Case: Jawaharmal Vs. State Of Rajasthan And Others

it imposes enhanced tax duty retrospectively. His argument is, where a taxing Statue purports to impose a tax retrospectively, it necessarily involves an element of unreasonableness and that virtually amounts to contravention of the citizens fundamental rights guaranteed under Art. 19 (1) (f) or (g) of the Constitution. 26. For the purpose of the present writ petition, we will assume that notwithstanding the proclamation of emergency issued by the President under Art. 352, the constitutional bar created by Art. 358 does not operate against the petitioner inasmuch as he relies upon the contravention of his fundamental right prior to the date of the proclamation. It is on that assumption that we wish to deal with the contention raised by Mr. Tiwari, In our opinion, the said contention is plainly unsound. We have already stated that the power to make laws involves the power to make them effective prospectively as well as retrospectively, and tax laws are no exception to this rule. So, it would be idle to contend that merely because a taxing statute purports to operate retrospectively, the retrospective operation per se involves contravention of the fundamental right of the citizen taxed under Art. 19 (1) (f) or (g). It is true that cases may conceivably occur where the Court may have to consider the question as to whether excessive retrospective operation prescribed by a taxing statute amounts to the contravention of the citizens fundamental right; and in dealing with such a question, the Court may have to take into account all the relevant and surrounding facts and circumstances in relation to the taxation. In the present case, having regard to the legislative background of the provision prescribed by S. 2 there can be little doubt that there is no element of unreasonableness involved in the retrospective operation of Cl. (b) of the proviso added by the said section to S. 3 (1) of the principal Act. 27. The result is that S. 2 of the Act is valid and the tax in question can be recovered from the petitioner for the periods covered by Cls. (a) and (b) of the proviso as therein prescribed. In this connection, it will be recalled that the provision prescribed by Cl. (a) of the proviso is really superfluous, because the same tax could have been validly recovered at the prescribed rates under the notification issued on April 30, 1959 under S. 3 of the principal Act. But as we have already pointed out, the period between March 26, 1962 to September 9, 1964 is not covered by the provisions inserted by S. 2 in S. 3 (1) of the principal Act; and so, the provisions of S. 2 are of no assistance to the respondents in imposing a tax against the petitioner at the enhanced rates initially prescribed by S. 9 of the Finance Act 11 of 1962. 28. If we had held that S. 4 of the Act was valid, then the imposition of the tax at the enhanced rates prescribed by the said S. 9 would also have been valid; but in view of the fact that we have come to the conclusion that S. 4 is invalid, it follows that the tax which can be legitimately and validly imposed against the petitioner for the said period must be levied under the notification issued on April 30, 1959 under S. 3 of the principal Act. No doubt, Mr. Tiwari attempted to argue that in view of the fact that the said S. 3 had been amended by S. 9 of the Finance Act 11 of 1962, the notification issued under the original S. 3 of the principal Act ceases to be operative. This contention is clearly misconceived. If the said Finance Act is unenforceable and the notification issued thereunder is of no effect, then S. 3 of the principal Act would remain unamended for the period in question and the notification initially issued under it would be operative. 29. As a consequence of this conclusion, it follows that the petitioner is entitled to claim that the tax assessed against him in respect of his vehicles for the period between 26th March 1962 and the 9th September 1964 at the enhanced rates is invalid, and that the taxing authorities concerned will have to levy the tax at the rates prescribed by the notification issued on the 30th April 1959 under S. 3 of the principal Act as it originally stood. It is true that this result sounds very anomalous, because for the period immediately preceding the period in question, the tax is validly recoverable at the enhanced rates, whereas for the period in question, it has to be recovered at a lower rate; but, for this anomaly, the defective drafting of S. 2 and S. 4 of the Act is entirely responsible. 30. Before we part with this petition, we would like to refer briefly to two decisions of this Court to which reference was made during the course of the arguments before us. In Rai Ramkrishna v. State of Bihar, (1964) 1 SCR 897 : (AIR 1963 SC 1667 ), the validity of the Bihar Taxation on Passengers and Goods (Carried by Public Service Motor Vehicles) Act, 1961 (No. 17 of 1961) was challenged on the ground that it sought to validate taxes already recovered under an invalid Finance Act. Rejecting the argument that such retrospective validation of tax illegally recovered amounts to the contravention of the citizens fundamental right under Art. 19 (1) (f) or (g), this Court held that if in its essential features a taxing statute is within the competence of the Legislature which passed it, its character is not necessarily changed merely by its retrospective operation so as to make the said retrospective operation either unreasonable or outside its legislative competence. 31. A similar view has been expressed by this Court in Jaora Sugar Mills (Pvt.) Ltd. v. State of Madhya Pradesh, Civil Appeal No. 531 of 1964, dated 19-8-1965: (AIR 1966 SC 416 ). 32.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]We made it clear to the learned Advocate-General that our decision in the present writ petition would cover the decision of the said appeals in so far as it would relate to the validity of the provisions of the Act which are impugned before us by the present petitioner and not to that part which covered the question of penaltyIn the first place, it is not clear that the Rajasthan High Court has held that the said earlier Finance Acts are void ab inito: in fact, as we have already pointed out, the said High Court thought it unnecessary to pronounce its considered opinion on that aspect of the matter, because it held that the Act of 1964 with which it was primarily dealing the said proceedings not merely amended or cured the earlier Finance Acts, but re-enacted the provisions of the said Acts, and so, the provisions of the said Acts became operative by their own force. Therefore, factually, it is not correct to say that the said earlier Acts have been struck down as void ab initio by any Court of competent jurisdiction. Besides, in assessing the validity of this argument, it is necessary to remember that the Act was passed on September 8, 1964 and the judgment of the Rajasthan High Court was pronounced on November 30, 1964; and so, it is clear that at the time when the Act was passed the earlier Finance Acts had not been struck down at allThere are two answers to this question. Article 255 provides, inter alia, that no Act of the Legislature of a State and no provision in any such Act, shall be invalid by reason only that some recommendation or previous sanction required by this Constitution was not given, if assent to the Act was given by the President later. The position with regard to the laws to which Art. 255 applies, therefore, is that if the assent in question is given even after the Act is passed, it serves to cure the infirmity arising from the initial non-compliance with its provisions. In other words, if an Act is passed without obtaining the previous assent of the President, it does not become void by reason of the said infirmity; it may be said to be unenforceable until the assent is secured. Assuming that such a law is otherwise valid, its validity cannot be challenged only on the ground that the assent of the President was not obtained earlier as required by the other relevant provisions of the Constitution. The said infirmity is cured by the subsequent assent and the law becomes enforceable. It is unnecessary for the purpose of the present proceedings to consider when such a law becomes enforceable, whether subsequent assent makes it enforceable form the date when the said law purported to come into force, or whether it becomes enforceable from the date of its subsequent assent. Besides, it is plain that the Legislature may, in a suitable case, adopt the course of passing a subsequent law re-introducing the provisions of the earlier law which had not received the assent of the President, and obtaining his assent thereto as prescribed by the Constitution. We see no substance in the argument that an Act which has not complied with the provisions of Art. 255, cannot be validated by subsequent legislation even where such subsequent Act complies with Art. 255 and obtains the requisite assent of the President as prescribed by the Constitution. Whether the infirmity in the Act which has failed to comply with the provisions of Art. 255, should be cured by obtaining the subsequent assent of the President or by passing a subsequent Act re-enacting the provisions of the earlier law and securing the assent of the President to such Act, is a matter which the Legislature can decide in the circumstances of a given case. Legally, there is no bar to the legislature adopting either of the said to courses. Therefore, the preliminary objection raised by Mr. Tiwari against the validity of the Act fails18. It is well recognised that the power to legislate includes the power to legislate prospectively as well as retrospectively, and in that behalf, tax legislation is no different from any other legislation. If the Legislature decides to levy a tax, it may levy such tax either prospectively or even retrospectively. When retrospective legislation is passed imposing a tax, it may, in conceivable cases, become necessary to consider whether such retrospective taxation is reasonable or not. But apart from this theoretical aspect of the matter, the power to tax can be competently exercised by the legislature either prospectively or retrospectively; and that is precisely what S. 2 has done in the present case. Therefore, there is no substance in the argument that S. 2 of the Act is invalidIn our opinion, the Legislature is incompetent to declare that the failure to comply with Art. 255 is of no consequence; and, with respect, the assent of the President to such declaration also does not serve the purpose which subsequent assent by the President can serve under Art. 255In our opinion, even the assent of the President cannot alter the true constitutional position under Art. 255. The assent of the President cannot, by any legislative process, be deemed to have been given to an earlier Act at a time when in fact it was not so given. In this context there is no scope for a retrospective deeming provision in regard to the assent of the President. It is somewhat unfortunate that the casual drafting of S. 2 leaves the period covered by Act. 11 of 1962 and the notification issued thereunder as unenforceable as before and the omnibus and general provisions of S. 4 are of no help in regard to the said periodWe have given our anxious consideration to the problem raised by the wording of S. 4 and we have come to the conclusion that it would not be possible to uphold its validity. On many occasions, this Court has tried to look at the substance of the matter and determine the issue in spite of the fact that the words or expressions used in the relevant provisions are either slovenly inappropriate or unhappy. But in the present case, however benevolently or favourably we look at the provisions of S. 4, we see no escape from the conclusion that in enacting it, the Legislature appears to have clearly assumed that it can by itself cure the infirmity resulting from the non-compliance with Art. 255 and all that it has to do in such a case is to obtain the assent of the President to its own view about its power to cure such an infirmity. We are satisfied that it is necessary that the true position in regard to the scope and effect of Art. 255 must be clearly brought out in order to avoid any misapprehension in futureIn the present case, having regard to the legislative background of the provision prescribed by S. 2 there can be little doubt that there is no element of unreasonableness involved in the retrospective operation of Cl. (b) of the proviso added by the said section to S. 3 (1) of the principal ActThe result is that S. 2 of the Act is valid and the tax in question can be recovered from the petitioner for the periods covered by Cls. (a) and (b) of the proviso as therein prescribed. In this connection, it will be recalled that the provision prescribed by Cl. (a) of the proviso is really superfluous, because the same tax could have been validly recovered at the prescribed rates under the notification issued on April 30, 1959 under S. 3 of the principal Act. But as we have already pointed out, the period between March 26, 1962 to September 9, 1964 is not covered by the provisions inserted by S. 2 in S. 3 (1) of the principal Act; and so, the provisions of S. 2 are of no assistance to the respondents in imposing a tax against the petitioner at the enhanced rates initially prescribed by S. 9 of the Finance Act 11 of 1962.If we had held that S. 4 of the Act was valid, then the imposition of the tax at the enhanced rates prescribed by the said S. 9 would also have been valid; but in view of the fact that we have come to the conclusion that S. 4 is invalid, it follows that the tax which can be legitimately and validly imposed against the petitioner for the said period must be levied under the notification issued on April 30, 1959 under S. 3 of the principal ActThis contention is clearly misconceived. If the said Finance Act is unenforceable and the notification issued thereunder is of no effect, then S. 3 of the principal Act would remain unamended for the period in question and the notification initially issued under it would be operativeAs a consequence of this conclusion, it follows that the petitioner is entitled to claim that the tax assessed against him in respect of his vehicles for the period between 26th March 1962 and the 9th September 1964 at the enhanced rates is invalid, and that the taxing authorities concerned will have to levy the tax at the rates prescribed by the notification issued on the 30th April 1959 under S. 3 of the principal Act as it originally stood. It is true that this result sounds very anomalous, because for the period immediately preceding the period in question, the tax is validly recoverable at the enhanced rates, whereas for the period in question, it has to be recovered at a lower rate; but, for this anomaly, the defective drafting of S. 2 and S. 4 of the Act is entirely responsible.