1995 (3) TMI 464 - HC - VAT and Sales Tax

Summary

Issues:
Challenge to vires of section 4-A(3) of the U.P. Sales Tax Act, 1948.

Analysis:
The petitioner, a registered partnership firm, challenged the vires of section 4-A(3) of the U.P. Sales Tax Act, 1948. The petitioner was granted an eligibility certificate for exemption from sales tax, which was later sought to be cancelled by the Commissioner of Sales Tax, U.P. The petitioner contended that the Commissioner had no jurisdiction to cancel the certificate, citing the procedure outlined in the Act and the lack of retrospective effect given to the power to cancel certificates. The matter was initially dismissed by a division bench but was remitted to the High Court by the apex Court for further consideration.

The petitioner argued that the Commissioner did not have the authority to cancel the eligibility certificate once granted by the Divisional Level Committee. The petitioner highlighted the specific provisions of the Act and the lack of retrospective effect given to the power to cancel certificates. The petitioner contended that the Commissioner's jurisdiction was limited and that the cancellation of the certificate was not valid.

The Court examined the provisions of sub-section (3) of section 4-A of the Act, which empowered the Commissioner to cancel or amend eligibility certificates if misuse or breach of conditions was found. The Court held that the Commissioner had the authority to cancel the certificate if the facility of exemption had been misused or conditions violated. The Court clarified that the power given to the Commissioner was not limited by the initial grant of the certificate by the Divisional Level Committee.

The Court further addressed the argument regarding retrospective effect and held that the Commissioner was empowered to cancel certificates granted even before the amendment giving him the power to cancel. The Court concluded that the provisions of sub-section (3) of section 4-A of the Act did not suffer from any legal or constitutional infirmity, and the Commissioner had the authority to cancel the eligibility certificate based on misuse or violation of conditions.

The Court refrained from discussing the specific conclusions reached by the Commissioner, as the revision of the petitioners was pending before the Court. The writ petition challenging the vires of section 4-A(3) of the Act was disposed of accordingly.