1995 (12) TMI 372 - HC - VAT and Sales Tax

Summary

Issues:
1. Rejection of application for exemption under section 4-A of U.P. Trade Tax Act.
2. Interpretation of the requirements for claiming exemption under section 4-A.
3. Binding nature of Supreme Court decisions on lower courts.
4. Impact of retrospective amendment on vested rights.

Detailed Analysis:
1. The writ petition was filed challenging the rejection of the petitioner's application for exemption under section 4-A of the U.P. Trade Tax Act. The rejection was based on the petitioner's failure to submit a registered lease deed and proof of registration under the Factories Act. The petitioner argued that these requirements were directory, not mandatory, citing previous court decisions. However, the Court noted that a Supreme Court decision emphasized strict construction of exemption provisions to avoid increasing the tax burden on the community. The Court held that the judgments of the lower court were no longer valid in light of the Supreme Court decisions.

2. The Court discussed the necessity of registration in the context of a lease deed. While the word "registered" was not explicitly mentioned in section 4-A, the Transfer of Property Act mandates registration for a lease of immovable property exceeding one year. The absence of a registered lease deed for over seven years led the Court to conclude that, legally, no lease deed existed. The Court rejected the petitioner's argument that registration was not required, emphasizing the legal significance of registration in creating a valid lease deed.

3. The Court highlighted the binding nature of Supreme Court decisions on lower courts under Article 141 of the Constitution. It referenced specific cases where the Supreme Court overruled previous decisions of the High Court, emphasizing the need to adhere to the Supreme Court's interpretations of the law. The Court held that previous judgments of the High Court, which took a different view, were no longer valid in light of the Supreme Court rulings.

4. The Court addressed the argument regarding vested rights and the impact of retrospective amendments on such rights. The petitioner contended that vested rights could not be nullified by an amendment to the law, citing various Supreme Court decisions. However, the Court stated that a retrospective amendment creates a legal fiction, and cited precedents to support the notion that vested rights could be affected by such amendments. The Court dismissed the argument that vested rights were immune to retrospective amendments, emphasizing the legal implications of such legislative changes.

In conclusion, the Court dismissed the petition, citing the strict adherence to the conditions of section 4-A for claiming exemption under the U.P. Trade Tax Act. The Court emphasized the importance of following Supreme Court interpretations, rejected arguments against the necessity of registration, and upheld the impact of retrospective amendments on vested rights.