Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases VAT and Sales Tax VAT and Sales Tax + SC VAT and Sales Tax - 2019 (12) TMI SC This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2019 (12) TMI 61 - SC - VAT and Sales Tax


Issues Involved:
1. Power of the State to rescind the notification providing for tax rebate under the Uttar Pradesh Trade Tax Act, 1948.
2. Application of the doctrine of promissory estoppel against the State.
3. Validity of the rescission notification dated 14th October 2004.
4. Impact of the High Court's judgment and subsequent Supreme Court affirmation on the rebate scheme.
5. Supervening public interest as a ground for rescinding the notification.
6. Retrospective or retroactive effect of the rescission notification.
7. Entitlement of the industrial units to the rebate for the period before the rescission notification.

Detailed Analysis:

1. Power of the State to Rescind the Notification:
The State issued a notification on 27th February 1998, providing a tax rebate for goods with fly ash content. However, due to the lack of new industrial units and increased consumption of fly ash, the State rescinded this notification on 14th October 2004. The Supreme Court examined whether the State had the power to rescind the notification and concluded that Section 5 of the Uttar Pradesh Trade Tax Act, 1948, does not confer express authority to withdraw or rescind the rebate facility from a date prior to the notification.

2. Doctrine of Promissory Estoppel:
The respondents argued that they had commenced production based on the representation made in the 1998 notification, and the rescission violated the principle of promissory estoppel. The Supreme Court affirmed that the doctrine of promissory estoppel applies to the State like any other party. The State must justify any deviation from its promise by showing overwhelming public interest.

3. Validity of the Rescission Notification:
The Supreme Court found that the rescission notification dated 14th October 2004, could not be given retrospective or retroactive effect. The notification explicitly stated that it would take effect from the date of issuance, thereby not affecting the rights accrued to industrial units that commenced production before this date.

4. Impact of the High Court's Judgment:
The High Court had earlier ruled that the rebate scheme discriminated against producers outside Uttar Pradesh, violating Articles 301 and 304(a) of the Constitution. The Supreme Court affirmed this decision, leading the State to rescind the rebate scheme. However, the Supreme Court clarified that this rescission could not apply retrospectively to industrial units that had already commenced production.

5. Supervening Public Interest:
The State argued that supervening public interest justified the rescission, citing logistical issues and future revenue loss. The Supreme Court rejected this argument, stating that the reasons provided did not constitute overwhelming public interest. The original intent of the 1998 notification—to promote industrial activity and address environmental issues—remained relevant.

6. Retrospective or Retroactive Effect:
The Supreme Court held that the rescission notification could not have retrospective or retroactive effect. The industrial units that commenced production before 14th October 2004 were entitled to continue receiving the rebate for the specified period under the 1998 notification.

7. Entitlement to Rebate:
The respondents were entitled to the rebate for the period specified in the 1998 notification, subject to verification of their claims and ensuring they had not passed on the tax burden to consumers. The rebate for Birla Corporation Limited was to continue until 13th December 2008, and for Jai Prakash Associates Limited until 17th September 2014.

Conclusion:
The Supreme Court dismissed the State's appeals, upholding the respondents' entitlement to the tax rebate as per the 1998 notification. The rescission notification was held not to have retrospective or retroactive effect, and the doctrine of promissory estoppel was applied against the State. The State's argument of supervening public interest was rejected, and the respondents' rights to the rebate were affirmed.

 

 

 

 

Quick Updates:Latest Updates