|CORAM:||A.K. Sikri J., Rohinton Fali Nariman J.|
|SECTION(S):||26(4) of Kar Agr I. T. Act|
|CATCH WORDS:||Retrospective amendment|
|DATE:||March 17, 2015 (Date of pronouncement)|
|DATE:||March 26, 2015 (Date of publication)|
|FILE:||Click here to download the file in pdf format|
|While an amendment to overrule a judgement is not valid, it is permissible to retrospectively alter the character of the levy so as to save it from illegality|
The Supreme Court had to consider the validity of an Explanation added retrospectively to Section 26(4) of the Karnataka Agricultural Income Tax Act. The said Explanation was inserted to supercede the judgement in L. P. Cardoza and others v. Agricultural Income Tax Officer and others [(1997) 227 ITR 421. On the validity of the retrospective amendment, the High Court held, following the judgment in D. Cawasji and Co., Mysore v. State of Mysore and another [1984 (Supp) SCC 490], that the amending Act of 1997 suffered from the vice that was found in Cawasji’s case, namely that it interfered directly with the judgment of a High Court and would therefore, have to be struck down as unconstitutional on this score alone. This the Division Bench found, because in the statement of objects and reasons for the 1997 amendment, it was held that the object of the amendment was to undo the judgment of the High Court of Karnataka in Cardoza’s case. On appeal by the revenue to the Supreme Court HELD reversing the High Court:
(i) In exercising legislative power, the legislature by mere declaration, without anything more, cannot directly overrule, revise or override a judicial decision. It can render judicial decision ineffective by enacting valid law on the topic within its legislative field fundamentally altering or changing its character retrospectively. The changed or altered conditions are such that the previous decision would not have been rendered by the court, if those conditions had existed at the time of declaring the law as invalid. It is also empowered to give effect to retrospective legislation with a deeming date or with effect from a particular date. The legislature can change the character of the tax or duty from impermissible to permissible tax but the tax or levy should answer such character and the legislature is competent to recover the invalid tax validating such a tax on removing the invalid base for recovery from the subject or render the recovery from the State ineffectual. It is competent for the legislature to enact the law with retrospective effect and authorise its agencies to levy and collect the tax on that basis, make the imposition of levy collected and recovery of the tax made valid, notwithstanding the declaration by the court or the direction given for recovery thereof.
(ii) The consistent thread that runs through all the decisions of this Court is that the legislature cannot directly overrule the decision or make a direction as not binding on it but has power to make the decision ineffective by removing the base on which the decision was rendered, consistent with the law of the Constitution and the legislature must have competence to do the same.
Tax dept need to understand the import of the judgement, i believe revenue panel lawyers do understand what court pronounced!
it appears panel lawyers seem do not understand what is retrospective amendments or when amendment retrospective is not there how revenue need to treat.. if not understanding sorry huge wastage of tax payers moneys, hope Adv Jaitley as FM reads all the judgements as revenue generation is vital to govt,what use you waste tax payer moneys you already collected from other tax payers…long live finance ministry with its dead wood system of revenue collection with dead weight of too many public servants and their remuneration ….sorry FM!
very sad, how come legislatures are so incompetent in legislating is the million$ question voters need to ask all the politicians when they come to beg their votes and if the legislators to be are not competently answering the simple questions the voters can ask them on what basis we can vote you to power…as citizens we have to honor the constitution under which only you are now some legislators to be once elected bu us please!