1988 (9) TMI 327 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for tax exemption period.
2. Validity of administrative instructions versus statutory notifications.
3. Interpretation of relevant statutory provisions.

Issue-Wise Detailed Analysis:

1. Eligibility for Tax Exemption Period:
The petitioner-company, a registered dealer under the Uttar Pradesh and Central Sales Tax Acts, established a unit in Dehradun with a capital investment exceeding three lacs rupees. Initially, the petitioner was granted a five-year tax exemption starting from 14th January 1983, under the Government notification dated 27th August 1984. Subsequent notifications dated 29th January 1985 and 26th December 1985 extended the exemption period to seven years for units in Dehradun with similar capital investment and production dates. The petitioner applied for this extended exemption, which was initially granted but later reduced back to five years by the Director of Industries, based on clarifications received in March 1988.

2. Validity of Administrative Instructions Versus Statutory Notifications:
The core issue was whether the period of exemption granted under statutory notifications could be modified by administrative instructions. The petitioner argued that the notifications dated 29th January 1985 and 26th December 1985 were statutory and could not be altered by the Government's letters dated 17th March 1988 and 23rd March 1988. The respondent contended these letters were merely clarifications. The court referred to a Supreme Court decision (AIR 1985 SC 956) which emphasized that statutory notifications could only be modified or canceled through another notification, not by administrative instructions.

3. Interpretation of Relevant Statutory Provisions:
The court examined sub-sections (1) and (2) of section 4-A of the U.P. Sales Tax Act, which mandate that exemptions must be granted by notification. The term "notification" is defined under section 4(29-A) of the Uttar Pradesh General Clauses Act, 1904, as a notification published in the State Gazette. The court noted that the notifications dated 29th January 1985 and 26th December 1985 were issued under section 4-A of the U.P. Sales Tax Act and section 8(5) of the Central Sales Tax Act, and were duly published in the Gazette. These statutory notifications specified a seven-year exemption period, which could not be overridden by administrative clarifications.

Conclusion:
The court concluded that the statutory notifications providing a seven-year exemption period could not be modified by the Government's administrative instructions. The writ petition was allowed, setting aside the order dated 23rd May 1988, and quashing the administrative instructions in the letters dated 17th March 1988 and 23rd March 1988. The petitioner was entitled to the seven-year exemption as per the statutory notifications dated 29th January 1985 and 26th December 1985. No order as to costs was made.