1991 (7) TMI 354 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of sales tax exemption notifications.
2. Effect of cancellation of a notification on previous notifications.
3. Co-existence of multiple notifications.

Issue-wise Detailed Analysis:

1. Validity of Sales Tax Exemption Notifications:
The petitioner sought a mandamus to prevent the second respondent from collecting sales tax, surcharge, additional sales tax, and other amounts for the year 1989-90. The petitioner, a catering service provider, argued that the initial exemption granted by G.O. P. No. 570 dated June 10, 1987, which exempted sales of food and drinks in hotels and restaurants from sales tax, should still be in force. This exemption was later restricted by G.O. P. No. 198 dated March 25, 1989, limiting the exemption to establishments with an annual turnover not exceeding Rs. 10,00,000, which was subsequently amended to Rs. 15,00,000 and Rs. 18,25,000.

2. Effect of Cancellation of a Notification on Previous Notifications:
The petitioner contended that the cancellation of G.O. P. No. 198 dated March 25, 1989, by G.O. P. No. 532 dated September 5, 1990, should revive the earlier exemption notification G.O. P. No. 570 dated June 10, 1987. The court held that the cancellation of G.O. P. No. 198 was prospective and did not obliterate its efficacy from inception. The Supreme Court's decision in B.N. Tewari v. Union of India was cited, clarifying that the cancellation of a rule or notification does not automatically revive the previous one. The court emphasized that G.O. P. No. 570 dated June 10, 1987, ceased to exist once superseded by G.O. P. No. 198, and its revival was not automatic upon the latter's cancellation.

3. Co-existence of Multiple Notifications:
The petitioner argued that the issuance of G.O. P. No. 532 dated September 5, 1990, which imposed tax liability for turnovers exceeding Rs. 18.25 lakhs, could not coexist with the earlier exemption under G.O. P. No. 570 dated June 10, 1987. The court dismissed this argument, stating that G.O. P. No. 570 did not revive upon the cancellation of G.O. P. No. 198. The court further clarified that the legal effect of a notification's cancellation does not depend merely on the terminology but on the totality of circumstances and the context in which they are used.

Conclusion:
The writ petitions were dismissed, with the court ruling that the cancellation of G.O. P. No. 198 did not revive the earlier exemption notification G.O. P. No. 570. The court upheld the validity of the subsequent notifications and their amendments, confirming the tax liabilities as per the latest applicable notification. There were no orders as to costs.