Holding

Sub‑section 6 of Section 17, as amended, and its retrospective operation, are constitutionally valid and within the legislative competence of the State.

Summary

The appellant, Mis. My Con Construction Ltd., challenged the constitutional validity of sub‑section 6 of Section 17 of the Karnataka Sales Tax Act, 1957 as amended by Act 5 of 1996 and its further amendment by Act 7 of 1997 which made the provision retrospective. It argued that the State lacked competence to levy sales tax on the total consideration of a works contract and that the retrospective operation violated Articles 14, 19(1)(g) and 265 of the Constitution. The State relied on the Supreme Court’s decision in State of Kerala v. Builders Association of India, contending that the amendment was within its legislative power and that retrospective legislation is permissible if it does not breach any constitutional provision. The Court held that the amended sub‑section 6 and its retrospective effect are constitutionally valid and that the State has the competence to levy tax on the total consideration of works contracts. Consequently, the appeals were dismissed.

Issues considered

Whether sub‑section 6 of Section 17 of the Karnataka Sales Tax Act, 1957, as amended by Act 5 of 1996, is constitutionally valid.
Whether the amendment introduced by Act 7 of 1997, which gave retrospective effect to sub‑section 6, is unconstitutional.

Legislation cited

Constitution of Indias. 14, s. 19(1)(g), s. 245, s. 246, s. 265, s. 366(29A)
Karnataka Sales Tax Act, 1957s. 17(6), s. 5-B

Subjects

sales taxconstitutional validityretrospective legislationlegislative competencecomposition schemeKarnataka Sales Tax Actworks contractArticle 366(29A)Article 14Article 19

Judgment

A MIS. MY CON CONSTRUCTION LTD.
v.
STATE OF KARNATAKA AND ANR.

MAY 7, 2002

B [SHIVARAJ V. PATIL AND BISHESHWAR PRASAD SINGH, JJ.]

Sales Tax:

Karnataka Sales Tax Act, 1957 amended by Act 5 and Act 7 of 1996/
C 1997-Section 17(6)(i)-Constitutional validity of-Works contract-Levy
ofSales Tax by State on total consideration of the works contract- Legislative
competence of State-Held, Section 17(6) constitutionally valid and within
the legislative competence of the State-Retrospective operation of Section
17(6)(i)-Held constitutionally valid-Legislative competence .to enact a
D statute being consistent with constitutional provision, a provision cannot
become unconstitutional because of its retrospective operation-Constitution
of India, Articles 245, 246 and 366 (29A).

The questions which for consideration in these appeals were whether
sub-section 6 of Section 17 ofKarnataka Sales Tax Act, 1957 as amended by
E Act No.5of1996 is unconstitutional and whether the amendment brought in
Clause (i) of sub-section 6 of Section 17 of the Act by Act No. 7 of 1997
retrospectively is also unconstiutional.

Appellant challenged the constitutional validity of sub-section 6 of
Section 17 of the Karnataka Sales Tax Act as amended by Act No.5 of 1996
F before the High Court on the ground that ta" is leviable only on transfer of
property in goods, whether as goods or in some other form, therefore, even
under a scheme of composition of tax, the tax could not be levied on any goods
other than goods in which there was transfer of property in execution of the
works contract. The State had no legislative competence to levy sales tax on
a· the total consideration of the works contract so as to include items or goods
in which there was in fact no transfer of property. It challenged the validity of
the amendment brought in Clause (i) of sub-section 6 of Section 17 of the Act
by Act No. 7of1997 retrospectively contending that the appellant who had
opted for the composition scheme could not be saddled with additional burden
of tax by the amended provision which was given effect retrospectively. High
H 854
MYCON CONSTRUCTION LTD. v. STATE 855
Court disposed of the writ petitions relying on State of Kera/a v. Builders A
Association of India's* case. It held that question was no longer res integra
and amendment to sub-section 6 of Section 17 by Act 5 of 1996 is
constitutionally valid. It also upheld the validity of Act No.7of1997 holding
that the legislature was competent to enact the law with retrospective effect.
However, it reserved liberty to the appellant to opt for regular assessment under
Section SB of the Act notwithstanding the fact that they had opted for B
composition under Section 17(6) of the Act. Aggrieved, appellant filed appeals
before the Division Bench which were dismissed.

In appeals before this Court, appellant submitted that even while evolving
a simplified method for assessment of tax, such as the scheme of composition, C
the law cannot give an option to the assessee which is in the teeth of
constitutional provisions; amendment of sub-section 6 of Section 17 with
retrospective effect by Act 7of1997 is unconstitutional and the judgment was
based on an erroneous assumption of facts that the assessments so far made
were on the basis of total consideration.
D
Appellant in other appeals submitted that they had opted under the
; composite scheme and enjoyed the benefit for almost 9 years. It would be
unreasonable to relegate them to the same position that they occupied before
they exercised the option for assessment under the composition scheme.
E
Dismissing the appeals, the Court

HELD: I.I. Sub-section 6 of Section 17 of the Karnataka Sales Tax Act,
1957 as amended by Act No. 5of1996 and also the amendment brought in
Clause (i) of sub-section 6 of Section 17 of the Act by Act No. 7 of 1997 F
• retrospectively, are constitutionally valid. Further the challenge on the ground
' of lack of legislative competence of the State Legislature must be repelled.
1863-H; 864-AJ

*State of Kera/av. Builders Association of India, )19971 2 sec 183, G
held applicable.

1.2. The submission that even while evolving a simplified method for
3.ssessment of tax, such as the scheme of composition, the law cannot give an
option to the assessees which is in the teeth of constitutional provisions does
not survive. (864-B] H
856 SUPREME COURT REPORTS [2002] 3 S.C.R.

A State of Kera/av. Builders Association of India, [1997] 2SCC183, held
applicable.

1.3. The submission that amendment of sub-section 6 of Section 17 with
retrospective effect by A~t 7of1997 is clearly unconstitutional has no force.
B If the legislature has legislative competence to enact a statute and the statute
so enacted does not breach any constitutional provision, the same cannot be
said to be unconstitutional merely because it is retrosl?ective in operation.
Moreover, in the instant case the appellant had opted for assessment under ...
the composition scheme. They were not compelled to exercise their option,
otherwise they would have been assessed in accordance with the provisions of
C the Act particularly Section 5-8 thereof. To remove any hardship to the
assessees by retrospective operation of the amended scheme of composition,
the State Government itself submitted that the appellants and others like them
may be given option to opt for assessment under Section 5-8 of the Act even if
they had earlier opted for assessment under sub-section 6 of Section 17. High
D Court has in fact made such a direction. Thus, the appellants are not prejudiced
in any manner whatsoever. 1864-E-H]

1.4. It is not factually correct that the High Court passed its judgment (
on an erroneous assumption of fact that the assessments so far made were on
the basis of total consideration. The judgment of the High Court is neither on
E such assumption of fact, nor the judgment would have been different even if
the fact was otherwise. 1865-A-8]

1.5. Having held that the retrospective operation of the amended provision
is constitutional, and having noticed that the assessees are at liberty to opt for
regular assessment under Section 5-8 of the Katnataka Sales Act, it would
F
not be appropriate to make a direction so that the assessments made on basis
of the options already given are not affected in any manner, on considerations
of equity, particularly while dealing with a taxing statute. 1865-D-El

Taxmaco ltd. and Anr. v. State of A.P. and Anr., 120001 1 SCC 763 and
G D. Cawasji & Co. Mysore v. State of Mysore and Anr., [1984) Supp. SCC 490,
distinguished.

Builders Association of India and Ors. etc. v. Union of India and Ors.,
f1989) 2 SCC 645 and Gannon Dunkerley and Co. v. State of Rajasthan, 119931
H 1 sec 364, referred to.
MY CON CONSTRUCTION LTD. '· ST ATE [BISHESHWAR PRASAD SINGH, J.) 857
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 902 of 1999. A
From the Judgment and Order dated 9.9.1998 of the Karnataka High
Court in W.A. No. 1391/98 in W.P. No. 26445of1997.

WITH
B
C.A. Nos. 7575-77/99, 950-957 of2000 and 1111 of2000

Rama Chandaran, S.S. Javali, Ms. Shiraj Patodia, Niraj Sharma,
Ms. Priyanjali, Ms. Praveena Gautam, Ms. Pramod B. Agarwala, Sanjay R.
Hegde and N. Ganpathy for the appearing parties.
c
The Judgment of the Court was delivered by

BISHESHWAR PRASAD SINGH, J. In this batch of appeals by special
leave common questions arise for consideration and therefore the appeals
( have been heard together and are being disposed of by this common judgment.
D
The questions which arise for consideration are whether sub-section 6
of Section 17 of the Karnataka Sales Tax Act, 1957 (hereinafter referred to as
"the Act") as amended by Act No. 5 of 1996 is unconstitutional, and secondly,
whether the amendment brought in Clause (i) of sub-section 6 of Section 17
of the Act by Act No.7 of 1997 retrospectively is also unconstitutional. The E
High Court of Karnataka has answered both these questions in the negative
and against the appellants. The main judgment was rendered in the writ
petition preferred by the appellant in Civil Appeal No. 902 of 1999. The
remaining matters were disposed of by the High Court following the aforesaid
judgment.
F
To determine the questions that arise for consideration, it is necessary
to notice the legislative history of sub-section 6 of section 17 of the Act. We
may first notice Section SB of the Act which provides for levy of tax on
transfer of property in goods involved in the execution of works contract
which reads as follows:-
G
"5-B. Levy of tax on transfer of property in goods (whether as goods
or in some other form) involved in the execution of works contracts.
,. Notwithstanding anything contained in sub-section (I) or sub-section
(3) or sub-section (3-C) of Section 5, but subject to sub-section (4),
(5) or (6) of the said Section, every dealer shall pay for each year, a H

I T
858 SUPREME COURT REPORTS [2002] 3 S.C.R.

A tax under this Act on his taxable turnover of transfer of property in
goods (whether as goods or in some other form) involved in the
execution of works contract mentioned in column (2) of the Sixth
Schedule at the rates specified in the corresponding entries in column
(3) of the said Schedule."

B Section 5B was introduced in the Act by Act No. 27 of 1985 with effect
from April I, 1986 pursuant to the Constitution (46th Amendment Act, 1982)
introducing Clause (29 A) in Article 366 of the Constitution.

By Act 4 of 1987 sub-section 6 of Section I 7 of the Act was incorporated
which as originally enacted read as follows :-
C
"Notwithstanding anything contained in sub-section (I) to (3), subject
to such conditions and in such circumstances as may be prescribed,
the Assessing Authority of the area may, ifa dealer liable to tax under
Section 5-B so elects, accept in lieu of the amount of tax payable by
him during any year, under this Act, in respect of works contracts
D falling under serial number 6 of the Sixth Schedule, by way of
composition, an amount at the rate of Two percent of his total turnover
in respect of transfer of property in goods (whether as goods or in
some other form) involved in the execution of such works-contracts."

Sub-section 6 of Section I 7 of the Act was amended by Act No. 4 of
E 1992 with effect from April I, 1992 and the amended sub-section read
c as follows :-

"Notwithstanding anything contained in sub-section (I) to (3), but
subject to such conditions and in such circumstances as may be
prescribed, the Assessing Authority of the area may, if a dealer liable
F
to tax under Section· 5-B in respect of the works contract specified in
column (2) of the table below so elects, accept in lieu of the amount
of tax payable by him during the year under this Act, by way of
composition an amount at the rates specified in the corresponding
entries in column (3) of the Table on his total turnover relating to
G transfer of property in goods (whether as goods or in some other
form) involved in the execution of such works-contract."

Again by Act No.5 of I 996 sub-section 6 of Section 17 was amended
to read as follows:-

H "Notwithstanding anything contained in Section 5-B.' but subject to
MYCON CONSTRUCTION LTD. v. STATE [BISHESHWAR PRASAD SINGH, J.] 859

such conditions and in such circumstances as may be prescribed, the A
Assessing Authority of the area may, if a dealer liable to tax under
Section 5-B so elects, accept in lieu of the amount of tax payable by
him during the year under this Act, by way of composition an amount
on the total consideration for the works contracts executed by him in
that year in the State in respect of works contract specified in column
(2) of the Sixth Schedule at the rates specified in the corresponding B
entries in Column (4) of the said Schedule,"

Sub-section 6 was further amended by Act No.7 of 1997 with effect from
April 1,1997. Clause (i) of sub-section 6 of Section 17 of the Act as amended
reads as follows:-
c
"(a) for the words and brackets "on his total turnover relating to
transfer of property in goods (whether as goods or in some other
form) involved in the execution of such works contract", the words
"on the total consideration received or receivable by him in respect
of such works contract executed by him in that year in the State", D
shall be deemed to have been substituted with effect from the first
day of April, 1988:

(b) for the words, brackets and figure, "at the rates specified in the
corresponding entries in column (4) of the said Schedule," the words,
"at the rate of four per cent" shall be substituted." E
The constitutional validity of sub-section 6 of Section 17 of the Act
was challenged in several writ petitions filed before the High Court ofKamataka
at Bangalore. The challenge was on the ground that in view of Entry 54 of
List III of the Seventh Schedule read with sub-clause (b) of Clause (29A) of
,, Article 366 of the Constitution of India, the tax under the Act is leviable only F
on transfer of property in goods (whether as goods or in some other form),
Therefore, even under a scheme of composition of tax, the tax could not be
levied on any goods other than goods in which there was transfer of property
in execution of the works contract. The State had no legislative competence
to levy sales tax on the total consideration of tlw works contract so as to
ir,clude items or goods in which there was in fact no transfer of property. G
Reliance was placed on the decisions of this Court in Builders Association
of India and Ors., etc. v. Union of India and Ors., [1989] 2 SCC 645 and
Gannon Dunkerley and Co. v. State of Rajasthan, [1993] I SCC 364. It was
submitted that the judgment of this Court in Stale of Kera/a v. Builders
Association of India, [ 1997] 2 sec 183 ran counter to the ratio in Builders H
y
860 SUPREME COURT REPORTS (2002] 3 S.C.R.

A Association of India (supra), a judgment rendered by a Constitution Bench
of this Court, and therefore the same had no binding effect. In any event that
decision was distinguishable having regard to the facts and circumstances of
that case and the provisions contained in the Kerala Act. .
Secondly, it was contended that in any event sub-section 6 of Section
B 17, to the extent it had been given retrospective operation by Act 7 of 1997,
was unconstitutional as it violated the rights guaranteed to the petitioners
under Articles 14, 19 (l)(g) and Article 265 of the Constitution of India. The
petitioners and others like them, who had opted for the composition scheme,
as it stood prior to April I, 1996, could not be saddled with additional burden
C of tax by the amended provision which was given effect retrospectively from
April I, 1988. In the facts and circumstances of the case the retrospective
operation of the amended provision was arbitrary, violating the right
guaranteed to the petitioners under Article 14 of the Constitution of India.

The State of Karnataka on the other hand relied upon the decision of
D this Court in the State of Kera/a v. Builders Association of India (supra) and
contended that the question was no longer res integra and the validity of sub-
section 6 of Section 17 as amended must be upheld. As to the retrospective
operation of the amended provision, it was submitted that the legislature had
competence not only to enact a law prospectively, but also retrospectively,
subject to its being consistent with the constitutional provisions. It was
E submitted that the rights of the petitioners guaranteed under Article 14 and
19 were not breached at all. In fact the legislature always intended to levy tax
on total consideration of works contract so far as assessment under the
scheme of composition was concerned, and for this he relied upon the Budget
speech of the Finance Minister wherein a reference was made to the levy at
F an average rate of 2% on the total turnover in lieu of all taxes payable under
the Act. The legislative intent was not truly reflected in the amendment
effected in the Act which gave rise to some controversy on the subject. To
clarify and to give effect to the legislative intent, a circular was issued by the
Commissioner but the same was quashed by the High Court. In these
circumstances the State was left with no option, but to exercise its legislative
G power to legislate retrospectively with a view to remove the lacuna in the
existing provision.

A batch of writ petitions, including the writ petition preferred by the
appellant in Civil Appeal No. 902 of 1999, was disposed of by a common ~
judgment of a learned Judge of the High Court holding that the decision of
H this Court in State of Kera/av. Builders Association of India (supra) squarely
•

MY CON CONSTRUCTION LTD. v. STATE [BISHESHWAR PRASAD SINGH, J.) 86 J
answered the challenge and the question was no longl:r res integra. The A
_, challenge to the constitutional validity of sub-section 6 of Section 17 was
accordingly repelled.

So far as the validity of Act No.7 of 1997 is concerned, the learned
Judge upheld its validity holding that the legislature was competent to enact
the law with retrospective effect. T[]e High Court however noticed the stand B
of the State in its statement of objections filed in reply to the writ petition
in which it was submitted that with a view to avoid hardship that may be
caused by the retrospective operation of the amended provision, the Court
in the interest of justice may direct that the works contractors may opt, if so
advised, f&r regular assessment under Section SB of the Act, even if they had C
earlier oilt~\i for assessment under the composition scheme. The learned
Judge ther~fore, while dismissing the writ petitions, having regard to the
stand of;tti~ Sfu\e of Karnataka, reserved liberty to the petitioners to opt for
regular assessment under Section SB of the Act notwithstanding the fact that
they had opted for composition under Section 17 (6) of the Act. For this
purpose petitioners were required to make an application to the concerned D
assessing authority and the assessing authorities were directed to proceed
to assess the petitioners and all others who were not before the court, under
J
Section SB of the Act, if they so opted.

Appeals preferred before a Division Bench of the High Court were also
dismissed, since the Division Bench of the High Court found itself in complete E
agreement with the learned Judge and was also of the view that the judgment
of this Court in the State of Kera/a v. Builders Association of India (supra)
fully covers the case. The judgment of the Division Bench is impugned before
us by special leave in Civil Appeal No. 902 of 1999. In the remaining appeals
the High Court followed its aforesaid judgment, and dismissed the writ petitions. F
-.. Mr. Raju Ramachandaran, Senior Advocate appearing on behalf of some
of the appellants placed before us the judgment of this Court in State of
Kera/av. Builders Association of India, [1997] 2 SCC 183. We have carefully
read the aforesaid judgment. Fairly Mr. Raju Ramachandaran submitted that
he was unable to point out any distinction between the provisions of the G
Kerala Act and the Karnataka Act which may have a bearing on the question
of interpretation. We have also considered the matter and we are also of the
view that so far as the scheme of composition of tax is concerned, the relevant
provisions of both the Acts even if not identical, are vastly similar. On the
question of the constitutional validity of sub-section 6 of Section 17 the same
argument was advanced before this Court in the State of Kera/a v. Builders H
y
862 SUPREME COURT REPORTS [2002] 3 S.C.R.

A Association of India ~<supra). In that case, the High Court had declared as
unconstitutional sub-sections (7) and (7 A) of Section 7 upholding the
contention that they sought to levy tax at the rate of 2 % on the whole
amount of the contract, or at a particular rate applied to the entire value of
contract, and not merely upon the value of the goods transferred in the
course of execution of the works contract as contemplated under sub-clause
B (b) of clause (29-A) of Article 366. The court noticed that the goods which
were transferred in the course of execution of works contract may be "declared
goods", liable to be taxed under the Central Sales Tax Act, 1956. The goods
so transferred may also be taxable under different Schedules to the Kerala Act
which prescribe different rates. In such a situation levy of tax on entire value
C of the contract meant levy of tax contrary to the provisions of the Central
Sales' Tax Act and the Kerala General Sales Tax Act. It also meant including
the non-taxable components of works contract e.g. labour and services etc.
For all these reasons, the High Court held that the said sub-sections were
clearly beyond the legislative competence of the State Legislature. This court
repelled the submission urged before it in the following words:-
D
'The first feature to be noticed is that the alternate method of taxation
provided by sub-section (7) or (7-A) of Section 7 is optional. The sub-
sections expressly provide that the method of taxation provided ....
thereunder is applicable only to a contractor who elects to be governed
by the said alternate method of taxation. There is no compulsion upon
E any contractor to opt for the method of taxation provided by sub-
section (7) or sub-section (7-A). It is wholly within the choice and
pleasure of the contractor. If he thinks it is beneficial for him to so
opt, he will opt; otherwise, he will be governed by the normal method
of taxation provided by Section 5( I) (iv). Sub-section (8) provides that
F the option to come under sub-section (7) or (7-A) has to be exercised
by the contractor "either by an express provision in the agreement for ·~

the contract or by an application to the assessing authority to pennit
him to pay the tax in accordance with any of the said sub-sections".
In these circumst~nces, it is evident that a contractor who had not
opted to this alternate method of taxation cannot complain against the
G said sub-sections, for he is in no way affected by them. Nor can the
contractor who has opted to the said alternate method of taxation,
complain. Having voluntarily, and with the full knowledge of the
features of the alternate method of taxation, opted to be governed by
it, a contractor cannot be heard to question the validity of the relevant
H sub-sections or the rules. Sub-sections (8), (11) and ( 12) of Section 7
""".'
MYCON CONSTRUCTION LTD. v. STATE [BISHESHWAR PRASAD SINGH, J.] 863

are incidental and ancillary to sub-sections (7) and (7-A) and cannot A
_, equally be faulted. Secondly, it is true that the goods transferred in
the course of execution of the works contract may be chargeable at
different rates under different Schedules appended to the Kerala Act;
it may also be that some of them may be "declared goods', the levy
of tax upon which is subject to certain restrictions specified in Sections
14 and l 5 of the Central Sales Tax Act; it may also be that sale of some B
of the goods may also be subject to Central sales tax. It must yet be
remembered that the method of taxation introduced by sub-sections
(7) and (7-A) is in the nature of composition of tax payable under
Section 5 (I) (iv). The impugned sub-sections have evolved a
convenient, hassle-free and simple method of assessment just as the C
system of levy of entertainment tax on the gross collection capacity
of the cinema theatres. By opting to this alternate method, the
contractor saves himself the botheration of book-keeping, assessment,
appeals and all that it means. It is not necessary to enquire and
determine the extent or value of goods which have been transferred
in the course of execution of a works contract, the rate applicable to D
them and so on. For example, under sub-section (7), the contractor
pays two per cent of the total value of the contract by way of tax and
he is done with all the above-mentioned botheration. The rate of two
per cent prescribed by sub-section (7) is far lower than the rates in
Schedules l,2 and 5 referred to in Section 5(1)(iv)(a). In short, sub- E
sections (7) and (7-A) evolve a rough and ready method of assessment
of tax and leave it to the contractor either to opt for it or be governed
by the normal method. It is only an alternative method of ascertaining
the tax payable, which may be availed of by a contractor if he thinks
it advantageous to him. It must be remembered that the analogous
system of alternate method of taxation evolved by certain State F
Legislatures in the matter of levy of entertainment tax has been upheld
by this Court in Venkateshwara Theatre v. State of A.P. The rough
and ready method evolved by the impugned sub-sections for
ascertaining the tax payable under Section 5(1) (iv) of the Act cannot
be said to be beyond the legislative competence of the State or G
violative of clause (29-A) of Article 366 either. The Constitution does
not preclude the legislature from evolving such alternate, simplified
and hassle-free method of assessment of tax payable, making it optional
for the assessee. The object of sub-sections (7) and (7-A) is the same
as that of Section 5(1 )(iv); it is only that they follow a different route
to arrive at the same destination." H
y
864 SUPREME COURT REPORTS [2002) 3 S.C.R.

A We are of the considered view that principles laid down by this Court
in the aforesaid decision squarely apply to the facts of this case having -< _
regard to the similarity of the provisions in the two Acts. We therefore find
ourselves in complete agreement with the High Court and hold that sub-
section 6 of Section 17 of the Kamataka Sales True Act is constitutionally valid
and the challenge on the ground of lack of legislative competence of the State
B Legislature must be repelled. Learned Counsel then submitted that even while
evolving a simplified method for assessment of tax, such as the scheme of
composition in the instant case, the law cannot give an option to the assessees
which is in the teeth of constitutional provisions. This argument does not
survive in view of the principles laid down by the Supreme Court in State of
C Kera/av. Builders Association of India (supra). He made a faint attempt to
draw a distinction between the Kerala Act and the Karnataka Act by reference
to the background in which the provisions were enacted. He submitted that
under the Kerala Act the composition scheme was introduced by the
amendments in the years 1991 and 1992. So far as State of Karnataka is
concerned sub-section 6 of Section 17 which gave option to the assessees
D to pay tax at a fix rate on the value of the goods, the property in which was
transferred in the course of execution of works contract came into effect in
the year 1988 and continued till the year 1996. The appellants had taken
benefit of the said scheme of composition by exercising their option for
ass.essment under the composition scheme. They had therefore opted for
E something different from what is sought to be given to them under the
amended provision which levies tax not merely on the value of goods
transferred, but on the whole amount of the contract. He, therefore, submitted
that having regard to the legislative background, amendment of sub-section
6 of Section 17 with retrospective effect by Act 7 of 1997 is clearly
unconstitutional. The submission has no force. ff the Legislature has legislative
F competence to enact a statute and the statute so enacted does not breach
any constitutional provision, the same cannot be said to be unconstitutional . .,...
merely because it is retrospective in operation. Moreover, in the instant case
as explained in State of Kera/a v. Builders Association of India (supra) the
appellants had opted for assessment under the composition scheme. They
G were not compelled to exercise their option and otherwise they would have
been assessed in accordance with the provisions of the Act particularly
Section 5-B thereof. To remove any hardship to the assessees by retrospective
operation of the amended scheme of composition, the State Government itself
submitted that the appellants and others like them may be given option to opt
for assessment under Section 5-B of the Act even if they had earlier opted
H for assessment under sub-section 6 of Section 17. The High Court has in fact
MYCON CONSTRUCTION LTD. v. STATE [BISHESHWAR PRASAD SINGH, l.] 865
made such a direction. The appellants are therefore not prejudiced in any A
_, manner whatsoever.

Lastly, counsel submitted that while considering the question of
retrospectivity, the High Court has passed its judgment on an erroneous
assumption of facts, namely that the assessments so far made were on the
basis of total consideration. The learned counsel submitted that this was riot B
factually correct. We have perused the judgment and we find that though the
submission of the counsel for the State to this effect was noticed, the
judgment of the High Court is not based on this assumption. The judgment
of the High Court would not have been different even ,if the fact was otherwise.

Mr. S.S. Javali, learned Senior Advocate, appearing for the appellants C
in Civil Appeals Nos. 7575-77 of l 999 submitted that the appellants had opted
under the composite scheme and enjoyed the benefit for almost 9 years. It
would be unreasonable to relegate them to the same position that they

- occupied before they exercised the option for assessment under the
composition scheme. He submits that considerations of equity must persuade D
this court to pass an appropriate direction so that the assessments made on
the basis of the options already given are not affected in any manner. Having
held that the retrospective operation of the amended provision is constitutional,
and having noticed that the assessees are at liberty to opt for regular
assessment under Section 5-B of the Kamataka Sales Tax Act, it would not
be appropriate to make such a direction on considerations of equity particularly E
while dealing with a taxing statute.

Learned counsel relied upon some observations made in Texmaco ltd.
and Anr. v. State of A.P. and Anr., [2000] I sec 763. He also relied upon the
judgment of this court in D. Cawasji & Co. Mysore v. State of Mysore and
Anr., 1984 [supp] sec 490. We have carefully perused the aforesaid judgments F
•
of this Court but we find nothing in the two judgments to support the case
of the appellants. Those cases proceeded on altogether different considerations,
which do not arise in the appeals before us. The principles laid down therein
are of no assistance to the appellants. Having considered all aspects of the
matter we find that there is no merit in these appeals. G
We accordingly dismiss the appeals, but without any order as to costs.

N.J. Appeals dismissed.