LexCOMORIN MATCH INDUSTRIES (PVT.) LTD. versus STATE OF TAMIL NADU
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COMORIN MATCH INDUSTRIES (PVT.) LTD. A v. STATE OF TAMIL NADU APRIL l6, 1996 [N.P. SINGH AND SUHAS C. SEN, JJ.] B Central Sales Tax Amendment Act, 1969: Ss.2(j), 9-Validating Act retrospectively pennitting inclusion of excise duty in tlunover to overconie Supreme Court's decision in State of Madras v. N.K. Nataraja Mudalim- Whether legislature can nullify judgment of the court-Held, yes; the validating C Act removed the VCIY basis of the law and was validly enacted-Constitution of India, A1ticle 246( 1)-Legislative power of Parliament. Constitution of India, A1ticles 215, 226--High Court quashing central sales tax assessn1ents including excise duty as pa1t of tun1over--Depa1tnie11t not filing appeal-After Validating Act passed, High Cowt in contempt D proceedings ordering refund - S11ecial Leave Petition against the order dis- missed-Whether subsequent demand by department under Validating Act ban·ed by res judicata-ffeld, no, reftuid of tax under an order in a conten1pt petition does not debar recoveiy of tax under valid subsisting law. The Appellant challenged the assessments nnder the Central Sales Tax Act, 1956 for the years 1957-58 to 1965-66, inter alia, on the ground that sales tax was levied on turnover which included excise duty. In Larsen Toubro v. Joint Commercial Tax Officer, (1967) 20 STC 150 the Madras High Court allowed the writ petitions and quashed the assessment orders. While, the Respondent State did not file an appeal in the appellant's case, its appeals in the other cases were decided by this Court in State of Madras v. N.K. Nataraja Mudaliar, AIR (1969) SC 147. While reversing the High Court and holding the amended Ss.8(2), 8(2A) and 8(5) of the Central Sales Tax Act valid, this court held that tax on excise duty was illegal. E F To overcome the decision, the Central Sales Tax Amendment Act G 1969 (validating Act') was enacted under which the definition of 'turnover' was retrospectively amended and the words 'and determined in a prescribed manner' were substituted by 'and determined in accordance with the provisions of this Act and rules made thereunder'. Thus the very basis of the law on which the judgment in N.K. Nataraja Mudaliar was H 349 350 SUPREME COURT REPORTS [1996] SUPP. 1 S.C.R. A pronounced was removed. B c D E F Thereafter the High Court, in a contempt application by the appel- lant, directed refund of the disputed amount of tax. With the State's Special Leave Petition bdng dismissed by this Court, the refund was made. Thereafter, the State filed a suit to recover the tax due under the Validating Act. The appellant contended before this Court that the legislature could not, by the Validating Act, nullify the Judgment of the High Court quashing the assessment order in its case. Further, Once refund of tax was niade by the State pursuant to the orders of the High Court in the contempt petition, and the Special Leave Petition of the State was also dismissed, filling of a fresh suit to recover the tax was barred by res judicata. Dismissing the appeals, this Court HELD : 1.1. If a High Court quashed several assessment orders by interpreting a taxing statute in a certain manner and that interpretation was nullified by a subsequent judgment of the Supreme Court and the statute itself was amended as a resnlt of which the law on the basis of which the High Court's judgment was given is drastically altered, in such a situation, it was permissible for the legislature, by a Validation Act, to declare the assessments as valid and binding notwithstanding the judg- ment of the High Court to the contrary. [338-G; 359-A-B] 1.2. The includibility of excise duty element in the turnover was validated by ihe statutory amendments with retrospective effect. Therefore, the very basis on which the assessments were quashed in the case of Larsen and Toubro disappeared. The contention that the Judgment of the Madras High Court in the appellant's case was in full force in spite of the Amendment Act of 1969 could not be upheld. [360-C; 358-F] Madan Mohan Pathak v. Union of India & Ors., [1978) 3 SCR 334; G Slui Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, [1970] 1 SCR 388 and Patel Gordhandas Hargovindas v. Municipal Commissio11er, Ah- medabad, [1964) 2 SCR 608, followed. A. V. Nachane v. U11ion of India, [1982) 2 SCR 246; Janpada Sabha, Chhindwara v. The Central Provinces Syndicate Ltd., [1970) 3 SCR 745; P.S. H Mahal v, Uni
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