1995 (2) TMI 357 - SC - VAT and Sales Tax

Whether the action of withdrawing the benefit under the Central Sales Tax Act by the notification dated May 7, 1990, found to be invalid by the High Court, is assailable? Held that - The claim of the respondents under the State Sales Tax Act being no longer pressed before us, and the facts relating to that being different since there was no restoration of that benefit, as was the case under the Central Sales Tax Act, the judgment of the High Court to that extent is set aside Even after the impugned judgment of the High Court was rendered on January 12, 1993, eligibility certificates were issued to certain industrial units and a circular dated January 27, 1994 was also issued by the Director of Industries of the State Government on the same lines under which some benefit has been availed by those industrial units under the State Sales Tax Act. In these circumstances direct that the unavailed benefit under those eligibility certificates under the State Sales Tax Act would not be available to them but the extent to which the benefit under the State Act has been already availed up to April 4, 1994, the date on which the ex parte order of stay was made by this Court, on the basis of the eligibility certificate so issued, the State Government would not disturb that position by seeking to recover any amount under that head.

Summary

Issues:
1. Validity of notification withdrawing tax exemption under Central Sales Tax Act and State Sales Tax Act.
2. Challenge to the notification dated May 7, 1990.
3. Restoration of benefits under the Central Sales Tax Act.
4. Limited challenge to the claim for exemption under the Central Sales Tax Act.
5. Withdrawal of benefit under the State Sales Tax Act.
6. Eligibility certificates issued to industrial units.
7. Benefit availed under the State Sales Tax Act.
8. Recovery of amounts by the State Government.

Analysis:

1. The judgment in question pertains to an appeal against a Rajasthan High Court decision quashing a notification dated May 7, 1990, which withdrew tax exemption benefits under the Central Sales Tax Act and the State Sales Tax Act for certain industries. The High Court allowed a bunch of writ petitions challenging the validity of the notification, resulting in the restoration of the benefits of the earlier scheme for both enactments.

2. The State of Rajasthan appealed against the High Court judgment, focusing on the withdrawal of benefits under the Central Sales Tax Act. The respondents did not challenge the withdrawal of benefits under the State Sales Tax Act. The Supreme Court limited the consideration to the claim for exemption under the Central Sales Tax Act, and upheld the High Court's decision regarding the invalidity of the withdrawal of benefits under the Central Sales Tax Act.

3. The Supreme Court found that the restoration of benefits under the Central Sales Tax Act before the High Court's judgment indicated a lack of public interest in withdrawing the concession. The State Government failed to provide any material supporting the withdrawal in public interest. The Court modified the High Court judgment to reflect that the benefit under the Central Sales Tax Act was available only between May 7, 1990, and July 26, 1991.

4. As the respondents no longer pressed their claim under the State Sales Tax Act, and there was no restoration of benefits as in the case of the Central Sales Tax Act, the Supreme Court set aside the High Court judgment regarding the State Sales Tax Act.

5. The Court noted that eligibility certificates were issued to certain industrial units even after the High Court judgment. It directed that unavailed benefits under those certificates under the State Sales Tax Act would not be available, but benefits already availed up to a specified date would not be recoverable by the State Government.

6. The appeals were disposed of accordingly, with no costs imposed. Additional appeals were also disposed of in line with the main appeal's decision.