TECHNOVA IMAGING SYSTEMS LTD Vs. STATE OF MAHARASHTRA

JUDGEMENT

(1.) By this petition, the petitioner prays that the amendment to the definition of "manufacture" in Section 2(17) of the Bombay Sales Tax Act, 1959 (for short "the Sales Tax Act") made by the Maharashtra Act No. IX of 1996, be struck down to the extent of its retrospectivity with effect from 1st July 1981.

(2.) The challenge to the amendment arises under the following circumstances.

(3.) The 1st petitioner (hereinafter referred to as "the petitioner") is engaged in the business of buying polyester films and selling it after subjecting it to a process of "lacquering". In a proceeding under Section 52 of the Sales Tax Act, the Deputy Commissioner of Sales Tax held that the chemical process of lacquering of the polyester film done by the petitioner amounted to a manufacture as defined under Section 2(17) of the Sales Tax Act and therefore attracts sales tax. An appeal filed against the said order was dismissed. However, on a reference to this Court, by an order dated 2nd February 1995, this Court held that lacquering of a polyester film does not amount to manufacture within the meaning of Section 2(17) of the Sales Tax Act. The Governor of Maharashtra thereafter issued an Ordinance bearing Ordinance No. XII of 1996 dated 4th September 1996 retrospectively amending the definition of "manufacture" appearing in Section 2(17) of the Act by adding Clause (d) thereto. The Ordinance has been replaced by the Legislature of Bombay by passing Act No. IX of 1996. The effect of the amending definition of "manufacture" appearing in Section 2(17) of the Sales Tax Act is to bring the process of lacquering of polyester film within the definition of "manufacture". Consequently, the petitioner would be liable to pay sales tax retrospectively on the lacquered polyester films sold by it. The petitioner has therefore challenged the Ordinance as well as the Amending Act.