Case: M/s. Tirath Ram Rajindra Nath Vs. State of Uttar Pradesh &amp; Another

validity of that amendment came up for consideration before the Allahabad High Court in Krishna Brick Field v. State of U. P., 29 STC 15 = (1971 Tax LR 1057) (FB) (All). A Full Bench of that High Court held that Section 3-A (1) was unconstitutional inasmuch as it delegated essential legislative functions to the State Government and further the power conferred under S. 3A to the Government was an arbitrary power and consequently it was violative of Art. 14 of the Constitution. After that decision, the U. P. legislature again amended the Act by U. P. Sales Tax (Amendment and Validiation) Act, 1971 (Act 20 of 1971). The said amending Act incorporated into the Act S. 3AB (1) which reads :"Notwithstanding any judgment, decree or order of any court, any tax imposed, assessed, levied or collected, or purporting to have been imposed, assessed, levied or collected before the commencement of the U. P. Sales Tax (Amendment and Validation) Act, 1971, under any of the notifications specified in the Second Schedule shall be deemed to have been validly imposed, assessed, levied or collected in accordance with law, as if the said notifications had been included in and formed part of this section and this section had been in force at all material times when such tax was imposed, assessed, levied or collected."4. Dr. L. M. Singhvi, the learned Counsel for the appellants sought to assail the decision of the High Court on three grounds i.e. (1) in any event the purported validation does not cure the vice noticed by the High Court in the previous decision. Unless the vice is cured, there can be no validation; (2) S. 3AB which seeks to validate the notifications has merely removed the vice of excessive delegation but has not cured the judicially declared infirmity in respect of want of power and (3) the liability to be taxed arises only under the charging section; section 3A is only prospective and not retrospective. Section 3AB is not a charging section though it is both prospective and retrospective. It can assist the charging section only in its prospective operation.5. We are unable to accept any of these contentions as correct. We have earlier noticed that the High Court struck down the levy in Krishna Brick Fields case (supra) on two grounds viz. (1) that the Act delegated the essential legislative powers to the State Government and (2) that the levy is violative of Art. 14 of the Constitution. The latter conclusion was based on the ground that the discretion conferred on the Government is an arbitrary discretion. As seen earlier, the legislature has now incorporated the impugned notifications as part of S. 3AB. Those notifications have now ceased to be subordinate legislations. They are now part of the law enacted by the legislature. Hence there is no question of any excessive delegation.6. Now coming to the question of the infringement of Art. 14 the High Court earlier came to the conclusion that the notifications issued by the Government were violative of that Article solely on the ground that the power conferred on the Government is an arbitrary power. That question no more arises for consideration. It is well settled that the legislature has wide powers of classification in the case of taxing statutes.The question of the impact of Art. 14 on taxing statutes has been elaborately discussed by us in Hira Lal Rattan Lal v. State of U. P. (1972) Civil Appeals Nos. 821, 822, 1625 and 2008 of 1971, D/- 3-10-1972 (SC). For the reasons mentioned therein we are unable to accept the contention that the vice noticed by the Allahabad High Court in Krishna Brick Fields case, 29 STC 15 = (1971 Tax LR 1057) (FB) (All), (supra) has not been removed.7. Now coming to the 2nd contention of Dr. Singhvi, we fail to see how the question of lack of power now arises in view of S. 3AB. While developing his contention No. 2, Dr. Singhvi urged that the legislature has unauthorisedly encroached on the judicial power. The amended S. 3AB merely intradicts the decision rendered by the High Court and has not removed the want of power noticed by the High Court. We are unable to accede to this contention. The legislature has not purported either directly or by necessary implication to overrule the decision of the Allahabad High Court in Krishna Brick Fields case, 29 STC 15 = (1971 Tax LR 1057) (FB) (All) (supra). On the other hand it has accepted the decisions as correct but has sought to remove the basis of the decision by retrospectively changing the law.This court has pointed out in several cases the distinction between encroachment on the judicial power and the nullification of the effect of a judicial decision by changing the law retrospectively. The former is outside the competence of the legislature but the latter is within its permissible limits. In the instant case what the legislature has done is to amend the law retrospectively and thereby remove the basis of the decision rendered by the High Court. Such a course cannot be considered as an encroachment on the judicial power.8. Dr. Singhvis contention that S. 3AB is not a charging section cannot be accepted as correct. That section as it now stands incorporates into itself the impugned notifications. Those notifications have now become part of that section. To find out the scope and effect of that section, we have not only to read the section but we have also to read the concerned notifications. If so read, as it should be, it is clear that the section not only levies tax on the bricks at the prescribed rates, it also provides for the quantification of tax. The law is given retrospective effect. The fact that in those notifications it is mentioned that they were issued in pursuance of the power conferred under S. 3A does not in any way take away the intended legal effect. The intention of the legislature is clear.

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

Explanation:
0[ds]4. Dr. L. M. Singhvi, the learned Counsel for the appellants sought to assail the decision of the High Court on three grounds i.e. (1) in any event the purported validation does not cure the vice noticed by the High Court in the previous decision. Unless the vice is cured, there can be no validation; (2) S. 3AB which seeks to validate the notifications has merely removed the vice of excessive delegation but has not cured the judicially declared infirmity in respect of want of power and (3) the liability to be taxed arises only under the charging section; section 3A is only prospective and not retrospective. Section 3AB is not a charging section though it is both prospective and retrospective. It can assist the charging section only in its prospective operation.We are unable to accept any of these contentions as correct. We have earlier noticed that the High Court struck down the levy in Krishna Brick Fields case (supra) on two grounds viz. (1) that the Act delegated the essential legislative powers to the State Government and (2) that the levy is violative of Art. 14 of the Constitution. The latter conclusion was based on the ground that the discretion conferred on the Government is an arbitrary discretion. As seen earlier, the legislature has now incorporated the impugned notifications as part of S. 3AB. Those notifications have now ceased to be subordinate legislations. They are now part of the law enacted by the legislature. Hence there is no question of any excessive delegation.6. Now coming to the question of the infringement of Art. 14 the High Court earlier came to the conclusion that the notifications issued by the Government were violative of that Article solely on the ground that the power conferred on the Government is an arbitrary power. That question no more arises for consideration. It is well settled that the legislature has wide powers of classification in the case of taxing statutes.The question of the impact of Art. 14 on taxing statutes has been elaborately discussed by us in Hira Lal Rattan Lal v. State of U. P. (1972) Civil Appeals Nos. 821, 822, 1625 and 2008 of 1971, D/(SC). For the reasons mentioned therein we are unable to accept the contention that the vice noticed by the Allahabad High Court in Krishna Brick Fields case, 29 STC 15   = (1971 Tax LR 1057) (FB) (All), (supra) has not been removed.7. Now coming to the 2nd contention of Dr. Singhvi, we fail to see how the question of lack of power now arises in view of S. 3AB. While developing his contention No. 2, Dr. Singhvi urged that the legislature has unauthorisedly encroached on the judicial power. The amended S. 3AB merely intradicts the decision rendered by the High Court and has not removed the want of power noticed by the High Court. We are unable to accede to this contention. The legislature has not purported either directly or by necessary implication to overrule the decision of the Allahabad High Court in Krishna Brick Fields case, 29 STC 15   = (1971 Tax LR 1057) (FB) (All) (supra). On the other hand it has accepted the decisions as correct but has sought to remove the basis of the decision by retrospectively changing the law.This court has pointed out in several cases the distinction between encroachment on the judicial power and the nullification of the effect of a judicial decision by changing the law retrospectively. The former is outside the competence of the legislature but the latter is within its permissible limits. In the instant case what the legislature has done is to amend the law retrospectively and thereby remove the basis of the decision rendered by the High Court. Such a course cannot be considered as an encroachment on the judicial power.8. Dr. Singhvis contention that S. 3AB is not a charging section cannot be accepted as correct. That section as it now stands incorporates into itself the impugned notifications. Those notifications have now become part of that section. To find out the scope and effect of that section, we have not only to read the section but we have also to read the concerned notifications. If so read, as it should be, it is clear that the section not only levies tax on the bricks at the prescribed rates, it also provides for the quantification of tax. The law is given retrospective effect. The fact that in those notifications it is mentioned that they were issued in pursuance of the power conferred under S. 3A does not in any way take away the intended legal effect. The intention of the legislature is clear.