2001 (9) TMI 1087 - AT - VAT and Sales Tax

Summary

Issues Involved:
1. Eligibility for relief under the West Bengal Sales Tax (Settlement of Dispute) Act, 1999.
2. Constitutionality and ultra vires nature of the West Bengal Sales Tax (Settlement of Dispute) (Amendment) Ordinance, 1999, especially its retrospective effect.
3. Applicability of the principle of promissory estoppel.

Issue-wise Detailed Analysis:

1. Eligibility for Relief under the Act, 1999:
The petitioner filed an application for settlement on August 4, 1999, before the deadline of September 30, 1999, as required by section 5 of the Act, 1999. The appeal against the order of assessment was pending since May 5, 1997. Therefore, the petitioner met the conditions for settlement of the dispute under sections 4 and 5 of the Act, 1999. The designated authority must verify the correctness of the particulars and determine the amount payable for settlement as per section 7. The petitioner's eligibility for seeking relief under the Act, 1999, cannot be questioned.

2. Constitutionality and Ultra Vires Nature of the Ordinance, 1999:
The Ordinance, 1999, amended section 7 of the Act, 1999, with retrospective effect from July 1, 1999. The amendment required that the higher amount of tax already deposited be accepted for settlement instead of 33 per cent of arrear tax. The retrospective operation of the amended section 7 was challenged on the grounds of its constitutional validity. The Constitution does not prohibit retrospective legislation, but it should not affect, alter, or destroy an existing right. The retrospective amendment was deemed discriminatory and confiscatory, as it created an unreasonable classification between taxpayers who had already paid the full amount of arrear tax and those who had not. The amendment was found to violate Article 14 of the Constitution, which ensures equality before the law and equal protection of the laws. Consequently, the retrospective effect of the Ordinance, 1999, was struck down as unconstitutional.

3. Applicability of the Principle of Promissory Estoppel:
The principle of promissory estoppel applies when the Government makes a promise that the promisee relies on, altering their position. However, in this case, the legislative enactment provided the remedy for taxpayers disputing the assessed tax. There was no element of a promise from the Government's side. It is well-settled that there can be no estoppel against the Government in the exercise of its legislative, sovereign, or executive power. Therefore, the principle of promissory estoppel was not applicable in this case.

Conclusion:
The petitioner was entitled to relief as prayed for. The retrospective effect given by the (Amendment) Ordinance, 1999, was held to be discriminatory and confiscatory, and thus unconstitutional. The impugned order dated August 4, 2000, was set aside. The applications RN-261 of 2000, RN-262 of 2000, and RN-263 of 2000, though related to different periods of assessment, were disposed of in terms of the findings made above, with no costs.

Additional Judgment:
The Chairman added that the Ordinance aimed to provide relief for the settlement of tax disputes. The retrospective amendment unfairly classified bona fide taxpayers and those yet to pay taxes, violating the principle of equality before the law. The classification was deemed unreasonable and unfair, and the application was allowed.