NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING FEDERATION OF INDIA LTD. AND ANR. versus UNION OF INDIA AND ORS.

Citation: [2003] 3 S.C.R. 1 · Decided: 25-03-2003 · Supreme Court of India · Bench: RUMA PAL · Disposal: Dismissed

Cited by 4 judgment(s) · cites 2 · see the full citation network in Lexace

Judgment (excerpt)

NATIONAL AGRICULTURAL CO-OPERATIVE MARKETING 
A 
FEDERATION OF INDIA LTD. AND ANR. 
v. 
UNION OF INDIA AND ORS. 
MARCH 25, 2003 
B 
[RUMA PAL AND B.N. SRIKRISHNA, JJ.] 
Income Tax Act, 1961: Section 80 P(2)(a)(iii) with amendment in the Act 
(Act No. 11 of 1999): 
C 
Exemption-Profits and gains earned by Co-operative Societies marketing 
agricultural produce-Grant of deductions thereof-Amendment-Restriction 
of benefit of exemption to marketing of agricultural produce grown by its 
members-Retrospective effect-Constitutionality-Challenge to-Writ petition 
dismissed by High Court-On appeal, held since legislature is competent to D 
amend the enacted law with retrospective effect, amendment is valid-The 
degree and extent of the unforeseeable financial burden being minimal, such 
amendment cannot be termed unreasonable/unconstitutional-Income Tax Act, 
1922-Section 81. 
Constitution of India, 1950: 
Legislative power-Curative legislation-Judicial decision final inter 
parties cannot be set at naught by curative legislation. 
Words and Phrases. 
'Curative legislation' and 'Validating Act'-Meaning of 
Appellant-Societies had been granted deductions on profits earned 
E 
F 
by them from marketing of agricultural produce under Section 80 
P(2)(a)(iii) of the Income Tax Act. Apex Court and High Court in various 
decided cases also construed the provision of law accordingly. However, G 
the view was reversed by the apex court in Assam Co-operative Marketing 
Society v. CIT (Addi.), 201 ITR 338 SC; 119941 Supp. 2 SCC 96 holding 
that the object of Sec.80 P was to encourage basic level societies. Therefore, 
the phrase "produce of its members" must refer to agricultural produce 
produced by its members. Thereafter, a larger Bench, in Kera/a Co- H 
I 
2 
SUPREME COURT REPORTS 
[2003] 3 S.C.R. 
A operative Marketing Federation Ltd. and Ors. v. CIT. 231 ITR 814; 119981 S 
sec 48, overruled earlier decision holding that legislature did not intend 
' 
to restrict the scope of exemption only to primary societies but to all 
societies marketing ugricultural produce of its members. Soon after, Sec.80 
P(2)(a)(iii) was amended with retrospective effect by the Income Tax 
B Second Amendment Act 1999(Act No. 11 of 1999) restricting the scope of 
deduction only to the profits d1~rived by Co-operative Societies engaged 
in the marketing of agricultural produce grown by its members. Aggrieved 
appellants challenged the constitutional validity of such amendment and 
sought relief to restrict its operation with prospective effect. High Court 
dismissed the writ petition, holding legislature competent to take away 
C benefit by the amendment in the Act. However, it recorded the statement 
of the Solicitor-General that the amendment would be applied to pending 
assessments only. Hence the present appeal. 
It was contended for the appellants that amendments cannot have 
retrospectiv1: operation without validating provision; that Parliament 
D cannot reverse the judgment of Apex Court by incorporating amendments 
in the Act; that since tax had been imposed for earlier years by making 
such amendment effective retrospectively, it is unconstitutional; and that 
by denial of such deduction, Societies/farmers would be affected adversely. 
E 
Dismissing the appeal, the Court 
HELD: I.I. Legislative powt'r either to introduce enactments for the 
first time or to amend the enacted law with retrospective effect, is not only 
subject to the question of competence but is also subject to several 
judicially recognized limitations. The first is the requirement that the 
F words used must expressly provide or clearly imply retrospective 
operation. The second is that the retrospectivity must be reasonable and 
not excessive or harsh, otherwise it runs the risk of being struck down as 
unconstitutional. The third is apposite where the legislation is introduced 
to overcome a judicial decision. Here the power cannot be used to subvert 
the decision without removing the statutory basis of the decision.110.E, fl 
G 
S.S. Gadgil v. Mis. Lal & Cu. AIR (1965) SC 171; J.C. Jani, Income 
Tax Officer, Circle-IV, Ward-G Ahmedabadv. lnduprasad Devshanker Bhatt, 
AIR 1969 SC 778; Rai Ramkrishnu and Ors. v. The Stale of Bihar. 119641 I 
SCR 897; Jawaharma/ v. State of'Rafasthan and Ors., 1196611SCR890 aml 
Supreme Court Employees Welfare Association v. Union of India and Anr .. 
H 119891 3 sec 488, relied on. 
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I 
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NATIONAL AGRI. CO-OPERA Tl VE MKT. FED. OF !NOIA LTD.

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