Andhra HC (Pre-Telangana)
The State Of Andhra Pradesh vs Parasu Kuppuswamy Chetty And Sons on 3 December, 1980
Equivalent citations: [1981]48STC1(AP)
ORDER Obul Reddi, C.J.
1. We are of the opinion that these four tax revision cases should be referred to a Full Bench of three Judges. Mr. D. V. Sastri, the learned counsel appearing for the State of Andhra Pradesh, the petitioner in all the cases, submitted that the decision of this Court in Konathala Audinarayana and Sons v. Commercial Tax Officer, Anakapalli ([1977] 39 S.T.C. 547), cannot be applied to the facts of these four cases. According to him, that was not a case where a Deputy Commissioner, in exercise of revisional jurisdiction under section 20(2) of the A.P. General Sales Tax Act, had restored the assessment order having regard to the Validation Act. According to him, that was only a case where an assessment has been set aside and sought to be revived by a Validation Act. He distinguishes that case by stating that after section 11 of the A.P. General Sales Tax Act was struck down by this Court in K. Venkata Ramana v. State of A.P. ([1969] 24 S.T.C. 367), revisions by the Deputy Commissioner became validated by virtue of the provisions of Act 9 of 1970. The learned counsel appearing for the respondents contend that it is not possible to draw any such distinction between assessments which have been made by an assessing authority and assessments revived by a Deputy Commissioner in exercise of revisional jurisdiction because of the Validation Act and, as such, there should have been fresh assessments as held by the Division Bench. As the question raised is of importance, the decision of this Court is sought to be distinguished by the Government Pleader. We, therefore, direct these four cases to be posted before a Full Bench.
2. The question that requires to be resolved in these cases is :
"Whether the assessments in dispute can be said to be subsisting by virtue of the provisions of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970) ?"
[In pursuance of the abovesaid order of reference the cases came on for hearing before the Full Bench.]
3. The Government Pleader for Home, for the petitioner.
4. S. Dasaratharama Reddi (T.R.C. Nos. 47, 57 and 66 of 1977), T. Ramam (T.R.C. No. 64 of 1977) and E. Manohar (T.R.C. No. 65 of 1977), for the respondents.
JUDGMENT Madhava Reddy, J.
5. The petitioners herein are all dealers in jaggery. They acted as commission agents on behalf of resident ryot principals and sold jaggery. For the disposal of the question involved in these tax revision cases, suffice to note the facts in Tax Revision Case No. 57 of 1977.
6. The Commercial Tax Officer, Chittoor, assessed the petitioner in T.R.C. No. 57 of 1977 on a total net turnover of Rs. 3,65,728 by his order dated 16th September, 1966. The petitioner disputed that the turnover of Rs. 3,35,050.91 relates to commission on sales of jaggery effected on behalf of the resident principal ryots. The petitioner carried the matter in appeal before the Assistant Commissioner, Commercial Taxes, Anantapur, disputing the liability to tax on the commission derived by the sale of jaggery on behalf of the resident principal ryots, contending inter alia that inasmuch as their turnover in respect of each of the resident principals did not exceed the taxable limit of Rs. 10,000 in each case and their liability as agents being stood revalidated and the subsequent order of the Commercial Tax Officer dated 21st January, 1972, was only in the nature of a reminder or communication to the assessee, that under the law as amended, the original turnover has become enforceable and the petitioner could no longer retain the money refunded to him. He accordingly allowed the appeal and set aside the order of the Assistant Commissioner and restored the order of the Commercial Tax Officer, Chittoor. The matter was taken before the Sales Tax Appellate Tribunal in T.A. No. 157 of 1976 and the Appellate Tribunal by its order dated 9th March, 1977, allowed the appeal in the view that "when an assessment has been revived by a validation Act, there should be a fresh order of assessment in accordance with the provisions of the principal Act as amended by Amendment Act 9 of 1970. The order of assessment or reassessment can only be passed under the provisions of section 14 of the Andhra Pradesh General Sales Tax Act, 1957. The period of limitation prescribed under the provisions of section 14 of the Andhra Pradesh General Sales Tax Act can be extended only by making a provision in the Amendment Act itself. In the absence of any provision extending the period of limitation for making an order of assessment or reassessment under section 14 of the Andhra Pradesh General Sales Tax Act, 1957, the provisions of section 14 only are applicable to the case on hand and the reassessment should have been made on or before 31st March, 1970, as it has been made on 21st January, 1972, in the absence of any extension of period of limitation in Amendment Act 9 of 1970 for making such assessment or reassessment as the case may be ............ the order of reassessment (made by the Commercial Tax Officer on 21st January, 1972) is barred by time". In coming to this view, the Appellate Tribunal purported to follow the judgment of this Court dated 23rd September, 1975, in Writ Petition No. 2922 of 1974, which was reported in K. Audinarayana and Sons v. Commercial Tax Officer, Anakapalli ([1977] 39 S.T.C. 547.).
7. The tax revision case is to revise this order of the Sales Tax Appellate Tribunal and the question of law formulated in the tax revision case is as under :
"Whether the finding of the Tribunal that an assessment which is subsisting cannot be enforced after the retrospective levy of tax and validation of the assessment without making further assessment is correct ?"
8. Tax Revision Case No. 64 of 1977 arises out of the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, dated 9th March, 1977, in T.A. No. 595 of 1975. Tax Revision Case No. 65 of 1977 arises out of a similar order made by the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, dated 27th April, 1977, in T.A. No. 391 of 1976. Tax Revision Case No. 66 of 1977 arises out of the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, dated 27th April, 1977, in T.A. No. 168 of 1976 and Tax Revision Case No. 47 of 1977 arises out of the order of the Sales Tax Appellate Tribunal, Andhra Pradesh, Hyderabad, dated 9th March, 1977, in T.A. No. 138 of 1976.
9. When these matters came up before a Division Bench, the learned counsel appearing for the State of Andhra Pradesh contended that the decision of this Court in K. Audinarayana and Sons v. Commercial Tax Officer, Anakapalli ([1977] 39 S.T.C. 547.), cannot be applied to these cases, and canvassed the correctness of the broad proposition stated therein that when an assessment has been set aside and is sought to be revived by a Validation Act, there should be a fresh assessment. He contended that in the tax revision cases with which we are concerned, the Deputy Commissioner, Commercial Taxes, had, in exercise of the revisional powers vested in him, restored the assessment orders made by the Commercial Tax Officer in view of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 5 of 1968). Though that Act was struck down by this Court in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367.) the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970) revived the order of the Deputy Commissioner, Commercial Taxes, restoring the assessment order made by the Commercial Tax Officer. Hence, no fresh assessments were required to be made. The original assessment order made by the Commercial Tax Officer, Chittoor, on 16th September, 1966, as restored by the Deputy Commissioner, Commercial Taxes, in exercise of his revisional powers vested in him subsists and is enforceable in view of Act 9 of 1970.
10. The learned counsel for the assessees, Sri Dasaratharama Reddi, however, argued that no such distinction can be made and a fresh assessment has to be made in spite of amending Act 9 of 1970, and as any assessment or reassessment for the years in question would be beyond four years, they are barred by limitation under section 14 of the Act. Having regard to the importance of the question raised, the Division Bench directed these tax revision cases to be posted before a Full Bench for resolving the following question :
"Whether the assessments in dispute can be said to be subsisting by virtue of the provisions of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970) ? (for short the A.P.G.S.T. Act)."
11. We may state at the outset that from the judgment in K. Audinarayana and Sons v. Commercial Tax Officer, Anakapalli ([1977] 39 S.T.C. 547.), it is not clear as to which particular Validation Act had come up for consideration before that Bench. The broad proposition that "when an assessment has been set aside and is sought to be revived by a Validation Act, there should be a fresh assessment" seems to have been conceded by both sides as covered "by a number of decisions of this Court and of the Supreme Court". That is why, perhaps, we do not find any reasons recorded for the conclusion reached in that judgment.
12. In order to appreciate the contentions raised, it is necessary to keep in mind the circumstances in which Amendment Act 9 of 1970 was enacted. Section 5(1) of the Andhra Pradesh General Sales Tax Act, as it stood prior to the amendment under the Andhra Pradesh General Sales Tax (Amendment) Act (Act 5 of 1968), provided that "every dealer (other than a casual trader and an agent of a non-resident dealer) whose total turnover for a year is not less than Rs. 10,000 and every agent of a non-resident dealer, whatever be his turnover for the year, shall pay a tax for each year at the rate of three naye paise on every rupee of his turnover". The definition of "dealer" in section 2(e) included any person who carried on business for commission as well. A commission agent for a resident ryot principal was also a "dealer" within the meaning of the Act. Section 11, as it stood prior to the amendment, provided as follows :
"The tax or penalty due under this Act, in respect of a transaction of sale or purchase effected by any agent on behalf of a principal who is a resident of the State, shall be assessed or levied and collected from the agent, in every case where such principal would be otherwise liable to pay such tax or penalty in respect of that transaction. Where the agent has paid the tax or penalty in respect of such transaction he may, without prejudice to his other rights to recover from his principal such tax or penalty, retain out of the moneys payable to the principal, a sum equal to the amount of tax or penalty so paid by him :
Provided that the tax or penalty assessed or levied on, or due from, the agent, may be recovered by the assessing authority from the principal, instead of from the agent."
13. Having regard to the fact that under section 11, as it then stood, the agent of a resident principal was liable to tax "in every case where such principal would be otherwise liable to pay such tax or penalty in respect of the transaction", unless the resident principal's turnover exceeded Rs. 10,000, the agent's turnover, even if it exceeded Rs. 10,000 on the aggregate, was not exigible to tax. In a large number of cases the turnover of the commission agents in respect of each of their resident principals did not exceed Rs. 10,000 but the turnover of many commission agents relating to all their resident principals put together during an assessment year far exceeded Rs. 10,000 and they were assessed to tax. However, when that was questioned, this Court in Irri Veera Raju v. Commercial Tax Officer ([1967] 20 S.T.C. 501.) declared that as each principal's turnover did not exceed the taxable limit, the commission agents' turnovers were not exigible to tax under section 11 of the A.P. General Sales Tax Act, 1957, as it stood before it was amended by Amendment Act 5 of 1968.
14. To get over the effect of this decision and to safeguard against any possible evasion by agent-dealers who purport to act on behalf of fictitious principals, section 11 was amended by Act 5 of 1968, so as to make the agent liable in respect of the transactions of several principals and irrespective of the liability of the principals. This provision also was struck down by the High Court of Andhra Pradesh as violative of article 14 of the Constitution in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367.). The State of Andhra Pradesh then enacted the Andhra Pradesh General Sales Tax (Amendment) Act, 1970 (Act 9 of 1970), to the relevant provisions of which we would immediately address ourselves.
15. By section 2 of the Amendment Act, section 5 of the principal Act was amended by adding a proviso after the proviso to sub-section (1) of section 5 in the following words :
"Provided further that a dealer in jaggery shall pay a tax at the rate of two paise on every rupee up to the 31st March, 1966, and at the rate of three paise on every rupee on and from the 1st April, 1966, of his turnover irrespective of the quantum of turnover."
16. Section 4 of the Amendment Act substitutes for section 11 of the principal Act a new section, which reads as under :
"The tax or penalty due under this Act, in respect of a transaction of sale or purchase effected by any agent on behalf of a principal who is a resident of the State shall be assessed or levied and collected from the agent, in every case where such principal would be otherwise liable to pay such tax or penalty in respect of that transaction. Where the agent has paid the tax or penalty in respect of such transaction he may, without prejudice to his other rights to recover from his principal such tax or penalty, retain out of the moneys payable to the principal, a sum equal to the amount of tax or penalty so paid by him :
Provided that the tax or penalty assessed or levied on, or due from, the agent, may be recovered by the assessing authority from the principal, instead of from the agent.
Explanation. - For the purposes of this section, the expression 'agent' shall have the meaning assigned to the expression 'dealer' in sub-clause (iv) of clause (e) of sub-section (1) of section 2."
17. By section 8 of the Amendment Act, the assessments or reassessments, levy or collection made under the provisions of the principal Act before the commencement of the Amendment Act are deemed to be valid and effective as if such assessment or reassessment, levy or collection were made under the principal Act as amended by the Amendment Act and were validated. That section reads as follows :
"8. (1) Notwithstanding anything in any judgment, decree or order of any court or other authority to the contrary, any assessment, reassessment, levy, or collection of any tax made or purporting to have been made, any action or thing taken or done in relation to such assessment, reassessment, levy or collection under the provisions of the principal Act before the commencement of this Act, shall be deemed to be as valid and effective as if such assessment, reassessment, levy or collection or action or thing had been made, taken or done under the principal Act as amended by this Act and accordingly -
(a) all acts, proceedings or things done or taken by the State Government or by any officer of the State Government or by any other authority in connection with the assessment, reassessment, levy or collection of such tax shall for all purposes, be deemed to be, and to have always been, done or taken in accordance with law;
(b) no suit or other proceedings shall be maintained or continued in any court or before any authority for the refund of any such tax; and
(c) no court shall enforce any decree or order directing the refund of any such tax.
(2) It is hereby declared that nothing in sub-section (1) shall be construed as preventing any person -
(a) from questioning in accordance with the provisions of the principal Act, as amended by this Act, any assessment, reassessment, levy or collection of tax referred to in sub-section (1), or
(b) from claiming refund of any tax paid by him in excess of the amount due from him by way of tax under the principal Act as amended by this Act."
18. Section 9 provided for exemption from liability to pay tax in certain cases where the dealers had not collected any amount by way of tax on the ground that no such tax could have been levied or collected in respect of such sale, or any portion of the turnover relating to such sale, and where no such tax could also have been levied or collected if the amendments made in the principal Act by this Act had not been made by the Amendment Act. This exemption is given notwithstanding anything contained in section 8 of the Amendment Act. In sub-section (2) of section 9 of the Amendment Act, the burden of proving that no amount by way of tax was collected under the principal Act was laid on the dealer. Section 9 reads as follows :
"9. (1) Where any sale of jaggery has been effected during the period between the 1st August, 1963, and the commencement of section 5 of this Act in so far as it relates to item 77, and the dealer effecting such sale has not collected any amount by way of tax under the principal Act on the ground that no such tax could have been levied or collected in respect of such sale, or any portion of the turnover relating to such sale, and where no such tax could also have been levied or collected if the amendments made in the principal Act by this Act had not been made, then, notwithstanding anything contained in section 8 or the said amendments, the dealer shall not be liable to pay any tax under the principal Act, as amended by this Act, in respect of such sale or such part of the turnover relating to such sale.
(2) For the purposes of sub-section (1), the burden of proving that no amount by way of tax was collected under the principal Act in respect of any sale referred to in sub-section (1) or in respect of any portion of the turnover relating to such sale, shall be on the dealer effecting such sale."
19. Different provisions of the said Amendment Act came into force on different dates as laid down in section 1(2) of the Amendment Act, which reads as follows :
"1. (2) Section 2 shall be deemed to have come into force on the 1st August, 1963, and shall cease to have effect on the date of commencement of section 5 in so far as it relates to item 77; section 4 shall be deemed to have come into force on the 1st August, 1963; section 5 in so far as it relates to item 79 and section 6 shall be deemed to have come into force on the 1st July, 1968; and the remaining provisions shall come into force on such date as the State Government may, by notification in the Andhra Pradesh Gazette, appoint."
20. In view of the above amendments, it has to be seen whether on the basis of the assessments already made, tax could be recovered or fresh assessments have to be made. Whether a particular Amendment Act relating to the general sales tax merely amends the defective provision enabling the tax authorities to assess in future according to that provision or merely empowers them to reopen assessments already made and make fresh assessments for the assessment years prior to the amendment or goes further and revives an assessment by its own force and validates the assessments already made retrospectively dispensing with a fresh assessment, is a matter which has to be determined on the wording, the scheme and the intendment of the particular Amendment Act. When a particular provision of an enactment, say, an Act relating to sales tax is declared invalid by a court, an Amendment Act may be brought merely to cure the defect pointed out by the judgment to make the particular provision more comprehensive, so as to bring within its ambit many more transactions exigible to tax. Such an Amendment Act without anything more, would be only prospective in operation and would cover future transactions; it cannot affect past transactions. The legislature may in some cases so amend the provisions as to not only cure the defect and make it more comprehensive but also give it retrospective effect. In such a case, past transactions also would be covered and subject to the other provisions relating to period of limitation, fresh assessments may be made and action taken in respect of these transactions as if the amended Act was then in force. The legislature in its wisdom may, having regard to the enormity of the mischief that may result or hardship that may be caused, deem it expedient not only to cure the defect and make the relevant provision more comprehensive but also while giving retrospective operation to the amended provision, declare the assessments made and action taken under the unamended Act as that taken under the amended Act as if the amended Act was in force then and at the same time validate such action retrospectively. In such a case, the defects or the inadequate provision in the Act pointed out by the judgment which was the ground for invalidating that provision would be deemed to have never existed and only the amended provision would be deemed to have been in force at all the relevant points of time and any action taken would have been valid with reference to the amended Act. Both the enactment as well the action taken under the enactment stand validated retrospectively. Such an Act is not only an Amendment Act but a Validation Act. The Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970) belongs to this last-mentioned category of the Amendment Act.
21. That a competent legislature can make a valid law by way of amendment and enforce it retrospectively and while declaring the action to be under the amended law and validate the action taken with retrospective effect cannot be any longer in doubt. Although without retrospectively enacting a valid law a legislature cannot render a judgment declaring the action taken or assessment made under the then existing law invalid, the legislature is certainly empowered to enact a valid law and enforce it retrospectively so as to render the action taken or assessment or reassessment or levy or collection made, valid. Suffice to refer in this regard to the decision of the Supreme Court in Shri Prithvi Cotton Mills v. Broach Municipality , which lays down as under :
"When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place effectively. The most important condition, of course, is that the legislature must possess the power to impose the tax, for, if it does not, the action must ever remain ineffective and illegal. Granted legislative competence, it is not sufficient to declare merely that the decision of the court shall not bind, for that is tantamount to reversing the decision in exercise of judicial power which the legislature does not possess or exercise. A court's decision must always bind unless the conditions on which it is based are so fundamentally altered that the decision could not have been given in the altered circumstances. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create the jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Sometimes this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change of the law. Whichever method is adopted it must be within the competence of the legislature and legal and adequate to attain the object of validation. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a valid law and make it retrospectively so as to bind even past transactions. The validity of a validating law, therefore, depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax."
22. The decisions in Rallis India Ltd. v. State of Andhra Pradesh and Jai Singh Jairam Tyagi v. Maman Chand give effect to the same principle.
23. In the Statement of objects and reasons made for introducing this Amendment Act, it was specifically stated that "in view of section 11 having been struck down by the High Court of Andhra Pradesh, it becomes necessary for the Government to refund the tax already levied and collected from the commission agents with turnovers exceeding the minimum, but who have been acting on behalf of the principals each of whose turnovers may fall short of the minimum and such amount required to be refunded may exceed rupees one crore. With a view to avoid the heavy financial liability, and validate the past levy, the Government have decided to remove the minimum turnover limit in respect of the jaggery dealers with effect from 1st August, 1963, up to the date of the commencement of the present amendment and in order, however, to ensure that no hardship is caused to dealers, who have not collected the tax, it is proposed to provide that such dealers will not be liable to pay tax ..........................." Thus Amendement Act 9 of 1970 was avowedly passed for the purpose of validating the assessments and reassessments, levy and collection which were rendered invalid on account of the judgment of this Court in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367). The High Court had in Irri Veera Raju v. Commercial Tax Officer ([1967] 20 S.T.C. 501.) held that the commission agent's turnover was not exigible to tax because he being an agent his liability was co-extensive with that of the principal. But the assessments were being made on the agents on the aggregate of the turnover of their several principals which exceeded Rs. 10,000 notwithstanding the fact that the turnover of each of the principals did not exceed Rs. 10,000. Hence that action was struck down. In order to get over the effect of this decision, section 11 of the A.P. General Sales Tax Act, 1957, was amended by Act 5 of 1968. Section 11 after amendment reads as follows :
"11. Notwithstanding anything in this Act or in any other law for the time being in force or in any judgment, decree or order of a court or other authority -
(i) the tax or penalty due under this Act, in respect of a transaction of sale or purchase effected by any agent on behalf of a principal who is a resident of the State, shall be assessed or levied and collected from the agent irrespective of the fact that such principal is not liable to pay the tax or penalty in respect of that transaction on account of the turnover of the principal being below the minimum turnover specified in sub-section (1) of section 5; and
(ii) where the agent has paid the tax or penalty in respect of such transaction of sale or purchase effected by him and where the principal would be otherwise liable to pay the said tax or penalty, the agent may retain, out of the moneys payable to the principal, a sum equal to the amount of tax or penalty so paid by him :
Provided that the tax or penalty assessed or levied on, or due from, the agent, may be recovered by the assessing authority from the principal instead of from the agent only if the principal is liable to pay the said tax or penalty.
Explanation. - For the purposes of this section, 'agent' shall have the meaning assigned to the expression 'dealer' in sub-clause (iv) of clause (e) of sub-section (1) of section 2."
24. It would be seen that the amendment did not render the principal liable irrespective of the total quantum of his turnover but only rendered the agent liable irrespective of the quantum of turnover although his principal himself was not liable and this provision was given an overriding effect by adding a non obstante clause. Challenging the amendment in section 11 by Act 5 of 1968, it was contended before the Bench in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367.) that the amendment had not in any way altered the basis of the decision of the Bench in the Irri Veera Raju's case ([1967] 20 S.T.C. 501.), namely, that on a true construction of the section, the liability of the agent was co-extensive with the liability of the principal, that where he was dealing on behalf of several principals, he was deemed to be as many dealers as there were non-resident principals for whom he was dealing, that the vicarious nature of the liability of the agent remains unaffected, and that the basis of his liability as being only a convenient representative for the assessment, levy and collection of the tax, was unaltered. Declaring that provision to be invalid as violative of article 14 of the Constitution, the Division Bench in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367.) observed :
"An agent who sells goods on behalf of a principal is a dealer just in the same way as a principal is a dealer in respect of the same goods. Section 11 is seeking to apply the incidence of tax differently between the same class of persons, in that where a principal employs an agent, no tax liability attaches in respect of transactions entered into by him directly if the turnover is less than Rs. 10,000, but the agent will be taxed irrespective of whether the principal is liable or not. Again if we take the case of a principal whose turnover exceeds Rs. 10,000, the turnover of the agent in respect of the goods sold or purchased on behalf of such a principal is liable and the State can assess either the principal or the agent in respect of that turnover. But when the turnover of the principal is less than Rs. 10,000 the State is authorised to aggregate the turnovers of the several principals and make the agent liable in respect of that turnover as if the agent is independently liable for the business. This contrast itself, ex facie, shows a hostile discrimination which is not reasonable, nor has it any nexus between the classification and the object sought to be achieved ............."
25. In that view the court declared that "we have no hesitation in holding that the provision which authorises the imposition of a tax independently of the liability of the principal or which takes away or limits the right of the agent to reimburse himself or withhold moneys due to the principal only where the principal is liable, is discriminatory. In other words, the provisions of section 11 in so far as they seek to make the agent primarily liable as if the liability is independent of his representative character comes within the vice of article 14 and is discriminatory as the levy under that provision results in inequality, and has, therefore, to be struck down". Even while holding that section 11 was violative of article 14 of the Constitution, the court declared that "in so far as the agent's liability which is co-extensive with that of the principal is concerned, section 11 is valid".
26. As the basis for declaring section 11 as amended by Act 5 of 1968 was that the commission agent's liability was to be co-extensive with that of each principal for whom he was acting, the legislature proceeded to adopt that as the basis for amending the relevant provisions of the Andhra Pradesh General Sales Tax Act by Act 9 of 1970. If the principals could be assessed irrespective of the quantum of their turnover, the agents also could be held liable likewise. Hence under Amendment Act 9 of 1970, the legislature amended section 5 by adding a proviso and substituting a new section 11 and gave them retrospective effect. It also added section 8 validating the assessments already made with retrospective effect and further added section 9 to give some exemptions in certain cases. The validity of these provisions of Amendment Act 9 of 1970 was questioned in Jonnala Narasimharao and Company v. State of Andhra Pradesh ([1971] 28 S.T.C. 262 at 264 (A.P.).). This Court upheld the validity of section 8, but struck down section 9 as discriminatory and violative of article 14 of the Constitution. But the Supreme Court, on appeal, upheld both sections 8 and 9 to be valid and reversed the judgment of the High Court to the extent of section 9 of the Amendment Act. The Supreme Court held that the commission agents had no locus standi to maintain the petitions. Whatever objections the principal dealers might have to the constitutional validity of the provisions introduced by the amending Act of 1970 under article 14 of the Constitution of India, the agent-dealers had no locus standi to complain about discrimination between the principal dealers inter se. Though a commission agent was a dealer within the meaning of section 2(e) of the Act the commission agent did not suffer any loss or disadvantage which would entitle him to seek a remedy under article 226, because the tax had already been collected, and the tax, though at first illegally collected, became legal by virtue of the Amendment Act of 1970, and as a dealer he was liable to pay the amount to the State in respect of the assessments made and there was nothing to show that what was sought to be recovered was more than what he had collected. Thus the attack on the validity of section 11 by the commission agent-dealers was repelled and both sections 8 and 9 of the Amendment Act were upheld.
27. Having regard to the circumstances in which the amendments were introduced, we have to consider in particular what is the effect of sections 8 and 9 on the assessment made by the Deputy Commissioner, Commercial Taxes, in exercise of the revisional jurisdiction. The order of the Deputy Commissioner, Commercial Taxes, was neither assailed in appeal nor questioned in any other proceeding. It had become final. Yet it was rendered ineffective on account of the judgment in K. Venkata Ramana v. State of Andhra Pradesh ([1969] 24 S.T.C. 367.). By inserting a second proviso to sub-section (1) of section 5 and by substituting section 11, both of which are already extracted above, the liability of the commission agents was made co-extensive with that of the principals by making both the principals and the agents liable to pay tax irrespective of the quantum of their turnovers. Thus the ground which formed the basis for declaring the earlier provision in section 11 and section 11 as amended by Act 5 of 1968 as invalid, was removed by Amendment Act 9 of 1970. Further it gave these amendments retrospective effect so as to cover the assessments now in question in these tax revision cases and all the assessments made were deemed to be made under the principal Act as amended by Act 9 of 1970 with retrospectively effect. Further the assessments themselves were validated with retrospective effect.
28. Thus the Amendment Act (Act 9 of 1970) removed all the objections to the validity of the action taken by the taxing authorities and consequently the assessment order as upheld by the order of the Deputy Commissioner, Commercial Taxes, sprung to life. The order of the Deputy Commissioner, Commercial Taxes, made on revision confirming the order of the Commercial Tax Officer assessing the turnover to tax was rendered ineffective only because section 11 of the Act, as amended by Act 5 of 1968, was declared to be illegal. The basis on which it was rendered illegal and ineffective was removed by Act 9 of 1970. Once that ground was removed with retrospective effect and assessment orders were validated, the correctness of the assessment orders had to be judged only in the light of the retrospectively amended Act. So viewed, the liability of the dealers is unquestionable. That being so, the order of the Deputy Commissioner stands revived by the Validation Act.
29. In State of Andhra Pradesh v. Shah Jamnadas Amichand ([1975] 35 S.T.C. 281.), a Division Bench of this Court had an occasion to consider a similar question where inter-State transactions of a dealer in turmeric were taxed under the Central Sales Tax Act, 1956, by the Commercial Tax Officer. But on appeal, the Appellate Assistant Commissioner, following the decision in State of Mysore v. Yaddalam Lakshminarasimhiah Setty & Sons , had held :
"That since such transactions were not amenable to local tax if they had taken place inside the State, they were also not liable to tax under the Central Act."
30. Subsequently, the Central Sales Tax (Amendment) Act (28 of 1969) was passed and thereupon the Commercial Tax Officer issued notices asking the petitioner to either claim exemption under section 10 of the Amendment Act or otherwise pay the amount as per the assessment validated by section 9 of that Act. The assessee filed writ petition contending that a combined reading of sections 9 and 10 would mean that the assessments had to be reopened in order to determine the tax liability. Sections 9 and 10 of the enactment under consideration in that judgment are in pari materia with sections 8 and 9 of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970). The second proviso to section 9 is in pari materia with section 8 of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970). The third proviso to section 10 of that Act is in pari materia with section 9 of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970). In that case the court observed that the order of the single Judge "virtually amounts to directing the reopening of the assessments validated". It was that order of the learned single Judge that was assailed in the appeals before the Division Bench, and the court declared :
"Even a casual reading of section 9 would disclose that notwithstanding anything contained in any judgment, all the assessments or reassessments made during a particular period have been validated by the Act with retrospective effect. It only means that even if the assessments were set aside in appeal or quashed in the proceeding under article 226 of the Constitution, the assessments nevertheless would be valid."
31. Referring to section 10 of that Amendment Act, the court held :
"... relates only to the exemption from liability to pay tax in certain cases. If the conditions laid down in that section are satisfied, then the liability to pay the tax would not be there and the assessment determining the tax leviable would not be enforced to that extent. It is therefore difficult to agree with the learned Judge that the assessment has to be reopened, the turnover to be redetermined and it is only then that the liability to pay the tax would arise."
32. No other decision of our High Court, except the decision in K. Audinarayana & Sons v. Commercial Tax Officer ([1977] 39 S.T.C. 547.), was brought to our notice holding that even after the Validation Act, when an assessment has been set aside and is sought to be revived by a Validation Act, a fresh assessment must be made before there could be a valid demand. Although in that judgment it is stated that a number of decisions of this Court and the Supreme Court have taken a similar view, none were cited which have taken that view. On the other hand at least two other decisions of a Division Bench are brought to our notice which lay down a different principle. They are the decisions in Writ Petition No. 682 of 1972 and batch dated 30th November, 1972, and in Chopperla Suryanarayana Moorthy & Co. v. Additional Commercial Tax Officer (1972 A.P. High Court Notes 152.). In Writ Petition No. 683 of 1972 and batch, Gopal Rao Ekbote (the then Chief Justice) speaking for the Bench, dealing with the Andhra Pradesh General Sales Tax (Amendment) Act (12 of 1971), held :
"A tax statute may be retroactive if the legislature clearly so intends. The Amendment Act is undoubtedly a curative Act. It is well-known that the curative Act is a statute passed to cure defects in prior law, or to validate legal proceedings, instruments, or acts of public and private administrative authorities which in the absence of such an Act, would be void for want of conformity with existing legal requirements, but which would have been valid if the statute had so provided at the time of enactment. Generally, curative Acts are made necessary because of some errors in the original enactment of a statute or in its administration. Action under the statute is usually taken in good faith and no, rights are jeopardized by the validation of the previous good faith action. Most of the curative Acts, therefore, are liberally construed for as a rule the Acts affect important public interest and are enacted to further public cause. As a consequence of the public purpose which underlies all taxation, tax legislation is liberally construed by the court. The liberal presumption in favour of validity equally applies to curative tax Acts, as curative Acts are passed to save and effectuate irregular tax assessments and collections."
33. Dealing with the validation of assessments under section 7 of the Amendment Act, he further held :
"Section 7 of the Amendment Act validates assessments, levy or collection of any tax by providing at the outset a non obstante clause. The result is that notwithstanding any decision of this Court issuing mandamus after quashing the assessments, these assessments and collection of tax have been clearly validated. It would, therefore, be erroneous to contend that there were no assessments to be validated. Since the cause which gave rise to decision has been removed, the decisions were neutralised. There was, in view of the valid Amendment Act, no obligation to refund the taxes collected. In any case, it would be an empty formality to, return the taxes in pursuance of the decisions and then collect the said taxes in pursuance of the valid and effective provisions of the Amendment Act.
It was also submitted that unless under section 8 assessments or reassessments are made afresh no tax can either be retained or collected in pursuance of the assessments already made and validated. The argument is not attractive. It is true that section 7 of the Amendment Act is made subject to section 8. The latter section, however, is merely an enabling one. It empowers the assessing authority to assess or reassess the tax on turnover relating to coconuts during the periods mentioned in item 5-A. Section 8 therefore does not compel the assessing authority to assess or reassess in every case. Only in cases where the assessing authority thinks that it is necessary or desirable to assess or reassess, it may do so. It is only subject to this enabling power that section 7 validates all the assessments and collections, etc."
34. In Chopperla Suryanarayana Moorthy & Co. v. Additional Commercial Tax Officer (1972 A.P. High Court Notes 152.), Obul Reddi, J. (as he then was), dealing with the validity of the Central Sales Tax (Amendment) Act (28 of 1969) amending section 6 and inserting section 6(1A), sub-section (2A) in section 8 and sections 9 and 10 of the Amendment Act, held :
"This provision has the effect of breathing life into assessments or reassessments or levy and collection of tax, which were held to be not in accordance with the statutory provisions. When an assessment has been validated, the State is empowered to recover tax and other dues payable in accordance with the provisions of sections 30 and 17 of the Andhra Pradesh General Sales Tax Act. By the fiction introduced, any action taken or anything done under the principal Act is deemed to have been taken or done under the Amendment Act, the result of which is that status quo ante is restored. It follows that the assessments, reassessments, levy and collection of tax or any action taken or anything done under the Act prior to its amendment are valid and perfectly legal."
35. A Division Bench of the Madras High Court in Subramania Chettiar & Sons v. State of Tamil Nadu ([1977] 39 S.T.C. 103.) dealing with the Tamil Nadu General Sales Tax (Second Amendment) Act (Act 18 of 1966), which substituted a new section for the original section 16 with retrospective effect from 1st April, 1959, enabling the assessing officer to determine the escaped turnover also by best of judgment so as to get over the decision of the Full Bench of the Madras High Court holding that section 16 of the Tamil Nadu General Sales Tax Act, 1959, authorised only the assessment of actual escaped turnover and did not enable the assessing officer to determine the escaped turnover by best of judgment, held that "in view of section 2, which retrospectively amended section 16 of the principal Act and section 3, which validated the assessments, the original order of assessment made under section 16 of the principal Act had been made valid and effective; that the amending Act had not rendered or declared the decision of the High Court void, but had made the decision ineffective after removing the basis of the decision". The Bench pointed out that there is a distinction between the encroachment of judicial power and the nullification of the effect of judicial decision by changing the law retrospectively. While the former is outside the competence of the legislature, the latter is within its permissible limits. We are in agreement with this statement of law.
36. In this context we deem it sufficient to refer to just one more decision of the Mysore High Court in Gill and Co. (P.) Ltd. v. Commercial Tax Officer, Mysore ([1973] 31 S.T.C. 336 (F.B.).). That was also a case which considered the effect of section 9 of the Central Sales Tax (Amendment) Act (Act 28 of 1969), read with section 9 of the Mysore Sales Tax Act (Act 25 of 1957), which was enacted to get over the situation created by the decision in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons . The court had to consider whether for the recovery of tax leviable in view of the Amendment Act mere issue of notice would be sufficient or whether a fresh assessment has to be made and held :
"(1) that section 9 of the amending Act operated to render ineffective the order of the High Court in the writ petitions and to render effective and valid the original assessment orders as if they had been made under or pursuant to section 6(1-A) of the Central Sales Tax Act, 1956;
(2) that section 9 likewise rendered ineffective any order made by an appellate or revisional authority under the Sales Tax Act following the decision in Yaddalam's case and rendered valid and effective the original assessment orders set aside by such authority for the said reason as if the same had been made under or pursuant to section 6(1-A) of the Central Sales Tax Act;
(3) that as the demand made pursuant to the original assessment orders were also rendered valid and effective, recovery of tax pursuant to such demand did not stand in need of any machinery other than or in addition to the machinery provisions contained in the Mysore Sales Tax Act, 1957, read with the Central Sales Tax Act, 1956;
(4) that as the retention of the tax refunded to the petitioner was unlawful and the demand originally made became valid and enforceable, such demand attracted the entire machinery for recovery provided in the Sales Tax Act and the notices received by the petitioner must be regarded as mere reminders or communications to it that under the law as amended the original demand had become enforceable and that the petitioner could no longer retain the money refunded to it."
37. In view of the above discussion, we are clearly of the view that sections 8 and 9 of the Validation Act which have been held to be valid in Jonnala Narasimharao & Co. v. State of Andhra Pradesh render the order of the Deputy Commissioner, Commercial Taxes, made on revision effective and the assessments in dispute subsist by virtue of the provisions of the Validation Act (Act 9 of 1970). No fresh assessment orders are required to be made. In fact, the order of the Deputy Commissioner, Commercial Taxes, was never set aside. Only because section 11 was declared to be invalid, it had become ineffective. By the removal of the basis of the invalidity by Amendment Act 9 of 1970 amending section 11 and validating the assessments under section 8, that order of the Deputy Commissioner which was dormant sprung to life.
38. Mr. Dasaratharama Reddi, the learned counsel for the assessees, however, contends that this matter has to be viewed from a different angle. He first points out that the Amendment Act does not validate the assessments absolutely. It is only a conditional validation of past assessments. Hence a fresh assessment ought to have been made and a machinery ought to have been provided for that purpose as was done in some enactments.
39. Reference was made by the learned counsel in this behalf to the Andhra Pradesh General Sales Tax (Amendment) Act (Act 4 of 1974); section 7(1) of which validates the assessments notwithstanding anything contained in any judgment, decree or order of any court. But that Act itself made provision in the proviso to sub-section (2) of section 7, that every application for any relief under this sub-section shall be made by the person concerned to the assessing authority within a period of one year from the date of publication of this Act in the Andhra pradesh Gazette, and the assessing authority may after making such enquiry as it deems necessary and after giving the person concerned an opportunity of being heard pass such order as it deems fit. Further under sub-section (2) of section 8, it is provided that notwithstanding the expiration of any periods specified in section 14 of the principal Act, an assessment or reassessment under sub-section (1) may be made within a period of one year from the date of the publication of this Act in the Andhra Pradesh Gazette. In fact, the amendments alter the rate of tax as well. Thus, this Act itself contemplated a fresh assessment or reassessment under the provisions of the Amendment Act. It is not an enactment which of its own force rendered the assessments already made under the principal Act as amended retrospectively by the Amendment Act retrospectively valid. Amendment Act 9 of 1970 did not provide a separate machinery to work out the provisions of sections 8 and 9. Hence, according to him, after the enactment of Validation Act 9 of 1970, the concerned Commercial Tax Officers are required to make a fresh assessment within four years under the Act as amended by Act 9 of 1970. According to him, both sections 8 and 9 are charging sections and the assessment has to be done under the Act in the light of sections 8 and 9. Since no separate provision for such assessment has been made and no special or extended period of limitation has been prescribed, the limitation of four years provided under section 14 of the Act would apply to such assessments as well and such of those assessments which are beyond four years would be barred by limitation. According to him, this bar of limitation could have been avoided by the Deputy Commissioner revising the order dated 24th October, 1968, within four years of the service of the order under section 20. According to him, even the order of the Assistant Commissioner dated 1st August, 1967, could have been revised by the Deputy Commissioner within the said period and even the Commissioner could revise it under section 20.
40. He relies upon the decision of the Supreme Court in Commissioner of Sales Tax v. Modi Sugar Mills Ltd. , which interpreting the provisions of the U.P. Sales Tax Act, 1948, as amended by the U.P. Sales Tax (Amendment) Act (Act 25 of 1948), laid down that "in interpreting a taxing statute, equitable considerations are entirely out of place. Nor can taxing statutes be interpreted on any presumptions or assumptions. The court must look squarely at the words of the statute and interpret them. It must interpret a taxing statute in the light of what is clearly expressed : it cannot imply anything which is not expressed; it cannot import provisions in the statute so as to supply any assumed deficiency". The court on an interpretation of the provisions of the Amendment Act therein held :
"The provision is limited to changes in or discontinuance of the business of a firm; in terms it does not apply to individuals. It is not for us to consider why the legislature has not chosen to make a similar provision in respect of individuals. But the fact that the legislature has made an express provision dealing with changes or discontinuance of business of firms in the course of the assessment year enabling a reduction proportionately to the tax already paid would be a ground indicating that in cases not governed by that provision, no alteration in the liability was permissible when the taxable turnover was based on the previous year's turnover.
It is not provided that in giving effect to the alteration of the rate during the course of the year of assessment an artificial division of the turnover of the previous year should, in applying the altered rate, be made. The legislature having failed to provide machinery for working out the liability, the attempted projection becomes unworkable. A legal fiction must be limited to the purposes for which it has been created and cannot be extended beyond its legitimate field. The turnover of the previous year is fictionally made the turnover of the year of assessment; it is not the actual or the real turnover of the year of assessment. By the imposition of a different tariff in the course of the year, the incidence of tax liability may competently be altered by the legislature, but for effectuating that alteration, the legislature must devise machinery for enforcing it against the taxpayer and if the legislature has failed to do so, the court cannot resort to a fiction which is not prescribed by the legislature and seek to effectuate that alteration by devising machinery not found in the statute."
41. This majority decision rendered by Shah, J., was dissented by Rajagopala Ayyangar and S. K. Das, JJ. Be that as it may, the majority judgment was dealing with only an Amendment Act and not a Validation Act. The court, on an interpretation of the provisions of the Act, the Rules and the notifications issued under that Act, held :
"The notification enjoins the levy of the tax at the altered rate only in respect of sales taking place after the fixed date, and all sales which preceded that date are to be taxed at the original rate. In the face of the language employed sales anterior to the date specified could not be affected."
42. In that context, the Supreme Court posed the question :
"Is any machinery provided in the Act or the Rules for projecting this division of the year of assessment into the previous year, and for apportioning the turnover of that year ?"
and noted that "express provision in that behalf there is none : and it is difficult to imply such a provision in the Act". That decision did not deal with the effect of retrospectively amending the relevant provisions of the charging section and validating the assessment by declaring that the said amendment would be deemed to have been made under the Act as amended by the amending Act. On the other hand, section 11 which was the charging section under the Andhra Pradesh General Sales Tax Act was itself amended by Act 9 of 1970 with retrospective effect and the assessments and reassessments made were deemed as assessments made under the amended Act and were also validated. That makes all the difference. In view of the retrospective amendments and validation, it is not necessary to make any fresh assessments or provide for any machinery for such assessments.
43. In State of Kerala v. Joseph & Co. ([1970] 25 S.T.C. 483 (S.C.).), dealing with the question "whether the effect of the Central Sales Tax (Amendment) Ordinance, 1969, is to supersede the judgment of the Supreme Court in Y. Lakshminarasimhiah Setty's case ", the court observed :
"It is now made clear that even if no tax was leviable under the general sales tax law of the State in respect of intra-State transactions of sale, tax will be leviable under the Central Sales Tax Act, 1956, on sale of goods effected by a dealer in the course of inter-State trade according to the sales tax law of the appropriate State. By section 9(2) of the Central Sales Tax Act, 1956, as amended by the Ordinance of 1969, the procedural law prescribed by the general sales tax law of the State applies in the matter of assessment, reassessment, collection and enforcement and payment under the Central Sales Tax Act, but the liability to pay is determined by the provisions of the Central Sales Tax Act. The effect of the amendment of section 2(j) of the Central Sales Tax Act, 1956, by the Ordinance with retrospective effect from the date on which the principal Act was enacted, is that the turnover for the purpose of the Central Sales Tax Act, 1956, has to be determined in accordance with the provisions of that Act and the Rules made thereunder."
44. In that case, the Sales Tax Officer assessed to tax the respondents who were dealers in eggs in Kerala on their turnover of inter-State sales of eggs. The High Court in revision, following the decision of the Supreme Court in the Y. Lakshminarasimhiah Setty's case and holding that because under the general sales tax law of the Kerala State eggs were not taxable except at the last point of purchase in the State they were not taxable in the course of inter-State sale, discharged the order of assessment. The Supreme Court, on appeal, set aside the order of the High Court in view of the Central Sales Tax (Amendment) Ordinance, 1969, which superseded the judgment of the Supreme Court in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons . The Supreme Court also set aside the order passed by the sales tax authorities and directed that assessments be made in the manner provided by the Central Sales Tax Act, 1956, as amended by the Ordinance. No doubt, by section 9 of the Amendment Ordinance, a provision similar to section 8 was made and by section 10 provision similar to section 9 of the Andhra Pradesh Amendment Act (Act 9 of 1970) was made but at the same time the Ordinance also amended sections 2, 6 and 9 of the principal Act which relate to the levy and collection of tax and penalties in accordance with the amended provisions. It is, therefore, having regard to the provisions relating to levy and collection of tax and penalties, that the Supreme Court, while holding that the provisions of the Act as amended by the Ordinance have retrospective operation, declared that the contention that eggs were not taxable except at the last point of purchase in the State cannot now be sustained in view of the provisions of section 6 of the principal Act, as amended by the Ordinance, and directed that "since the assessment has not been made in accordance with the provisions of the Ordinance which retrospectively amends the provisions of sections 6, 8 and 9 of the principal Act, it is necessary to set aside the order passed by the sales tax authorities, the Tribunal and the High Court, and to direct that assessment of tax be made in the manner provided by the Central Sales Tax Act, 1956, as amended by the Ordinance". It would be seen that the Supreme Court directed a fresh assessment not because sections 9 and 10 of that Amendment Act (corresponding to sections 8 and 9 of the Act in question) did not validate the assessment but having regard to the retrospective amendment of charging section 6 by the Amendment Act it had become necessary to validate the assessments themselves.
45. Although it was argued that the Supreme Court in State of Kerala v. Joseph and Co. ([1970] 25 S.T.C. 483 (S.C.).) directs fresh assessments in all cases where a Validation Act is made and such assessments have to be made afresh within the period of limitation as per the procedure laid down by the State enactment, we do not find any such principle laid down therein. In our view, fresh assessments were directed to be made in that case only because the charging sections 2, 6 and 9 of the principal Act were themselves amended retrospectively by the Amendment Ordinance and not because the validation did not bring to life the assessment orders already made. Although the assessment orders may have sprung to life, there was a necessity for a fresh assessment having regard to the amendment of the charging sections. Nowhere in that judgment has it been laid down as a principle that in all cases of validation of assessment by the validating Acts, there should nevertheless be a fresh assessment. In support of his contention that a fresh assessment must necessarily be made in accordance with Amendment Act 9 of 1970, Mr. Dasaratharama Reddi, the learned counsel for the assessees, relies upon the judgment in State of Kerala v. Joseph and Co. ([1970] 25 S.T.C. 483 (S.C.).) Reliance was also placed on the judgment in State of Madras v. East India Corporation ([1971] 1 S.C.W.R. 916.) in which the Supreme Court referring to the relevant amended provisions of the Central Sales Tax Act, 1956, following the decision of the Supreme Court in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons held that, "Since the Central Sales Tax Act has been amended with retrospective effect, the assessment to tax must be made in the light of the amended provisions."
46. That again was a case of an Amendment Act in which there was no validation of the assessments; only the relevant charging section was retrospectively amended; hence the necessity of making a fresh assessment in the light of the amended provisions. That decision, therefore, cannot be of any help to the assessees in their present contention.
47. Reference was also made to the decision of the Supreme Court in Commercial Tax Officer v. Sri Venkateswara Oil Mills . That was also a case where dealers who were earlier assessed in accordance with the decision in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons were sought to be reassessed and the question that arose was one of right of the assessee to an opportunity to lead evidence as to a mistake apparent on the face of the record justifying rectification. The court held that the law gives a further opportunity to the assessee whose assessments are sought to be reopened to satisfy the assessing authorities that they have not collected the tax in respect of the turnover in question and that the assessing authorities were bound to afford them a reasonable opportunity to satisfy them that they had not collected the tax. This decision is also not one dealing with the validation of the assessment, but one dealing with the retrospective effect of an Amendment Act. Further it must be remembered that the liability to tax does not depend upon whether a dealer has collected the tax from the purchaser or not; the liability is on the turnover. The principle enunciated therein cannot affect the conclusion reached by us. It is the amended section 2 which imposed the tax that came up for consideration in Sundaram lyengar and Sons v. Deputy Commercial Tax Officer ([1960] 11 S.T.C. 443.), which is next relied upon by the learned counsel for the assessees for the contention that there must be a fresh assessment. The Division Bench of the Madras High Court in Sundaram lyengar and Sons v. Deputy Commercial Tax Officer ([1960] 11 S.T.C. 443.) consisting of Rajagopalan, J., and Ramachandra Iyer, J. (which practically follows the judgment in M. M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer ([1960] 11 S.T.C. 220.) rendered by Rajagopala Ayyangar, J., sitting single), also laid down that where no machinery is provided for assessment it is not permissible to recover the amount of tax by virtue of the amendment. The Amendment Act dealt in that case was one which did not retrospectively amend the charging section and declare the assessments to have been made under the principal Act as amended by the Amendment Act with retrospective effect, but which merely rendered the order to the contrary void and ineffective. There was no retrospective validation of the assessments after giving retrospective effect to the charging section. The judgment, therefore, proceeds on the footing that the order of the court could not be nullified without curing the defect retrospectively. That view does not in any way militate against what is stated by us having regard to the decision of the Supreme Court in Shri Prithvi Cotton Mills v. Broach Municipality .
48. Another glaring point for distinction between the enactments which came up for consideration in those cases and the case on hand is that the finality of the judgment or assessment orders was left untouched as in Ceylon Thowfeck Hotel v. State of Madras ([1961] 12 S.T.C. 238.), whereas under Act 9 of 1970 the assessment and reassessments made earlier are deemed to have been made under the principal Act as amended by the Amendment Act with retrospective effect.
49. Mr. Dasaratharama Reddi, the learned counsel for the assessees, placed reliance also on the judgment of Venkataramiah, J., in Rallis India Ltd. v. Assistant Commissioner of Commercial Taxes ([1974] 33 S.T.C. 484.). In that judgment, no doubt, the learned single Judge distinguished the case on hand from the Full Bench decision of that Court in Gill & Co. (P.) Ltd. v. Commercial Tax Officer ([1973] 31 S.T.C. 336 (F.B.).) on the ground that no validation of assessment orders was possible in that case, as the assessment orders themselves became defective only on account of retrospective amendments of the Karnataka Act, and the defects in the assessments had to be removed by appropriate rectification before making a demand of the tax in question. The principle laid down in Gill & Co. (P.) Ltd. v. Commercial Tax Officer ([1973] 31 S.T.C. 336 (F.B.).) that where an earlier order of assessment which had been quashed by the court on the ground that there was no adequate provision for making the said order, and the legislature later amended the law by validating the assessment order and removing the infirmity pointed out by the court with retrospective effect, resulted in the revival of the assessment order and made it enforceable. The learned single Judge obviously could not have differed and in fact did not differ from the Full Bench decision of that very court and lay down a different principle. He only pointed out the distinguishing features. That decision, therefore, would be of no help to the respondent-assessees herein.
50. Very strong reliance was placed by the learned counsel for the assessees on the judgment of the Supreme Court in State of Punjab v. Shakti Cotton Co. . According to him, that judgment lays down that unless there is a review or revision of the order of the assessment in the light of the Amendment Act, the tax cannot be recovered on the basis of the earlier assessment order. The Supreme Court, in view of the amendment made in 1967 in the Punjab General Sales Tax Act (Act 46 of 1948) by introducing section 11AA of the Act, held that an entirely new scheme had been evolved in the matter of assessment of sales tax on declared goods, that a fresh assessment had to be made under section 11AA so as to bring it into conformity with the amended provisions, that the respondent was entitled to raise all objections available in law or on facts in respect of declared goods and that the Assessing Authority had to consider the matter in the light of the amendments incorporated in the Act, without reference to the decision of the Supreme Court in the Chandu Lal Kishori Lal's case , which had necessitated the amendment. The Supreme Court did not lay down therein that in every case of amendment with retrospective effect, a fresh assessment should be made. The decision turned upon the interpretation of section 11AA which provided for review of certain assessments, etc., of tax on declared goods notwithstanding any judgment or decree or order of the court. In our view, that is not the situation in the present case. The provision which was declared to be invalid was validated with retrospective effect and it also validated the assessment orders. The power of legislature to so amend cannot be doubted. When the amendment in the present case is so made, a fresh assessment order is not required. Further, the liability to tax is not so altered by the amendment as to require a fresh assessment or a review of the previous assessment orders. The provisions of section 11AA of the Validation Act were mandatory in nature which enjoined a review of the previous assessment; there is no provision under the Amendment Act (Act 9 of 1970) similar to that.
51. In Venkatappa & Sons v. Ramalingam Pillai and Sons ([1973] 32 S.T.C. 274.), the Madras High Court held that as the Amendment Act with which it was concerned in that case merely validates assessments and reassessments, levy or collection of tax already made, that did not enable the authorities to go behind the order of refund without bringing to charge by reassessment the inter-State transactions on the basis of the amending Act. That matter came up as civil revision petition arising out of suits filed by the persons who were purchasing arecanuts during the years 1961 to 1964 from the defendants, and the defendants have been charging and collecting Central sales tax from the plaintiffs, in the course of inter-State sales attracting the levy of sales tax under the Central Sales Tax Act. The tax was originally remitted to the State of Mysore, but in view of the Supreme Court's decision in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons that the tax was not payable, the sales tax authorities refunded the tax collected on inter-State sales of arecanuts to the defendants. The plaintiffs, who became aware of the said refund, filed suits to recover the same. However, with a view to get over the decision of the Supreme Court in State of Mysore v. Y. Lakshminarasimhiah Setty & Sons , the Central Sales Tax (Amendment) Act (Act 28 of 1969) was passed, which amended with retrospective effect section 9 of the principal Act, and validated all the assessments already made, notwithstanding any decree or order of any court. Following the judgment in M. M. Muthukaruppan Chettiar v. Deputy Commercial Tax Officer ([1960] 11 S.T.C. 220.), the court held that merely because the amending Act validated the assessments, levy and collection that would not enable the authorities to go behind the order of refund unless there has been an order bringing to charge the inter-State transactions on the basis of the amending Act. The refund of the tax to the defendants was held to be for the benefit of the plaintiffs. Basing on the judgment it is argued that there should be fresh assessments under the amended Act before the tax or the refunded amount could be recovered. It would be seen that the amending Act while retrospectively amending the provisions did not further declare that the assessments made would be deemed to have been made under the amended Act and that they would be valid and enforceable. In any event, that judgment, in our view, does not lay down as a principle that the legislature is not competent to cure the defect in the Act by way of amendment and give the amendment retrospective operation and validate the assessment orders already made by deeming those orders to be orders made under the principal Act, as amended by the Amendment Act, which is the position under Act 9 of 1970. We may also add that this judgment of the Division Bench of the Madras High Court proceeds on a principle contrary to the principle laid down in Shri Prithvi Cotton Mills Ltd. v. Broach Municipality .
52. We have, therefore, no hesitation in rejecting the contention of the assessees that unless there is a fresh order of assessment, the assessment orders cannot be given effect to, and that the assessment orders made earlier do not subsist by virtue of the provisions of the Validation Act (Act 9 of 1970).
53. The learned counsel for the assessees next contended that sections 8 and 9 read together constitute charging sections and, therefore, fresh assessments have to be made under these sections which are introduced by the Amendment Act (Act 9 of 1970). This premise, in our view, is not correct. So far as section 8 is concerned, it merely validates the assessments already made and creates a legal fiction that the assessments or reassessments made under the previous Act would be deemed to be assessments or reassessments made under the amending Act, even on the date when they were made, and validates them. That is not a charging section. It is validation of an action already taken by the assessing authorities. Even section 9, which gives a right to the assessee to claim that a particular turnover is exempt from tax, for the reason mentioned in that section, namely, collection of any tax, is not a charging section. A close reading of that section would disclose that it does not declare that a particular turnover is not liable to tax. What it lays down is that "the dealer shall not be liable to pay any tax". In other words, while under the Act, even as amended, the turnover is exigible to tax, the dealer is exempt from paying the tax. There is a world of difference between a turnover being exigible to tax and a dealer being exempt from paying tax. This exemption is based on the recognition of the fact that some dealers would have collected the price plus tax, while others would have collected only the price. If all the dealers irrespective of whether they collected the tax or not were made liable to pay tax, it would work a great hardship to those dealers, who had not collected the tax. It is to relieve the hardship that would have been caused on account of the retrospective amendment of the Act and the validation of the assessments, that a provision was made to exempt those dealers from the liability to pay tax, who had not collected the tax for the reason that no tax was leviable on such turnovers. To construe such a provision as charging section is, in our view, not correct. The charging section even after the amendment remains to be section 11, the only difference being that section 11 stands amended by virtue of section 4 of Amendment Act 9 of 1970 with retrospective effect, and the assessment itself is deemed to be under the amended section. The assessment order, therefore, stands validated automatically by virtue of section 8 of the Amendment Act. No further order of the assessing authorities is required to enforce the liability. The limited enquiry that is required to be made upon an application being filed under section 9 is for ascertaining whether the dealer has collected any tax on the transactions in question. If upon such enquiry it is found that no tax is collected by the dealer, that dealer is exempted from paying the tax. Sections 8 and 9 of the Amendment Act are, therefore, not charging sections.
54. It was next contended by the learned counsel for the assessees that whatever may be the position with regard to the recovery of the tax in pursuance of the assessment orders validated by Act 9 of 1970 where the tax collected has already been refunded, in the absence of any specific provision in this behalf to recover the refunded amount, no demand notice can be issued to them. Very strong reliance is placed for this proposition on the judgment of the Madras High Court in Venkatappa & Sons v. Ramalingam Pillai and Sons ([1973] 32 S.T.C. 274.), to which reference has been made above. For the reasons mentioned in that context the present case stands on a different footing. If we are right in our conclusion that the Validation Act validates the assessments and entitles the commercial taxes authorities to recover the tax, we do not see how the dealers who are under an obligation to pay the sales tax as assessed under the assessment orders can escape the liability, merely because prior to the Validation Act they have obtained refund of the amount paid by them. Once the orders of assessment are revived, the liability to pay tax subsists and in the absence of specific provision exempting the dealers in whose favour refund has already been made, in the same manner as it was done under section 9 of the amending Act in the case of assessee who have not collected tax on the transactions, the assessees cannot escape the liability. The consequence of validation of the assessments must be uniform irrespective of whether the tax has been recovered from the dealerassessees or after recovery it has been refunded to them. The result of the refund, in our opinion, would be no more than placing the assessees in the position as they were when the assessment orders were made but the recovery not effected. If the assessment order revives, liability to pay also subsists, and the sales tax authorities would have jurisdiction to recover the same. In view of the Validation Act, there is no necessity for a special provision authorising the recovery of the refunded tax.
55. A Full Bench of the Mysore High Court in Gill & Co. (P.) Ltd. v. Commercial Tax Officer ([1973] 31 S.T.C. 336 (F.B.).) took a similar view. It opined that as the demand made pursuant to the original assessment orders were also rendered valid and effective, recovery of tax pursuant to such demand did not stand in need of any machinery other than or in addition to the machinery contained in the Mysore Sales Tax Act read with the Central Sales Tax Act. It further held that as the retention of the tax refunded to the petitioner was unlawful and the demand originally made became valid and enforceable, such demand attracted the entire machinery for recovery provided in the Sales Tax Act and the notices received by the petitioner must be regarded as mere reminders or communications to it that under the law as amended the original demand had become enforceable and that the petitioner could no longer retain the money refunded to it. No doubt, as pointed out by the learned counsel for the assessees, under the Central Excises and Salt and Additional Duties of Excise (Amendment) Act (Act 6 of 1980) along with a provision validating the assessment order a provision for recovery of the duty refunded is also enacted. That provision, in our view, was necessitated, because Act 9 of 1980 is not a Validation Act pet se but an Amendment Act which effected the amendments with retrospective effect. Obviously, there could not have been any assessments as per the amended Act. There is only a deeming provision in the said Act declaring that the amended provision would be deemed to have been in force from the appointed day. For the same reason the decision of the Supreme Court in State of Punjab v. Shakti Cotton Company on which reliance is placed also can be of no assistance to the assessees. In the judgment in W.P. Nos. 9 and 10 of 1974 dated 8th April, 1974, which was rendered pursuant to the Yaddalam's case , the question of bar of limitation did not come up for consideration. Even in W.P. No. 4797 of 1972, the judgment of the Division Bench dated 27th August, 1974, which quashed the assessment orders and recovery proceedings, directed the assessing authorities to decide the matter afresh and did not go into the question of limitation now posed before us.
56. In this view of the matter, no question of bar of limitation arises. Assessments having been revived by virtue of section 8(1), they continue to subsist and if the tax has not already been paid, it can be recovered and if it has been refunded prior to the Amendment Act, it can still be recovered.
57. To sum up the result of the foregoing discussion :
When a legislature sets out to validate a tax declared by a court to be illegally collected under an ineffective or an invalid law, the cause for ineffectiveness or invalidity must be removed before validation can be said to take place. Ordinarily, a court holds a tax to be invalidly imposed because the power to tax is wanting or the statute or the rules or both are invalid or do not sufficiently create jurisdiction. Validation of a tax so declared illegal may be done only if the grounds of illegality or invalidity are capable of being removed and are in fact removed and the tax thus made legal. Sometimes this is done by providing for jurisdiction where jurisdiction had not been properly invested before. Same times this is done by re-enacting retrospectively a valid and legal taxing provision and then by fiction making the tax already collected to stand under the re-enacted law. Sometimes the legislature gives its own meaning and interpretation of the law under which the tax was collected and by legislative fiat makes the new meaning binding upon courts. The legislature may follow any one method or all of them and while it does so it may neutralise the effect of the earlier decision of the court which becomes ineffective after the change in law. If the legislature has the power over the subject-matter and competence to make a valid law, it can at any time make such a law and make it retrospectively operative so as to bind even past transactions. The validity of validating law therefore depends upon whether the legislature possesses the competence which it claims over the subject-matter and whether in making the validation it removes the defect which the courts had found in the existing law and makes adequate provisions in the validating law for a valid imposition of the tax.
58. The Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970) provides the jurisdiction to tax commission agents on their total turnover irrespective of the quantum of turnover of each of the resident principals. It thus provides the basis for validly imposing the tax on them which did not exist in the principal Act prior to this amendment. By retrospectively amending sections 5 and 11 of the principal Act and declaring under section 8 that the assessments already made shall be deemed to be assessments made under the principal Act as amended by amending Act 9 of 1970 and validating the assessments retrospectively, Amendment Act 9 of 1970 removed the defects or deficiencies pointed out by the courts, in this behalf, in the existing law. Sections 8 and 9 of Amending Act 9 of 1970 are not charging sections. Section 8 validates the assessments, reassessments, levy and collection retrospectively by creating a legal fiction. Section 9 merely enables the assessees to claim exemption from tax if no tax was collected by them. Since the assessments already made are in conformity with the principal Act as amended by Amendment Act 9 of 1970, and those assessments are retrospectively validated, there is no need to make a fresh assessment to recover the tax payable as per those assessment orders. Consequently, the question of any bar of limitation does not arise. No special machinery either for making a fresh assessment or for recovery of the tax payable thereunder was required to be provided. Since the assessments stand revived and subsist, the liability to pay the tax continues. The refund ordered earlier does not extinguish that liability. Notwithstanding the earlier order of refund, the assessment order having sprung to life, in view of the Validation Act, the tax refunded can be recovered. Orders issued to recover the same do not constitute assessment orders; they are merely in the nature of reminders to pay the tax due under the validated assessment orders.
59. We, therefore, hold on the question posted for consideration of the Full Bench that the assessments in dispute subsist by virtue of the provisions of the Andhra Pradesh General Sales Tax (Amendment) Act (Act 9 of 1970).
60. Our answer to the question of law raised in the tax revision cases is in the negative; the finding of the Tribunal that an assessment which is subsisting cannot be enforced after the retrospective levy of tax and validation of the assessments without making further assessments, is not correct. The taxes due and payable as per such subsisting orders of assessment can be recovered even if such taxes were earlier refunded to the assessees.
61. These tax revision cases, therefore, succeed and are accordingly allowed; but, in the circumstances of the case, there will be no order as to costs. Advocate's fee Rs. 250 in each.
62. We are unable to certify that these tax revision cases involve such sub-stantial question of law of general importance as require the consideration of the Supreme Court or otherwise fit cases for grant of leave to appeal to the Supreme Court. Leave refused.
63. We do not see any reason to stay the recovery of the tax. If the petitioners have not collected the tax, the Act itself makes a provision for making an application under section 9 of the Act. We, therefore, see no grounds to grant stay of the recovery of the tax.
64. Petitions allowed.