1991 (4) TMI 373 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Double Taxation and Refund under the Central Sales Tax Act, 1956.
2. Validity and Rescission of Notification dated 8th December 1966.
3. Public Interest and Reasonableness of Government Actions.
4. Applicability of the Doctrine of Eclipse.
5. Competence of Government to Issue Rescinding Notification.
6. Delay in Approaching the Court.

Issue-wise Detailed Analysis:

1. Double Taxation and Refund under the Central Sales Tax Act, 1956:
The petitioner, a dealer in wholesale seasonal goods like pulses and oil-seeds, faced double taxation under the Orissa Sales Tax Act, 1947, and the Central Sales Tax Act, 1956. The petitioner sought refunds for taxes paid under the Orissa Sales Tax Act, which were not processed despite eligibility. The court recognized the issue of double taxation and the necessity for refunds.

2. Validity and Rescission of Notification dated 8th December 1966:
A notification issued by the State Government on 8th December 1966 exempted dealers from paying tax under the Central Sales Tax Act if taxes were already paid under the Orissa Sales Tax Act. This notification was declared invalid by earlier court decisions, leading to its rescission on 5th July 1976. However, a Full Bench later upheld the notification's validity, overruling previous judgments.

3. Public Interest and Reasonableness of Government Actions:
The rescission of the 1966 notification was challenged for lacking a public interest basis. The court examined whether the rescission was reasonable and in public interest, referencing cases like Baldev Raj Chadha v. Union of India and Indian Express Newspapers (Bombay) Private Ltd. v. Union of India. It concluded that the rescission was not based on public interest but on earlier court decisions, which were later overruled.

4. Applicability of the Doctrine of Eclipse:
The petitioner argued that the doctrine of eclipse applied, suggesting that the 1966 notification was merely eclipsed by earlier court decisions and revived by the Full Bench's ruling. The court acknowledged this argument but noted that the rescinding notification of 1976 rendered the 1966 notification non est in the eye of law, thus limiting the doctrine's applicability.

5. Competence of Government to Issue Rescinding Notification:
The petitioner contended that the government lacked competence to issue the rescinding notification in 1976, as the 1966 notification was already declared invalid by the court. The court rejected this argument, stating that formal rescission was a valid governmental action, even if the notification was previously invalidated.

6. Delay in Approaching the Court:
The department argued that the petition was delayed, as assessments from 1982 were challenged in 1986. The petitioner countered that the challenge included an assessment from 1981-82, decided in 1985. The court, citing the importance of the issue and a precedent from Lohia Machines Ltd. v. Union of India, decided not to dismiss the petition on grounds of delay.

Conclusion:
The court allowed the petition, declaring the Notification dated 8th December 1966 enforceable and the demands against the petitioner for the assessment years in question as non est. The court emphasized the public interest that led to the original notification and the lack of such interest in the rescinding notification. The petition was not dismissed on the ground of delay, given the significant legal questions involved. The parties were directed to bear their own costs.