Judgment :

Leave granted.

Appellant-M/s. Varkisons Engineers is a partnership firm having its crushing unit at Kadiyiruppu, Kolenchery, Ernakulam District. It is a registered dealer under the Kerala General Sales Tax Act, 1963 (for short, the KGST Act) as well as the Central Sales Tax Act, 1956.

In lieu of payment of tax under Section 5(1) of the KGST Act for the Assessment Year 2001-2002, appellant opted to pay turnover tax under Section 7 which provides for payment of tax at the compounded rate. In short, the appellant opted for an alternate method of taxation provided for by Section 7 of the KGST Act.

To complete chronology of events, it may be stated, that the appellant had applied for permission for payment of tax under Section 7 read with Rule 30 of the Kerala General Sales Tax Rules. That application was made on 9th April, 2001 for the Financial Year commencing from 1.4.2001 to 31.3.2002. Vide Order dated 9th April, 2001, the assessing authority granted permission to the appellant to pay tax under Section 7. That permission was granted for the full Financial Year commending from 1.4.2001 to 31.3.2002. The demand for payment of tax under Section 7 read with Rule 30 was accordingly quantified. At this stage, it also may be noted that under the scheme of Section 7 read with Rule 30, once the dealer opts for the alternate method of taxation, the dealer has to pay the tax in monthly installments. In short, in the present case, the entire exercise stood concluded on 9th April, 2001. On 9th January, 2003, notice under Section 43 of the KGST Act came to be issued by the S.T.O., inter alia, seeking to rectify the permission/order dated 9th April, 2001 and seeking enhanced rate per machine with effect from 23rd July, 2001 by the Finance Act, 2001 (Act 7 of 2001). It may be noted that by Finance Act, 2001, the rate per machine stood enhanced from Rs.30,000/- to Rs.90,000/- from 23rd July, 2001 and not from 1st April, 2001 which, as stated above, was the first date of the Assessment Year 2001-2002. This notice under Section 43 came to be challenged by the appellant herein by filing Original Petition No.1501/2003.

When the matter came for hearing before the learned Single Judge, an order of reference was made as the point involved was of public importance. The purpose of the reference made by the learned Single Judge was whether the amended provisions of Kerala Finance Act, 2001, which came into effect from 23 rd July, 2001, was applicable for the Assessment Year 2001-2002 as there was no provision under the Act for making the assessment of the compounded tax under Section 7(1)(b), either for part of the year or the fraction of the year. This reference was disposed of by the Division Bench by a very cryptic reasoning, which is reproduced hereinbelow:

"Merely because there is no provision in the amendment brought in for making an assessment of compounded tax coming under this clause for fraction or part of the year, the petitioner cannot claim that it is entitled to pay tax at the rates applicable on the beginning of the assessment year in question, i.e. 1.4.2001, nor can it be said that the amendment would be operative from the next assessment year only. A retrospective law in the legal sense, is the one which takes away or impairs vested rights acquired under existing laws, or creates a new obligation and imposes a new duty or attaches a new disability, in respect of transactions or considerations already passed. Accordingly, we hold that the amendment made in clause (b) of sub-section (1) of Section 7 of the Kerala General Sales Tax is applicable for the assessment year 2001-2002."

The main argument of the dealer before us was that the alternate method of taxation is very similar to the taxation under the Income Tax Act. The argument of the dealer was that once the method of taxation proceeds on the basis that unit of assessment was the full assessment year commencing from 1st April, then, the law prevailent on the first day of the