Case: M/S. Krishnamurthi &amp; Co. Etc Vs. State Of Madras &amp; Anr

1949 and stated that the notification shall always be deemed to have meant like that. One of the contentions raised in that case was that the retrospective operation of the impugned section should be struck down as unconstitutional because it imposed unreasonable restrictions on the petitioners fundamental right under article 19 (1) (g).This contention did not find favour with this Court and it was observed that a legislation could not be struck down although the retrospective operation might operate harshly in some cases.12. In the case of J. K. Jute Mills Co. Ltd. v. State of Uttar Pradesh, (1962) 2 SCR 1 = (AIR 1961 SC 1534 ) this Court referred to the earlier case of Union of India v. Madan Gopal Kabra, 1954 SCR 541 = (AIR 1954 SC 158 ) and held that the power to make retrospective legislation in cases relating to tax on sale of goods was the same as in the case of income tax. It was observed:"The power of a legislature to enact a law with reference to a topic entrusted to it, is, as already stated, unqualified subject only to any limitation imposed by the Constitution. In the exercise of such a power, it will be competent for the legislature to enact a law, which is either prospective or retrospective. In the Union of India v. Madan Gopal (supra) it was held by this Court that the power to impose tax on income under entry 82 of List I in Schedule VII to the Constitution, comprehended the power to impose income-tax with retrospective operation even for a period prior to the Constitution. The position will be the same as regards laws imposing tax on sale of goods.13. Mr. Setalvad has referred to the fact that the appellants did not realise the sale tax on the sale of furnance oil at the rate of 6 per cent during at least some part of the period for which retrospective operation had been given to the amending Act. It is contended that this fact should weigh with this Court in striking down the provisions of the amending Act. There is, in our opinion, no force in this contention.The fact that a dealer is not in a position to pass on the sales tax to others does not affect the competence of the legislature to enact a law imposing sales tax retrospectively because that is a matter of legislative policy.A similar argument was advanced in the case of M/s. J. K. Jute Mills Co. Ltd. (1962) 2 SCR 1 = (AIR 1961 SC 1534 ) (supra). and was repelled in the following words:"And then it is argued that a sales tax being an indirect tax, the seller who pays that tax has the right to pass it on to the consumer, that a law which imposes a sales tax long after the sales had taken place deprives him of that right, that retrospective operation is, in consequence, an incident inconsistent with the true character of a sales tax law, and that the Validation Act is, therefore, not a law in respect of tax on the sale of goods, as recognised, and it is ultra vires entry 54. We see no force in this contention. It is no doubt true that a sales tax is, according to accepted notions, intended to be passed on to the buyer, and provisions authorising and regulating the collection of sales tax by the seller from the purchaser are a usual feature of sales tax legislation. But it is not an essential characteristic of a sales tax that the seller must have the right to pass it on to the consumer, nor is the power of the legislature to impose a tax on sales conditional on its making a provision for sellers to collect the tax from the purchasers. Whether a law should be enacted, imposing a sales tax, or validating the imposition of a sales tax, when the seller is not in a position to pass it on to the consumer, is a matter of policy and does not affect the competence of the legislature. This question is concluded by the decision of this Court in The Tata Iron and Steel Co. Ltd. v. State of Bihar, (1958) SCR 1355 = (AIR 1958 SC 452 ).14. In the case of Jaora Sugar Mills (P) Ltd. v. State of Madhya Pradesh, (1966) 1 SCR 523 = (AIR 196 SC 416) this Court dealt with the validity of S. 3 of the Sugar Cane Cess (Validation ) Act, 1961 (Central Act 38 of 1961). The said section concerned the levy of sugar cane cess and provided that "all cesses imposed, assessed or collected under any State Act before the commencement of this Act, shall be deemed to have been validly imposed, assessed or collected in accordance with law as if the provisions of the said Act and of notifications, orders and rules issued or made thereunder in so far as such provisions relate to the imposition, assessment and collection of such cess had been included in and formed part of the section and this section had been enforced at all material times when such cess was imposed, assessed or collected. Earlier the State Act under which the sugar cane cess had been levied was found to be invalid on the ground of want of legislative competence to deal with topics covered by it. The attack on the validity of Section 3 of that Act was repelled and it was held that the Parliament could, in exercise of its legislative competence, pass a law retrospectively validating the collections made under the State statutes. The present case is on a stronger footing from the point of view of the respondents because we are dealing in this case with retrospective legislation made by the same legislature which had enacted the earlier law. We are, therefore, of the opinion that the impugned provisions are a valid piece of legislation and do not contravene article 19 of the Constitution.15

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

Explanation:
0[ds]14. In the case of Jaora Sugar Mills (P) Ltd. v. State of Madhya Pradesh, (1966) 1 SCR 523   = (AIR 196 SC 416) this Court dealt with the validity of S. 3 of the Sugar Cane Cess (Validation ) Act, 1961 (Central Act 38 of 1961). The said section concerned the levy of sugar cane cess and provided that "all cesses imposed, assessed or collected under any State Act before the commencement of this Act, shall be deemed to have been validly imposed, assessed or collected in accordance with law as if the provisions of the said Act and of notifications, orders and rules issued or made thereunder in so far as such provisions relate to the imposition, assessment and collection of such cess had been included in and formed part of the section and this section had been enforced at all material times when such cess was imposed, assessed or collected. Earlier the State Act under which the sugar cane cess had been levied was found to be invalid on the ground of want of legislative competence to deal with topics covered by it. The attack on the validity of Section 3 of that Act was repelled and it was held that the Parliament could, in exercise of its legislative competence, pass a law retrospectively validating the collections made under the State statutes. The present case is on a stronger footing from the point of view of the respondents because we are dealing in this case with retrospective legislation made by the same legislature which had enacted the earlier law. We are, therefore, of the opinion that the impugned provisions are a valid piece of legislation and do not contravene article 19 of the Constitution.