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1994 (7) TMI 332 - HC - VAT and Sales Tax
Issues:
Challenge of enhancement of tax rate with retrospective effect from August 1, 1993 based on G.O. Ms. No. 864, dated September 7, 1993. Analysis: The petitioner, a dealer in electronic goods, challenged the retrospective enhancement of tax rate under the Andhra Pradesh General Sales Tax Act. The issue revolved around the validity of G.O. Ms. No. 864, dated September 7, 1993, which increased the tax rate to 4 per cent from August 1, 1993. The petitioner contended that the tax could only be levied at the pre-existing rate until the publication of the new rate. The court examined the powers of the State Government under sections 40 and 9 of the Act regarding altering tax rates and granting exemptions. It referenced a previous judgment stating that a notification altering tax rates cannot have retrospective effect and is effective only from the date of publication in the gazette. The court held that the retrospective cancellation of the earlier exemption notification and the imposition of the new tax rate from August 1, 1993, were invalid. It emphasized that the new tax rate of 4 per cent could only be enforced from the date of publication of the notifications in the gazette, which was September 10, 1993. The court declared the words "with effect from August 1, 1993" in the notifications as ultra vires the State Government's authority and directed the levy of the 4 per cent tax rate from September 10, 1993. The judgment clarified that when an exemption is in force, a new tax rate cannot be applied until the exemption is legally ineffective, ensuring coherence in the implementation of tax regulations. In conclusion, the court allowed the writ petition, setting aside the retrospective application of the enhanced tax rate and establishing the effective date for the new tax rate as September 10, 1993. The ruling provided clarity on the interpretation of notifications under the Andhra Pradesh General Sales Tax Act and upheld the principle that tax amendments cannot have retrospective effect unless explicitly authorized by law.
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