Case Note & Summary
This appeal arose from a sales tax reference under the U.P. Sales Tax Act, 1948. The assessee, a manufacturer of cotton yarn and registered dealer, had opted under Section 7 of the Act to be assessed on the basis of its previous year's turnover. For assessment year 1948-49, the Sales Tax Officer applied the rate of three pies per rupee for the first 69 days and six pies per rupee for the remainder, relying on a notification under Section 3-A. The appellate authority directed uniform three pies, but the revisional authority restored the Sales Tax Officer's order. The assessee then obtained a reference to the High Court, which, following Modi Food Products Ltd., held that the flat rate of three pies applied because the assessee had opted for the previous year's turnover. The Revenue appealed by special leave. During pendency, the Uttar Pradesh legislature enacted Act III of 1963 inserting Section 31 with retrospective effect from April 1, 1948. This provided that a dealer who opted for previous year turnover shall be assessed at the rates prevalent during the assessment year, and if rates were altered during the assessment year, the altered rates would apply proportionately as if they were in force during the previous year. The respondent contended that the Court, exercising advisory jurisdiction, must answer the reference based on law as it stood when the reference was made, not subsequent amendment. The Revenue argued the retrospective amendment must be given effect. The Supreme Court rejected the respondent's contention. It held that when a question has been referred and the law is amended with retroactive operation, the High Court and this Court must apply the amended law as if it applied from the material date. The amendment was deemed by express enactment to have been in operation at all material times in supersession of the earlier law declared in Modi Sugar Mills. The Court distinguished cases cited by the respondent, noting that the question referred was couched in terms of sufficient amplitude and did not require investigation of fresh facts. Section 31 made sales tax exigible from an assessee who opted for previous year turnover as if altered rates were in force during the previous year, requiring turnover to be broken up proportionately. The Court allowed the appeal, set aside the High Court's order, and answered the reference in favor of the Revenue, holding that the assessee was liable to pay tax at the altered rates for assessment year 1948-49, with the six pies rate applicable proportionately to the corresponding period of the previous year.
Headnote
A) Sales Tax - Retroactive Amendment - Section 31, U.P. Sales Tax Act, 1948 - Dealer opting for previous year turnover liable at rates prevalent during assessment year, altered rates proportionately projected as if in force during previous year. The Court held that Section 31 as inserted by Act III of 1963 operated retrospectively and required breaking up previous year turnover to apply new rates for the same number of days as in force in assessment year, superseding earlier law in Modi Sugar Mills. Held that assessee was liable to tax at altered rates for assessment year 1948-49. (Paras Not mentioned) B) Reference Jurisdiction - Pending Reference and Retroactive Amendment - Section 31, U.P. Sales Tax Act, 1948 - High Court can take cognizance of law amended with retroactive operation while answering pending reference. The Court held that in giving opinion on question referred, the Court must apply law as if it was in force at material time, because the amended provision is deemed to have been in operation at all material times; this did not require fresh facts and was necessarily implicit in question of sufficient amplitude. Held that respondent's contention that advisory jurisdiction barred consideration of subsequent amendment was rejected. (Paras Not mentioned)
Issue of Consideration
Whether amended legislation enacted after reference but with retroactive operation could be considered by High Court in answering pending reference; whether Section 31 made assessee liable to altered rates.
Final Decision
Supreme Court allowed the appeal, set aside the High Court's order, and answered the reference in favor of the Revenue, holding that the assessee was liable to pay tax at the altered rates for assessment year 1948-49, with the six pies rate applicable proportionately to the corresponding period of the previous year.
Law Points
- Retroactive amendment applies to pending references
- High Court must apply amended law
- Section 31 U.P. Sales Tax Act deems altered rates in force during previous year
- advisory jurisdiction does not preclude consideration of subsequent retrospective legislation
