 3,43,949 relating to the period May 8, 1959, to October 31, 1961. This demand pertained to three account years of the assessee, namely, years ended March 31, 1960, March 31, 1961, and March 31, 1962. However, even prior to the notice of demand, while closing his accounts for the year ended March 31, 1962, the assessee made a provision for motor vehicles tax under the Act 34 of 1961 at the enhanced rates. The provision amounted to Rs. 3,43,949. In the assessment for the relevant assessment year 1962-63, the assessee cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obviously to the enhanced tax payable under the Amending and Validation Act 34 of 1961. There is no dispute before us as to the assessee, s right to claim deduction in regard to a provision for taxation. But the argument for the Department was that a provision can properly be made only with reference to a liability which appertains to the particular year concerned. The motor vehicles tax, it was said, is a yearly tax and, therefore, a provision in any given year must stick to the liability for that year and no more. We agree with the principle of this argument. But the question is: Did the motor vehicles tax relating to the earlier two years accrue due during those years ? For an answer to this question, we must turn to the history o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count; would anyone not so endowed in hindsight accept it as a same provision or as a proper charge against net profits ? The answer is " No ". In this case, the provision made by the assessee in his accounts towards motor vehicles tax liability, no doubt, covered three account years, but, in the events that happened, it was inevitable. Under s. 3 of Act 34 of 1961, which is the charging section, the rescheduled rates of motor vehicles tax on buses covered the three account years, as under: -------------------------------------------------------------------------------------------------------------------------------------------------- Year of account Rate of tax ---------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided going into the details of the Tribunal's order, but we must say their conclusion accords with ours. There is also an observation of the Tribunal which accords with our line of reasoning and that observation reads thus : " legally enforceable liability to pay additional surcharge arose only when the Amendment and Validating Act 34 of 1961 came into operation ". For the rest, however, the Tribunal's order is a web of confusion. For instance, having made the observation we have quoted above, the Tribunal proceeded to remark that " accrual of liability cannot be given a retrospective effect by a validating legislation ". This remark makes us wonder whether the propounding of the earlier observation can be ascribed to any cogent piece of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o stand under the re-enacted law; and (iii) The legislature may give its own meaning and interpretation of the law under which the tax was collected, and by legislative flat make the new meaning binding on courts. The Supreme Court observed that the legislature may follow any one method or all of them and, while it does SO, it may neutralize the effect of the earlier decision of the court which becomes ineffective after the change of the law. The pattern of Andhra Act 34 of 1961 would seem to follow the second of the examples given by the Supreme Court as to the nature and scheme of a combined validation and amending legislation. The provision for taxation for which the assessee has claimed deduction has to do with that part of the Act 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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