ORDER
H.L Dattu, J
1. The constitutional validity of Explanation to first proviso to subsection (1.A) of Section 5 of Karnataka Sales Tax Act, 1957 (‘the Act’ for short) as introduced by Section 3 of Karnataka Taxation Laws (Amendment) Act, 1996 w.e.f. 1.4.1996 is under challenge in this batch of Writ Petitions by wholesale dealers in Karnataka, doing business in liquor.
2. I may refer to the facts in W.P. 21980-981 of 1996, which is representative of and typifies the content in which of and typifies the content in which the question arises. The petitioners are engaged in the business of Indian Manufactured liquor (IML) and registered as dealers under the provisions of the Act. In the course of business, the petitioners purchase I.M.L from other manufacturers and effect sale of such goods to other retail dealers.
3. Before I advert to and evaluate the merits of the contentions, it is appropriate to refer to statutory provisions. The levy of sales tax on certain alcoholic liquors for human consumption, in contradiction to other commodities, is governed by Sub-section (1.A) of Section 5 of the Act, as inserted by the amendment Act of 1988 effective from 1.4.1988. Section 5(1.A) imposes levy on every dealer of liquor to pay tax on his taxable turnover at the prescribed rate except the dealer effecting the last sale in the State. The scheme of levy of tax as envisaged under the said provision is that of value added taxation where under the value added to a commodity and which has not suffered tax is only subjected to levy of tax. Proviso to sub-section provides a mode of arriving at taxable turnover in case of sales other than at the first and the last point. According to this proviso, the taxable turnover of a dealer is arrived by deducting the turnover of such goods on which tax has been levied under this sub-section immediately preceding point of sale.
4. On a request made by dealers in liquor, Commissioner of Commercial Taxes in Karnataka has clarified in his clarification dated 1.4.1988 that the expression ‘turnover’ occurring in the proviso will not take within its fold the amount of sales tax which the intermediary dealer has paid to his vendor as part of the sale price. This clarification of Commissioner of Commercial Taxes and the notification issued by the State Government in No. SO 1707, dated 25.11.1989, came to be questioned by several dealers in liquor on the premise that the clarification of the Commissioner and the notification of the State Govt., are contrary to the provisions of Section 5(1.A), 3A and 8A of the Act and further the clarification issued by the Commissioner will abridge the meaning of the term ‘turnover’ by omitting to include the sales tax element, which the intermediary dealer has paid to his vendor, as a part of the consideration. It is at this stage, a batch of Writ Petitions came to be filed by liquor dealers inter alia seeking a declaration to declare and strike down the clarification issued by Commissioner of Commercial Taxes and the notification issued by State Govt., dated 25.11.1989. This Court in the case of SRi VINAYAKA AGENCY v. STATE OF KARNATAKA while considering the correctness or otherwise of the clarification of the Commissioner and the notification, was of the view that the challenge to the clarification revolves around on the interpretation of first proviso to Section 5(1.A) of the Act. On a construction of the proviso, the Court was pleased to hold that under the scheme of Section 5(1.A) of the Act, the amount collected by a registered dealer from the consumer by way of sales tax and paid over to the State Govt. should be included in the turnover of a registered dealer as a sale price of the goods sold and that amount was liable to be given deduction while arriving at the taxable turnover of the dealer. In a nutshell, the Court was pleased to hold that the expression ‘turnover’ as used in the first proviso to Section 5(1.A) includes the amount of Sales Tax collected by the selling dealer. This decision was rendered by this Court on 18th August, 1995.
5. Subsequent to this, State Legislature has introduced an explanation to the first proviso to Sub-section (1.A) of Section 5 of the Act by Karnataka Taxation Laws (Amendment) Act, 1996 (herein after referred to as impugned Act). The explanation is given retrospective effect w.e.f. 1st day of April, 1988. Referring to the new explanation, the statement of objects and reasons for the Karnataka Amendment Act No. 1 of 1996, states that by inserting an explanation after the first proviso to sub-section(1.A) of Section, is to clarify that the expression ‘turnover’ of goods on which tax has been levied means ‘taxable turnover and shall not include tax’. Explanation so inserted reads as under:
“Explanation: For the purpose of this proviso ‘turnover of such goods on which tax has been levied’ means taxable turnover and shall not include tax.”
6. The Amended Act also provides validation clause, validating assessments etc., The sane reads as under:
“5. Validation of assessments etc..:- (1) Not withstanding anything contained in any judgment, decree or order of any Court, Tribunal or other authority to the contrary any assessment, levy or collection of any tax made or purporting to have been made, any action, or thing taken or done (including any notices or orders issued or assessments made and all proceedings held for the levy and collection of tax or amount purported to have been collected by way of tax) in relation to such assessments, levy or collection under the provisions of the Karnataka Sales Tax Act, 1957 (Karnataka Act 25 of 1957) and the Karnataka Tax on Entry of Goods Act, 1979 (Karnataka Act 27 of 1957) (hereinafter referred to as the principal Acts) before the commencement of the Karnataka Taxation Laws (Amendment) Act, 1996 shall be and shall be deemed to be valid and effective as if such assessment, levy or collection or action of thing had been made, taken or done under the principal Acts as amended by Clause (i) of Sub-section (2) of Section 3 and Section 4 of this Act and accordingly.-
(a) all acts, proceedings or things taken or done by any authority in connection with the assessment, levy or collection of such tax shall, for all purposes be deemed to be and to have always been made, done or taken in accordance with law; (b) no suit or other proceedings shall be maintained or continued in any Court or Tribunal 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) For the removal of doubts it is hereby declared that nothing in Sub-section (1) shall be construed as preventing any person,- (a) from questing the levy or collection of tax or any proceeding or thing in connection therewith in accordance with the provisions of the principal Acts as amended by Clause (i) of Sub-section (2) of Section 3 and Section 4 of this Act; or (b) from claiming refund of any tax paid by him in excess of amount due from him by way of tax under the principal Acts as amended by Clause (i) of Sub-section (2) of Section 3 and Section 4 of this Act."
7. The scope of the explanation is to make plain or elucidate what is enacted and not to add to or subtract from it. Thus, an explanation would not either restrict or extend the enacted part and it would not enlarge or narrow down the scope of the original Section that it is supposed to explain. However, the construction of the explanation must depend upon its terms and not on the theory of its purpose and intention unless it is to be inferred from the language used. Explaining the true object and effect of an explanation, the Supreme Court in the case of APHALl PHARMACEUTICALS LTD., v. STATE OF MAHARASHTRA AIR 1989 SC 2227 was pleased to observe as under:
“32. An Explanation, as was found in Bihta Marketing Union v. Bank of Bihar, , may only explain and may not expand or add to the scope of the original section. In State of Bombay v. United Motors, , it was found that an Explanation could introduce, a fiction or settle a matter of controversy, Explanation may not be made to operate as “exception” or “proviso”. The constructions of an Explanation, as was held in Collector of Customs v. G. Dass and Co., , must depend upon its terms and no theory of its purpose can be entertained unless it is to be inferred from the language used, it was said in Burma Shell Oil Ltd., v. Commercial Tax Officer, , that the explanation was meant to explain the Article and must be interpreted according to its own tenor and it was an error to explain the Explanation with the aid of the Article to which it was annexed. We have to remember what was held in Dattaraya Govind Mahajan v. State of Maharashtra, , that mere description of certain provision, such as “Explanation” is not decisive of its true meaning. It is true that the orthodox function of an explanation is to explain the meaning and effect of the main provision to the which it is an explanation and to clear up any doubt or ambiguity in it, but ultimately it is the intention of the legislature which is paramount and mere use of a label cannot control or deflect such intention. State of Bombay v. United Motor(supra) laid down that the interpretation must obviously depend upon the words used therein, but this must be borne in mind that when the provision is capable of two interpretations, that should be adopted which fits the description. An explanation is different in nature from a proviso for a proviso excepts, excludes or restricts while an explanation explains or clarifies. Such explanation or darification may be in respect of matters whose meaning is implicit and not explicit in the main section itself. In Hiralal Ratanlal v. State of U.P, it was ruled that if on a true reading of an explanation it appears that it has widened the scope of the main section, effect be given to legislative intent notwithstanding the fact that the Legislature named that provision as an Explanation. In all these matters Courts have to find out the true intention of the Legislature. In D.G. Mahajan v. State of Maharashtra, (supra) this Court said that legislature has different ways of expressing itself and in the last analysis the words used alone are repository of legislative intent and that if necessary an Explanation must be construed according to its plain language and ‘not. on any prior consideration’.
8. Again in the case of KESHAVJI RAVJI AND CO., v. COMMISSIONER OF INCOME TAX 1990(183) ITR 1; the Court explaining the true purpose and internment of -an explanation was pleased to observe as under:
“(D) Interpretation of Statutes-Explanation added to statutory provision-Purpose & Intentments are determined by its own words.
An ‘Explanation’, generally speaking, is intended to explain the meaning of certain phrases & expressions contained in a statutory provision. There is no general theory as to the effect and intentment of an explanation except that the purposes and intentment of the ‘Explanation’ are determined by its own words. An Explanation, depending on its language, might supply or take away something from the contents of a provision. It is also true that an Explanation may be introduced by way of abundant caution in order to clear any mental cob-webs surrounding, the meaning of a statutory provision spun by interpretative errors and to place what the legislature considers to be the true meaning beyond controversy or doubt. Hypothetically, such can be the possible purpose of an ‘explanation’ cannot be doubted.”
9. Andhra Pradesh High Court explaining the functions of an explanation in a legislative enactment in the case of SRI RAMULU NAIDU v. COMMERCIAL TAX OFFICER 35 STC 531 was pleased to observe as under:
“It is true that the above said decisions of the Supreme Court held that an explanation added to the Section does not enlarge the scope of the Section. These decisions, however, have to be read in the context of the facts of those cases. In some other cases, it is also held that the explanation does not restrict the operation of the main provision. But these are not inflexible or rigid rules which must be applied universally to every case. It is all a matter of construction of the relevant statue, which, in the ultimate analysis, depends upon the interntion of the legislature. There is no general rule nor there can be any, that an explanation can in no case enlarge the scope of the section to which it is appended. The purpose of the explanation ordinarily is not to limit the scope of the main provision.
It is plain that when any phrase, word, expression or provision in an enactment is explained by the legislature, the provision has to be applied with the authoritative explanation; for the very object of the authoritative explanation is to enable the Court to understand the provision in the light of the explanation: see Balaji Singh v. Chakkamma Gangamma.
In fact when an explanation is appended to a Section to explain its meaning, it becomes a part and parcel of the section: See Bengal Immunity Co. v. State of Bihar.
An explanation very often, as here, introduces a legal fiction and treats the legal fiction as a reality contained in the section itself: See United Motors (India) Ltd., v. State of Bombay and Public Prosecutor v. Gladstone.
It would therefore follow that an explanation enacting a legal fiction can add to the cases falling within the main provision. When a particluar class of cases does not come within the purview of the main provision, nevertheless the legislature, if intends clearly to bring such a class of cases, within its fold, the legislative device of adding an explanation of the kind we have in the instant case is often employed.
An explanation to a section makes plain or intelligible or clears from obscurity something which may arise from the section. What is plain is that an explanation has to be interpreted within the scope of what is purports to be, i.e. something which “explains” the section and it may do so by clarification of some doubt or by way of an addition or subtraction, either expressly, or by introducing a legal fiction: See South Indian Co-operative Insurance Society v. Bapi Raju.
It follows therefore that the meaning to be given to the explanation must depend upon its own terms. It must be interpreted according to its own tenor. If the language of the provision is clear and unambiguous it should be unhesitatingly accepted without any demur, whatever may be the caption or title given to such a provision. The mere description of a certain provision such as explanation is not decisive of its true meaning. If the language of the provision is dear it will prevail over the title if it is wrongly given. The interpretation must obviously depend upon the words used in the provision. The safest course in such cases is to apply the fundamental general rule to construe the explanation according to its own terms having regard to its context and setting. It is of course true that if the provision is capable of two interpretations, own in accordance with the title and the other inconsistent with it, then the one in accordance with the title must be accepted: See-State of Bombay v. United Motors (India) Ltd.,”
10. If the above principles are borne in mind the only inference that could be drawn, in so far as the intentment of the explanation is concerned, it is, at time appended to a section to explain the meaning of the words contained in the section. The meaning to be given to an explanation must depend upon its terms and no theory of its purpose can be entertained unless it is to be inferred from the language used. But if the language of the explanation shows a purpose and a construction consistent with that purpose can be reasonably placed upon it and that construction will be preferred as against any other construction which does not fit with that purpose. The explanation appended to a section becomes part and parcel of the Enactment.
11. Keeping in view the well accepted purpose and object of the explanation in view, let me now analyse Sub-section (1.A) of Section 5 of the Act and its proviso and the explanation as. inserted. This Court in Vinayaka Agency’s case was pleased to observe that the scheme envisaged under Section 5(1.A) is that of value added taxation whereunder the value added to a commodity which has not suffered tax is only subjected to tax so that no part of the turnover from first point to last point remains uncovered by levy of tax. Then the Court while construing the proviso appended to the main subsection was pleased to observe that the said proviso envisages the mode of arriving at the amount which is liable to be subjected to levy of tax and while interpreting the crucial expression “the turnover of such goods on which tax has been levied” was pleased to hold that the word ‘turnover’ as used in the first proviso to Section 5(1.A) includes the amount of sales tax collected by the selling, dealer.
12. Proviso to a section excepts, excludes and restricts something out of the proceeding portion of the enactment or to qualify something contained therein, which, but for the proviso, would be within the purview of the enactment. The explanation is now inserted to the sub-section with retrospective effect; the legislature intends to explain and clarify the expression ‘turn over’ occurring in the first proviso. It only says that the expression “turnover of goods on which tax has been levied means’ “taxable turnover and shall not include tax. The present explanation explains and clarifies by subtracting something by introducing a legal fiction. By this process, legislature for the purpose of the proviso to Sub-section 5(1.A) intends to exclude tax from the expression turnover occurring in the first proviso. In view of the interpretation given by this Court while construing the expression ‘turnover’, tax would have come within its definition but in view of this explanation inserted with retrospective effect, tax element is excluded from the purview of the expression ‘turnover’. This explanation is in the nature of a deeming provision and creates a legal fiction and the same has to be taken to its logical conclusion. It is a self-contained and a complete provision in regard to the expression ‘turnover’ occurring in the first proviso. It stands apart from the main definition but by a legal fiction is made part of it. For the purpose of proviso to Sub-section 5(1.A) turnover does not include tax as is clear from the explanation, the matter concludes there. It is not necessary for such deemed provision to further satisfy the requirements of main definition. If the provision of the charging section be clear which would not admit of any doubt or which would not create any ambiguity, such provision has to be given effect to, although it may be strictly not in conformity with the well known principles of interpretation of statutes and further it cannot be declared void merely on account of incongruity. Assuming there is some variance or conflict between the definition ‘section’ and the “charging section’, that would not affect the validity of the charging Section. The object of the definition clause is to define particular words or phrases with precision and such definitions are to be read into the charging Section. But the liability is created by the charging section, which cannot be declared invalid on an assumption of incongruity or conflict with the definition section. At this stage, it may be useful to mention that the assesses do not challenge the competence of State Legislature and that the questions raised by them are essentially of interpretation.
13. In this case, I am also not concerned with matters of policy. If the legislature has made a distinction between the basis for. determining whether a dealer is liable to pay tax or not and the basis on which the amount has to be paid by him if found liable is to be determined. I am not only not to enquire whether the legislature had the power to make this distinction but also not to enquire whether it acted wisely or even reasonably in doing so. The sole question before me, has it done so and I have no doubt it must be answered in the affirmative. When the legislature did not intend to include a certain matter in a turnover even though according to the definition it would be included in it, it has made express provision. The ‘legislative power conferred on the legislatures under the constitution includes the subsidiary or auxiliary power to validate laws which have been found to be invalid. If a law passed by the legislature is struck down by the Courts as being invalid for one infirmity or the other, it would be competent to the appropriate legislature to cure the said infirmity and pass a validating law so as to make the provisions of the said earlier few effective from the date when it was passed. Dealing with the width of the power of the legislature to enact a legislation, the Supreme Court in RAI RAMAKRISHNA AND ORS. v. STATE OF BIHAR , observed that the entries in the Seventh Schedule of the Constitution of India conferring legislative power of the legislature must receive the widest denotation. It further laid down that the legislative power conferred on the appropriate legislatures to enact law in respect of topics covered by the several entries in the three lists can be exercised both prospectively and retrospectively. Where the legislature can make a valid law, it may provide not only for the prospective operation of the material provisions of the said law, but it can also provide for the retrospective operation of the said provisions. Proceeding further, it observed that the legislative power conferred on the legislature includes the subsidiary or the auxiliary power to validate laws which have been found to be invalid. If a law passed by the legislature is struck down by the Courts as being invalid for one infirmity or the other, it would be competent to the appropriate legislature to cure the said infirmity and pass a validating law so as to make the provisions of the said earlier law effective from the date when it was passed.
14. In the present case, what has been done by the legislature by the impugned Act is only to reiterate its earlier thinking that for the purpose of Sub-section 5(1.A) of the Act which is a charging section that turnover of goods on which tax has been levied means taxable turnover and shall not indude tax and thereby rubbing off the interpretation given by this Court earlier to the insertion of the explanation and the provisions are re-written w.e.f. 1.4.1988. It is not disputed and cannot be disputed that the legislature has ample powers to give retrospective effect to an explanation.
15. The power of the legislature to pass a law with retrospective effect is undoubted and cannot be normally questioned as violative of the provisions of Article 14 and 19(1)(g) of the Constitution. The legislature while acting within the scope of the entires in list II can pass a law which has not only prospective effect but also retrospective effect. The power to legislate retrospectively embraces within its scope the power to validate a law which had been declared invalid by Courts provided the infirmities or vitiating factors are removed or cured. The Supreme Court in ASST. COMMISSIONER OF URBAN LAND TAX v. BUCKINGHAM AND CARNATIC CO., LTD., 75 ITR 603 was pleased to observe as under:
“It is necessary that the legislature should be also to cure inadvertent defects in statutes or their administration by making what has been aptly called small repairs. More over, the individual who claims that a vested right has arisen from the defect is seeking a windfall since had the legislature or administrator’s action had the effect it was intended to and could have had, no such right would have arisen. Thus, the interest in the retrospective curing of such a defect in the administration of Govt. outweighs the individual’s interest in benefiting from the defect… The Court has been extremely reluctant to over ride the legislative judgment as to the necessity for retrospective taxation, not only because of the paramount Governmental interest in obtaining adequate revenues but also because of the paramount Governmental interest in obtaining adequate revenues, but also because taxes are not in the nature of penalty or a contratual obligations but rather a means of apportioning the cost of Government among those who benefit from it.”
16. Retropsective effect are normally given to overcome a defect or lacuna pointed by the Courts and to validate the past actions notwithstanding the judgment of the Court to the contrary.
17. In HINDUSTAN GUM AND CHEMICALS LTD., v. STATE OF HARYANA, the Supreme Court has observed thus:
“…It is now well settled that it is permissible for a competent legislature to overcome the effect of a decision of a Court setting aside the imposition of a tax by passing a suitable legislation amending the relevant provisions of the statute concerned with retorspective effect, thus taking away basis on which the decision of the Court has been rendered and by enacting an appropriate provision validating the levy and collection of tax made before the decision in question was rendered.”
18. In UTKAL CONTRACTORS AND JOINERY (P) LTD., v. STATE OF ORISSA , the Supreme Court was pleased to observe as under:
“The legislature may, at any time, in exercise of the plenary powers conferred on it by Articles 245 and 246 of the Constitution render a judicial decision ineffective by enacting a valid law. There is no prohibition against retrospective legislation. The power of the legislature to pass a law postulates the power to pass it prospectively as well as retorspectively. That of course, is subject to the legislatvie competence and subject to other constitutional limitation. The rendering ineffective of Judgments or Orders of competent Courts by changing their basis by legislative enactment is a well known pattern of all validating Acts. Such validating legislation which removes the causes of ineffectiveness or invalidity of action or proceedings cannot be considered as encroachment on judicial power. The legislature, however, cannot by a bare declaration, without more, directly overrule, reverse or set aside any judicial decision.”
19. Again in HIRALAL RATTANLAL v. SALES TAX OFFICER the Supreme Court has observed thus:
“A feeble attempt was made to show that the retrospective levy made under the Act is violative of Article 19(1)(f) and (g). But we see no substance in that contention. As seen earlier, the amendment of the Act was necessitated because of the legislature’s failure to bring out clearly in the Principal Act, its intention to separate the processed or split pulses from the unsplit or unprocessed pulses. Further the retrospective amendment became necessary as otherwise the State would have to refund large sums of money. The contention that the retorspective levy did not afford any opportunity to the dealers to pass on the tax payable to the consumer, has not much validity. The tax is levied on the dealer; the fact that he is allowed to pass on the tax to the consumers or he is generally in a position to pass on the same to the consumer has no relevance when we consider the legislative competence.”
20. In BURMAH SHELL OIL STORAGE AND DISTRIBUTING COMPANY OF INDIA LTD., v. STATE OF MADRAS 21 STC 227, in that case, as a result of the amendment made by Madras Act 7/1964 in Entry 47 of the first schedule to the Principal Act, sales tax was intended to be levied on all kinds of mineral oils, including non-lubricants, at the rate mentioned in that entry. Entry 47, however, was held not to include furnace oil which was a non-lubricant mineral oil by the Madras High Court as the language used by the legislature in that, entry was found by the High Court to be not appropriate for levying tax on sale of non-lubricating mineral oils. The amending Act was passed by the legislature to rectify and remove the defect in the language found by the High Court and to validate the past levy and collection of tax in respect of all kinds of non-lubricating mineral oils, including furnace oil, at the rate specified in entry 47 from April 1, 1974 when Act 7/1964 came into force. Such an amending and validating Act to make small repairs in a permissible mode of legislation. The Supreme Court held that such an amending and validating Act to make ‘small repairs’ is a permissible mode of legislation and is frequently resorted to in fiscal enactments.
21. Retrospective law relating to taxation is not normally tested on the length of time covered by retrospective operation and further the inability of a dealer to realise the sales tax during the period covered by retrospective operation of law is not a factor which affects the competence of the State Legislature in enacting a law imposing sales tax with retrospective effect. In EPARI CHINNA KRISHNA MOORTHY, v. STATE OF ORISSA the Supreme Court while considering the question whether excessive retrospective application of law affecting past transactions amounts to contravention of the citizen’s fundamental rights, the Court was pleased to observe that the Courts have to take into consideration the relevant facts and circumstances in relation to the taxation. In the present case, in fact, Commissioner while clarifying whether ‘turnover’ occurring in the proviso to sub-section, had clarified in the year 1988 itself when the provisions were introduced, that it does not include tax element in it. The understanding of the legislature as well as the department was only that but this Court took a different view of the matter. It is at this stage legislature has intervened to make matters dear. In that view of the matter, the retrospective operation given to the impugned provisions can neither be considered as unreasonable nor arbitrary. Retrospective legislation is also resorted in exceptional cases to levy fresh impost not covered by earlier law. Some time it is also resorted to plug a loop hole in an enactment, which defect when pointed out by Courts so as to bring the law in line with the intention of legislature. In that view of the matter, the contentions raised by all the Learned Counsels that the retrospective effect given to the explanation as unreasonable or arbitrary which contravenes Article 14 cannot be accepted. Further, petitioners who are dealer in liquor have no fundamental right to carry on business in liquor and as such they cannot complain of violation of Article 19(1)(g) of the Constitution. After having held that the impugned provision cannot be held to be invalid on the basis of the provisions of Article 14 of the Constitution, it may not be proper for this Court to direct the respondents not to collect taxes between the date of Judgment and the enactment of new impugned provisions.
22. To sum up the issues raised in these Writ petitions, it can only be said, that Karnataka Act 1/1996 has brought about a number of amendments in the Sales Tax Act. One such is, insertion of explanation immediately after the proviso to Sub-section (1.A) of Section 5 of the Act. This explanation is given effect from 1.4.1988. In my view, this amendment has been effected to put art end to the controversy whether the expression ‘turnover’ in the proviso would include tax or not. The purpose of this amendment was to exclude tax from turnover for the purpose of the proviso in Sub-section (1.A) of Section 5. By introducing the impugned explanation the legislature has made its intention very dear. By this explanation the legislature has explained the meaning and effect of the main provision and by giving retrospective effect to the amendment, legislature has made it dear that for the purpose of the proviso, they always understood the expression ‘turnover’ in a particular manner.
23. The amending Act, after amending the aforesaid provision of Sales Tax Act and various other provision, has also validated assessments, reassessments, levy or collection of any tax made notwithstanding anything contained in a Judgment, decision, decree or order of any Court or other authority to the contrary. The result of the insertion of the explanation retrospectively and introduction of validating provision was to change the law retrospectively and to impart validity to all assessments framed under the provisions of Section 5(1.A) of the Act.
24. Learned Counsels for the petitioners have questioned the validity of the retrospective effect, given to the impugned enactment. I failed to see any substance in their submissions. If the Act is good prospectively, generally it must be good retrospectively. Retrospective effect is given to the, period covered by the provisions which were interpreted by the Court in a particular manner. Once I am of the view that the construction pointed out by this Court in Vinayaka agency’s case is clarified and remedied in the impugned enactment, in my view it can certainly be given retrospective effect to cover the period by the earlier enactment, which is not only well known but frequently adopted measure by the legislature. In KRISHNA MURTHY AND CO. v. STATE OF MADRAS 23 STC 1 Mad it was observed: Now it is well settled that the power of the legislature in a taxation entry is plenary and it includes the, power to legislate prospectively and retorspectively: JAORA SUGAR MILLS v. STATE OF MADHYA PRADESH . No question of legislative competency of an enactment can arise merely on the ground of its retrospective effect in taxation. In J.K. JUTE MILLS CO., LTD., v. STATE OF UTTAR PRADESH 12 STC 429(SC) held that it would be competent to a legislature to impose a tax on sales which had taken place prior to the enactment of the legislation.”
25. Again, in the same judgment, it is held as under:
“But the Learned Counsel presses upon us that, in the present case, in view of the practical difficulties and inequalities produced by the impugned retrospective legislation which was referred to earlier, we should hold it to be unreasonable and arbitrary. We do not think that these inequalities and practical difficulties, assuming they exist which may be but peripheral and procedural result, would be sufficient by them – selves to render the retrospective effect unreasonable and to enable us to strike down the legislation as unconstitutional on that ground.”
26. In the result, I do not find any merit in these Writ Petitions and they are liable to be dismissed. Accordingly, Writ Petitions are dismissed. Rule discharged. Parties to bear their own costs.