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V. Ananthanarayana Iyer and ors. Vs. State of Kerala and anr. - Court Judgment

LegalCrystal Citation
SubjectSales Tax
CourtKerala High Court
Decided On
Case NumberO.P. Nos. 3014, 3031, 3038, 3043, 3198, 3220, 3269, 3300, 3303, 3334, 3337, 3358, 3382 and 3385 of 1
Judge
Reported in[1967]19STC282(Ker)
ActsKerala Sales Tax (Levy and Validation) Act, 1965 - Sections 1(3), 3 and 4; Constitution of India - Article 14
AppellantV. Ananthanarayana Iyer and ors.
RespondentState of Kerala and anr.
Appellant Advocate V.R. Krishna Iyer,; V. Sivaraman Nair, K. Prabhakaran, T.P. George,;
Respondent AdvocateGovt. Pleader
DispositionPetitions dismissed
Cases Referred(Ker) and K. C. Antony v. Sales Tax Officer
Excerpt:
.....to validity of act of 1965 - liability created by section 3 valid - retrospective effect given to liability created by section 3 equally valid - liability created by section 3 should be enforced in all cases other than those covered by section 4 - validation effected by section 4 is only to extent of liability created by section 3 and is controlled by trammels on that liability - when section 3 and 4 read together there is neither violation of article 14 nor an inroad into judicial power - petition fails. - - ' 4. the kerala sales tax (levy and validation) act, 1965, was enacted by the president in exercise of the powers conferred by the kerala state legislature (delegation of powers) act, 1965. we entertain no doubt that the enactment of a section like section 3 is competent under..........and ending with the 31st day of march, 1963, a tax on his turnover relating to the purchase of copra or cashewnut kernel for that year at the rate of four paise for every rupee in such turnover: provided that for the period commencing on and from the 1st day of october, 1958, and ending with the 31st day of march, 1963, such tax shall, with respect to the turnover relating to the purchase of copra, be two paise for every rupee in such turnover provided further that no tax shall be levied under this section on copra or cashewnut kernel if a tax has already been levied on the purchase of coconut or cashewnut out of which such copra or cashewnut kernel is produced: (2) such tax shall be chargeable in respect of any year referred to in sub-section (1) at the point of last purchase in the.....
Judgment:
ORDER

1. The controversy in these petitions relates to the validity of the Kerala Sales Tax (Levy and Validation) Act, 1965. It is common ground that but for that Act no tax is attracted on the purchase of copra and cashewnut kernel during the period from 1-4-1958 to 31-3 1963.

2. The non-liability to tax on the purchase of copra and cashewnut kernel during the period from 1-4-1958 to 31-3-196.3 arose as a result of the decisions of this Court in K.A. Karim v. Sales Tax Appellate Tribunal, (1963) 14 STC 36 (Ker). Poulose Bros. v State of Kerala, (1963) 14 STC 40 (Ker) and K. C. Antony v. Sales Tax Officer, (1964) 15 STC 620. The correctness of these decisions is not challenged before us.

3. The Kerala Sales Tax (Levy and Validation) Act, 1965, was passed in order to abrogate the non-liability that arose as a result of the three decisions mentioned above. Section 3 of the Act--which in view of Sub-section (3) of Section 1 of the Act should be deemed to have come into force on 1-4-1958--is the section that imposes the liability to tax on the purchase of copra and cashewnut kernel during the period from 1-4-1958 to 31-8-1963.

That section consists of four sub-sections and reads as follows:

'(1) Every dealer shall be liable to pay for each year during the period commencing on and from the 1st day of April. 1968, and ending with the 31st day of March, 1963, a tax on his turnover relating to the purchase of copra or cashewnut kernel for that year at the rate of four paise for every rupee in such turnover:

Provided that for the period commencing on and from the 1st day of October, 1958, and ending with the 31st day of March, 1963, such tax shall, with respect to the turnover relating to the purchase of copra, be two paise for every rupee in such turnover Provided further that no tax shall be levied under this section on copra or cashewnut kernel if a tax has already been levied on the purchase of coconut or cashewnut out of which such copra or cashewnut kernel is produced:

(2) such tax shall be chargeable in respect of any year referred to in Sub-section (1) at the point of last purchase in the State by a dealer who is not exempt from liability to pay such tax under Sub-section (3);

(3) no dealer whose total turnover relating to all goods in any year during the period referred to in Sub-section (1) is less than ten thousand rupees shall be liable to pay such tax for that year;

(4) the provisions of the General Sales Tax Act and all notifications, orders and rules issued or made thereunder shall apply in relation to the assessment and collection (including refund) of the tax levied under this section as they applied in relation to the assessment and collection (including refund) of any tax levied under that Act.'

4. The Kerala Sales Tax (Levy and Validation) Act, 1965, was enacted by the President in exercise of the powers conferred by the Kerala State legislature (Delegation of Powers) Act, 1965. We entertain no doubt that the enactment of a section like Section 3 is competent under the Constitution and that the retroactive operation given to that section is also within the power conferred by the Constitution.

5. The attack before us is not so much on the validity of Section 3 as on the validity of Section 4 Section 4 consists of two subsections and reads as follows:--

'(1) Notwithstanding any judgment, decree or order of any Court, tribunal or other authority all taxes levied, assessed or collected or purported to have been levied, assessed or collected under the General Sales Tax Act during the period commencing on and from the 1st day of April, 1958, and ending with the 31st day of March, 1963, on the purchase of copra or cashewnut kernel shall be deemed to have been validly levied, assessed or collected in accordance with law: and accordingly.

(i) no suit or other proceeding shall be maintained or continued in any Court, tribunal or other authority for the refund of any such tax paid under the General Sales Tax Act;

(ii) no Court shall enforce a decree or order directing the refund of any such tax paid under the General Sales Tax Act;

(iii) any such tax assessed under the General Sales Tax Act before the 1st day of April, 1963, but not collected, may be recovered in the manner provided under that Act and the rules made thereunder;

(iv) any such tax not assessed under the General Sales Tax Act before the 1st day of April, 1963, may be assessed within three years of the date of publication of this Act and recovered in the manner provided under the General Sales Tax Act and the rules made thereunder.

(2) For the removal of doubts it is hereby declared that nothing in Sub-section (1) shall be construed as preventing any person from claiming the refund of any amount paid by him in excess of the amount due from him by way of tax on the purchase of copra or cashewnut kernel under the General Sales Tax Act.'

6. No retroactive operation has been conferred on Section 4 and it is common ground that Section 4 can be considered to have come into force only on the date on which the Kerala Sales Tax (Levy and Validation) Act, 1966, came into force, namely, 27-9-1965. It is also common ground that what has been validated by Section 4 is only taxes levied, assessed or collected or purported to have been levied, assessed or collected under the General Sales Tax Act, 1125, during the period from 1-4 1958 to 31-3-1963 in respect of the purchase of copra or cashewnut kernel during that period.

7. The contention of the petitioners is that Section 4 is ultra vires of the Constitution. It is submitted that Section 4 violates Article 14 of the Constitution which provides that the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India. It is also submitted that Section 4 makes an inroad into the judicial power envisaged by the Constitution.

8. The tenability or otherwise of both the submission depends on the true scope and ambit of the validation effected by Section 4. In the validation effected of all levies, assessments or collections during the period from 1-4-1958 to 31-3-1963 on the purchase of copra or cashewnut kernel during the said period Irrespective of the provisions of Section 3? Or is the validation effected only of the levies, assessments or collections during the period from 1-4-1968 to 31 3-1963 on the purchase of copra or cashewnut kernel during the said period which are in conformity with the liability created by Section 3 with effect from 1-4-1958

9. According to the learned Advocate General the latter is the case; and no question of any violation of Article 1-1 or any inroad into the judicial power arises for consideration. We are inclined to agree. Apparently what Section 3 does is to provide a legal foundation for assessments on the purchase of copra or cashewnut kernel during the period from 1-4-1958 to 81-9-1963; and what Section 4 does is to validate all taxes already levied, assessed or collected or purported to have been levied, assessed or collected under the General Sales Tax Act, 1126, during the period from 1-4-1968 to 31-8-1963 in respect of the purchase of copra or cashewnut kernel during the said period to the extent, and only to the extent, of the legal foundation provided by Section 8 with effect from 1-4-1958.

10. In other words Sections 8 and 4 have to be read together; and an assessment, whether It be a fresh assessment made under Section 3 or an old assessment validated under Section 4, will be justified only to the extent of the liability created by Section 8 with effect from 1-4-1958. An example will make the position clear. The second proviso to Sub-section (1) of Section 3 says that no tax shall be levied under that section on copra or cashewnut kernel if a tax had already been levied on the purchase of the coconut or cashewnut out of which such copra or cashew-nut kernel is produced. In the view we take, assessments, whether they come under Section 3 or Section 4, will have to satisfy the stipulation of that proviso

11. It is suggested by the petitioners that Section 4 may be considered as validating the levies, assessments or collections mentioned in that section even in cases where there has been a violation of the canons of natural justice. There is no warrant for the suggestion. If there has been a levy, assessment or collection which is invalid for any reason other than the lack of the legal foundation provided by Section 3 with effect from 1-4-1958, then that assessment, levy or collection will certainly be open to challenge in appropriate proceedings.

12. We must add that no specific instance of an unconstitutional detriment as a result of the wording of Section 3 or Section 4 has been brought to our notice. The arguments were academic, and hypothetical.

13. What we have said above can be summed up in the form of five propositions:

(1) The liability created by Section 3 is a liability that has been validly created;

(2) The retrospective effect given to the liability created by Section 3 under subsection (3) of Section 1 is equally valid;

(3) The liability created by Section 3 should be enforced in all cases other than those covered by Section 4 by proceedings under Section 3 itself;

(4) The validation effected by Section 4 is only to the extent of the liability created by Section 3 and is controlled by the trammels on that liability: and

(5) Sections 3 and 4 have to be read together and when so done, there is neither a violation of Article 14 nor an inroad into the judicial power.

It follows that the petitions should fail and have to be dismissed

14. The petitions are hereby dismissed.In the circumstances of the case, however,there will be no order as to costs.


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