2000 (5) TMI 977 - SC - VAT and Sales Tax

EXEMPTION FROM TAX ON RAW MATERIALS ELIGIBILITY CERTIFICATE INCLUDING IN ADDITION TO RAW MATERIALS GUNNY BAGS - PERIOD OF EXEMPTION FIVE YEARS

Summary

Issues:
1. Validity of reviewing an eligibility certificate post-expiry.
2. Authority of the District Grant Committee to review eligibility certificates.
3. Interpretation of the notice for review and subsequent order.
4. Comparison with a previous judgment regarding withdrawal of eligibility certificates.
5. Consideration of equitable consequences in similar cases.
6. Justification for reviewing a certificate after the expiry date.

Analysis:

1. The main issue in this case was the validity of reviewing an eligibility certificate after its expiry. The appellant had been granted an exemption certificate for raw materials under a notification. The certificate was later amended to include consumable goods. However, long after the certificate had expired, the appellant received a notice for review from the District Industries Centre.

2. The appellant contended that the District Grant Committee had no authority to review the eligibility certificate once granted. The High Court did not provide a finding on this contention but ordered the matter to be reconsidered by the authorities. The appellant challenged this decision in the Supreme Court.

3. The notice for review mentioned additional items specified in the certificate besides raw materials. Subsequently, an order was passed deleting certain items from the certificate. The High Court judgment did not address the appellant's contention regarding the Committee's power to review the certificate.

4. The appellant referred to a previous judgment where a similar issue was dealt with by the High Court. The High Court in the previous case had ruled that withdrawal of an eligibility certificate could not have retrospective effect, especially if the certificate had been acted upon by the recipient.

5. The Supreme Court also considered equitable consequences in similar cases where exemption notifications were challenged, leading to financial burdens on the recipients. The Court emphasized the importance of not causing undue hardship to the parties who had relied on the validity of the certificates granted to them.

6. Ultimately, the Court held that there was no justification for reviewing the certificate post-expiry, especially when the benefits had already been availed by the appellant. The decision of the High Court to order a review was overturned, citing previous judgments supporting the appellant's position.

In conclusion, the Supreme Court allowed the appeal, setting aside the judgment and order under appeal. The writ petition filed by the appellant was allowed, and the order dated October 30, 1991, was quashed. The first respondent was directed to pay the costs of the appeal.