The Supreme Court of India has affirmed that it is within the legislature's purview to rectify defects in previous legislation, as noted by a constitutional court through its powers of judicial review. This rectification can be applied both prospectively and retrospectively, allowing for the validation of past actions.
However, the Court emphasized that if a legislature merely attempts to validate actions carried out under prior legislation, which had been invalidated or rendered inoperative by a court, without addressing the defects in that legislation, such subsequent legislation would be considered ultra vires.
In such cases, it would be seen as an attempt to "legislatively overrule" a court's judgment through legislative fiat, making it illegal and an instance of colorable legislation.
The Supreme Court's observation came during its examination of the Himachal Pradesh Passengers and Goods Taxation Act, 1955, as amended by the Amendment and Validation Act of 1997. The Court concluded that the Amendment and Validation Act, passed by the State Legislature, effectively addressed the basis of a prior judgment by a Division Bench of the High Court.
In the earlier judgment dated March 27, 1997, the High Court had ruled that NHPC Ltd., the appellant-assessee, was not liable to pay tax under the 1955 Act for providing free transportation services to its employees and their children. The Supreme Court's decision implies that, according to the Amendment and Validation Act of 1997, providing free transportation to employees and their children is now considered a taxable activity under Section 3(1-A) of the 1995 Act.
This judgment reinforces the principle that while legislatures can rectify defects in legislation, they must do so in a manner that addresses the specific issues pointed out by the courts.
Author: Anushka Taraniya
News Writer, MIT ADT University