Legislative validation of tax assessments previously quashed by final judicial orders violates the separation of powers.

The Petitioner No. 1 is a charitable society that owned various portions of a building at 8, Camac Street, Kolkata

In 1999, the Kolkata Municipal Corporation (KMC) retrospectively revised the property’s annual valuation back to 1984—a period of 15 years—and issued additional tax demands

The Petitioners challenged this in Sahujain Charitable Society v. KMC (2018), where a Division Bench of the High Court read down the "at any time" provision in Section 179(2)(d) of the KMC Act, 1980, holding that retrospective revision could not exceed three years

This judgment attained finality after the Supreme Court dismissed KMC’s Special Leave Petitions

Subsequently, the State enacted the KMC (Amendment) Act, 2022, which substituted Section 179(2)(d) to include a non-obstante clause overriding any judgment and a "validating clause" (sub-clause ii) to legalize revisions made beyond even a new six-year limit

Relying on this amendment, KMC issued a fresh demand of approximately ₹11.24 crores

The Petitioners challenged the constitutionality of the 2022 Amendment

The court primarily applied the doctrine of separation of powers and the principles of validating legislation under Articles 14 and 300A of the Constitution of India

It relied on Shri Prithvi Cotton Mills Ltd. v. Broach Borough Municipality, which establishes that while the Legislature can cure a defect in a law retrospectively, it cannot simply declare a court’s judgment ineffective without removing the ground of invalidity

It further cited Municipal Corporation of the City of Ahmedabad v. New Shrock Spinning & Weaving Co. Ltd., holding that a validating statute that leaves the foundational illegality untouched and seeks to retain illegally collected tax is an impermissible encroachment on judicial power

The court also reaffirmed the principle that fiscal statutes cannot retrospectively create fresh liabilities or resurrect time-barred debts in an arbitrary manner

The court observed that the 2018 Division Bench judgment had identified the "at any time" clause as arbitrary and read it down to a three-year limit to satisfy Article 14

The 2022 Amendment sought to override this by using a non-obstante clause ("notwithstanding any judgment...") and sub-clause (ii), which deemed revisions made beyond six years to be valid

The court reasoned that the Legislature cannot legislatively displace a binding interpretation of a Court by mere declaration; it must remove the constitutional infirmity (the unguided power)

While sub-clause (i) was found valid as it prescribed a finite six-year limit for future or non-finalized assessments, sub-clause (ii) and the non-obstante clause were held to be direct attempts to nullify a final judicial decision inter-partes without curing the underlying defect of arbitrariness

Furthermore, the court noted the amendment was prospective (effective 09.06.2023) and could not reopen liabilities that had already attained finality between these specific parties under the 2018 judgment

Sub-clause (i), which allows revision within six years, was upheld for prospective applications but held inapplicable to the Petitioners whose liabilities were already settled

The court quashed the demand letter dated 23.07.2024 and directed KMC to issue a revised demand strictly adhering to the 2018 judgment (the three-year retrospective limit)

The Petitioners were held entitled to a refund of any excess amounts paid

The ruling clarified that assessments which had already attained finality could not be reopened using the 2022 Amendment