The petitioners, M/s. Godrej Soaps Ltd., Mumbai, have filed this petition under article 226 of the Constitution of India to challenge the amendment to section 2(17) of the Bombay Sales Tax Act, 1959 ("the Act", for short), by Maharashtra Act No. 9 of 1989 ("Act No. 9 of 1989) with retrospective effect, i.e., with effect from January 1, 1960, contending it to be illegal, invalid and ultra vires the Constitution of India.

Factual matrix :

The factual matrix depicts that petitioner No. 1 is a public limited company engaged in manufacturing and selling of soaps, toiletries and fatty acids, etc. The petitioners purchase expeller groundnut oil and soyabean oil from other dealers in Maharashtra who are registered under section 22 of the Act. The petitioners also purchase such oil from dealers located in different States of the country.

According to the petitioners, the oil so purchased is edible. It can be used for human consumption without refining. However, with a view to find out a better market for the oil, petitioners carry on activity of refining of oil only to put the oil purchased in a more acceptable condition. The petitioners, during the calendar year 1981, under legal advice based on the judgment of the Supreme Court in the case of Tungabhadra Industries v. Commercial Tax Officer, Kurnool [1960] 11 STC 827, that the process of refining oil does not amount to manufacture, did not pay tax on the sale of the oil which was purchased from the registered dealers in the State of Maharashtra; on which tax was paid at the time of purchase because they were entitled to claim resale without payment of tax by virtue of section 8 of the Act.

The petitioners also stated that from the year 1981 onwards they have been claiming resale under section 8(ii) of the Act in respect of unrefined oil purchased by them from the registered dealers in the State of Maharashtra and which has been sold after refining. The assessing authority did not accept this claim and the petitioners were required to file appeals under section 55 of the Act to the appellate authority. The petitioners' assessments up to and including the year ending on June 30, 1986 have been completed by the assessing authority; wherein their claim for resale has not been accepted. The petitioners have, therefore, filed appeals for these periods, which are pending for hearing and final disposal before the appellate authority.

The petitioners stated that the Special Bench of the Maharashtra Sales Tax Tribunal at Bombay ("the Tribunal", for short) by its order dated August 22, 1988 in Appeal No. 62 of 1980 passed in the case of the petitioners and other connected cases held that the activity of refining of crude soyabean oil, sunflower oil and/or rape seed oil was not a process of "manufacture" within the meaning of section 2(17) of the Act, In view of this decision, petitioners' claim for set-off under rules 42 and 43 of the Bombay Sales Tax Rules, 1959 ("the BST Rules", for short) for the assessment period from 1973 to 1980 and resale under section 8(ii) of the Act for the assessment periods from 1981 to 1988-89 was upheld.

The petitioners stated that respondent No. 2 also filed reference application being Reference Application No. 22 of 1989; wherein the questions of law were sought to be referred to this Court under section 61 of the Act. All the questions framed by the Revenue for reference centers around the issue : whether or not the process of refining oil amounts to manufacture.

The reference application is still pending before the Tribunal for final disposal. During the pendency of the reference application, Explanation II came to be inserted with retrospective effect from January 1, 1960 by the Act No. 9 of 1989 in section 2(17) of the Act to the effect that "for the purpose of this clause, refining of oil shall be deemed to be manufacture".

The petitioners stated that by the said retrospective amendment to section 2(17) of the Act, the claim of resale under section