The Supreme Court upholds constitutional validity of the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009.
Reiterating the settled proposition that Legislature has the power to enact prospectively as well as retrospectively, the Supreme Court, in Eurotex Industries and Exports Limited vs State of Maharashtra, has upheld a Bombay High Court judgment which had dismissed challenge against constitutional validity of the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009.
The said Amendment Act, which got approval of legislature in 2009, had amended certain provisions in the Maharashtra Value Added Tax Act 2002, with retrospective effect from April 1, 2005.
The petitioners, having failed in their challenge against the amendment, argued before the bench comprising Justice AK Sikri and Justice AM Sapre that the high court failed to appreciate the effects and consequences and the practical impact of the retrospective amendment on the industrial units which had, in response to the state government's scheme, made huge investments in the most extremely backward areas of Maharashtra and which were led to believe that they were entitled to claim exemption from Value Added Tax on 100% of their production and, accordingly, did not recover any VAT from their customers.
The bench, however, did not accept the contentions, and dismissed the appeal vide a 35-page judgment. The judgment discusses various case laws on the aspect of power of legislature to amend retrospectively.
Referring to the RC Tobacco (P) Ltd case, the court observed that the fact that the dealer upon whom the tax is imposed is not in a position to pass on tax on the consumers is of no relevance to the competence of the legislature.
The bench also observed that Legislation of validating nature is constitutionally permissible inasmuch as such validating law is in the nature of removing the defect or vice in the earlier legislation.
Read the Judgment here.