2001 (12) TMI 854 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Interpretation of the Rajasthan Sales Tax/Central Sales Tax Exemption Scheme, 1998, and the Rajasthan Sales Tax/Central Sales Tax Deferment Scheme, 1998.
2. Effect of notification dated September 30, 1999, on the scheme, particularly concerning sick units engaged in manufacturing cement.
3. Whether the notification dated September 30, 1999, is a corrigendum or an amendment.
4. Retrospective application of the notification dated September 30, 1999.
5. Constitutionality of the amendment under Article 14 of the Constitution.

Issue-wise Detailed Analysis:

1. Interpretation of the Rajasthan Sales Tax/Central Sales Tax Exemption Scheme, 1998, and the Rajasthan Sales Tax/Central Sales Tax Deferment Scheme, 1998:
The scheme provides tax exemptions to certain industrial units on intra-State and inter-State sales of goods manufactured within Rajasthan. The appellants, two manufacturers of cement, claimed benefits under the scheme as sick units. The State Level Screening Committee and assessing authority allowed only 25% tax exemption each year, whereas the appellants claimed higher exemptions based on the original scheme provisions.

2. Effect of notification dated September 30, 1999, on the scheme, particularly concerning sick units engaged in manufacturing cement:
The notification dated September 30, 1999, altered the scheme, reducing the tax exemption rate for sick cement units to a flat 25% per year. This change was published on January 7, 2000. The appellants argued that their right to higher exemptions vested before this notification became effective.

3. Whether the notification dated September 30, 1999, is a corrigendum or an amendment:
The court agreed with the appellants that the notification was an amendment, not a corrigendum, as it substantively altered the scheme. A corrigendum corrects clerical errors, while an amendment changes substantive provisions. The notification became effective only upon its publication on January 7, 2000.

4. Retrospective application of the notification dated September 30, 1999:
The court held that the notification could not retrospectively affect the rights that vested in the appellants when their applications were completed. The scheme explicitly stated that benefits would be available from the date the application was complete. Thus, the appellants were entitled to the original higher exemption rates until January 7, 2000.

5. Constitutionality of the amendment under Article 14 of the Constitution:
The court found that the amendment violated Article 14 of the Constitution as it discriminated against sick cement units by reducing their exemption rates compared to other sick units. The classification lacked a rational nexus with the object of extending benefits to sick industries. The amendment was deemed arbitrary and unreasonable.

Conclusion:
The court allowed the appeals by the appellants, holding that they were entitled to the original tax exemptions as per the scheme in force when their applications were completed. The appeals by the State were dismissed. The notification dated September 30, 1999, was not given retrospective effect, and its discriminatory provisions were struck down as unconstitutional.