H. L. DATTU, C.J. –

This judgment would dispose of Writ Appeal No. 1877 of 2007 and connected appeals, which have been filed against the common judgment passed by learned single judge in W.P. (C) No. 8711 of 2007 and connected matters, whereby petitions filed by the appellants under article 226 of the Constitution of India were dismissed. The question which arises for determination in these appeals is whether the amended provisions of section 7(a) and (b) of the Kerala General Sales Tax Act, 1963 can be applied to those dealers who had opted for payment of turnover tax for the assessment year 2006-07 before the amendment was brought into the statute and whether the dealers are entitled to pay tax at the rate prescribed in clause (a) of section 7 of the KGST Act before its amendment on the purchase of liquor for the assessment year 2006-07.

The appellants are registered dealers under the provisions of the Kerala General Sales Tax Act, 1963, hereinafter for the sake of brevity referred to as "the Act, 1963". They are running bar-attached hotels within the area of Municipal Corporation, Municipal Council and other places.

Section 5(2) of the Act, among other things provides for levy of turnover tax at 10 per cent on the sales turnover of alcohol by bar hotels. The KGST Act was amended by the Kerala General Sales Tax (Amendment) Act, 2005 providing for payment of tax at compounded rate by bar licencees running hotels not being star hotels of and above three-star classification, heritage hotel or club. The said provision reads as under :

"4. Insertion of section 7. - In the principal Act, after section 6, the following section shall be inserted, namely :

7. Payment of tax at compounded rates. - Notwithstanding anything contained in sub-section (2) of section 5, any bar-attached hotel, not being a star hotel of and above three-star hotel, heritage hotel or club, may at its option, instead of paying turnover tax on liquor in accordance with the provisions of the said sub-section, pay turnover tax at the rate specified under the said sub-section on the turnover of foreign liquor calculated at the following percentage of the purchase price of such liquor, namely :

--------------------------------------------------------------------------------- (a) in the case of those situated within the area of a One hundred and municipal corporation or municipal council or a forty per cent cantonment --------------------------------------------------------------------------------- (b) in the case of those situated in any other place One hundred and thirty five per cent." ---------------------------------------------------------------------------------

Section 7 was introduced in the statute, whereby a dealer could exercise his option of composition of payment of turnover tax at the rates prescribed in the section. Under rule 30 of the Kerala General Sales Tax Rules, 1963 a dealer who is exigible to pay tax at the compounded rate under section 7 and who desires to exercise the option has to make an application to the assessing authority concerned for permission to pay tax at the rates specified on or before 1st day of May of the year to which the option relates. The assessing authority on receipt of the application has to conduct enquiries and pass orders granting or rejecting the application, as the case may be, and if the application is allowed by the assessing authority, he shall serve the dealer a notice of provisional assessment and demand for payment of tax under section 7. The dealers who are permitted to pay tax at the compounded rate under this rule shall submit an annual return in form No. 9 on or before the first day of May of the succeeding year along with the proof of payment of tax or other amount due under the Act.

In view of the amended provision and as required under rule 30, the dealers applied for grant of permission to pay tax at compounde