Supreme Court Upholds constitutional validity of the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009 which amended certain provisions in the MVAT Act, 2002 with retrospective effect from April 01, 2005.
A two judge bench of Supreme Court said that, Legislature has power to enact laws prospectively as well as retrospectively and also to pass a validating enactment.
The two judge bench comprising of Justice A.K Sikri and Justice A.M Sapre also upheld the Constitutional Validity of the Maharashtra Value Added Tax (Levy, Amendment and Validation) Act, 2009 which amended certain provisions in the Maharashtra Value Added Tax Act, 2002 with retrospective effect from April 01, 2005.
The appellant Eurotex Industries And Exports Limited & Anr. contended that the High Court has 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.
According to them, the effect and consequence of this amendment was that, with retrospective effect from April 01, 2005, industrial units which had made capital investments in very backward areas in the State of Maharashtra and which were earlier entitled to claim VAT exemption benefit on the entire production of their respective industrial units, had their exemption benefit substantially curtailed, being limited to, only a portion of the total production of the unit due to the aforesaid retrospective amendment.
The Court relied a bunch of precedents and said that, it was permissible to rectify a defective expression of object of the policy by a retrospective amendment.
While dismissing the appeal, the bench also said that, After pointing out that the power to legislate on a subject which falls within the competence of legislature comprehends within its ambit, the enactment of laws with prospective as well as retrospective effect, where a law suffers from an infirmity which has been noted in the judgment of the High Court, it is permissible for the legislature to remedy the defect by curing the defect which has been found by the Court. This is known as legislation of validating nature, which is constitutionally permissible inasmuch as such validating law is in the nature of removing the defect or vice in the earlier legislation.
Read the full text of the Judgment below.
