2002 (5) TMI 831 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Retrospective Operation of the Impugned Notification
2. Vires of the Impugned Notification under Articles 14, 19(1)(g), and 304 of the Constitution of India
3. Estoppel and Promissory Estoppel

Issue-wise Detailed Analysis:

1. Retrospective Operation of the Impugned Notification:
The impugned notification, S.R.O. No. 7/2002 dated January 4, 2002, was given retrospective effect from April 1, 2000. The challenge on retrospective operation was based on the interpretation of Section 10(3) of the Kerala General Sales Tax Act, 1963. The court referred to two prior decisions, M.M. Nagalingam Nadar Sons v. State of Kerala and Deputy Commissioner (Law) v. M.R.F. Ltd., which concluded that while the government has the power to issue notifications granting exemptions or reductions in tax rates either prospectively or retrospectively, no express power is conferred for retrospectively canceling or varying a notification already issued under Section 10(1). The court rejected the contention that the impugned notification was merely a clarification, stating that the amendment introduced a new concept of "own land" which was not implicit in the pre-amended notification. Therefore, the impugned notification could not have retrospective operation.

2. Vires of the Impugned Notification under Articles 14, 19(1)(g), and 304 of the Constitution of India:
The challenge under Articles 14, 19(1)(g), and 304 was addressed by referencing a Division Bench decision in P.P. Baby Archana Traders v. Additional Sales Tax Officer. The court upheld the impugned notification, stating that it was not discriminatory and did not violate Article 14 or 304(a) of the Constitution. The court also referred to the Supreme Court decision in Video Electronics Pvt. Ltd. v. State of Punjab, which supported the view that economic development and regulatory control by the state are legitimate. The court concluded that the impugned notification was intra vires the constitutional provisions and Section 10 of the KGST Act, as the government is competent to issue notifications concerning tax concessions or exemptions.

3. Estoppel and Promissory Estoppel:
The contention on estoppel was based on a clarification issued by the Commissioner under Section 59A of the KGST Act, which extended the exemption to poultry farms on leased land. The court noted that there is no estoppel against law and that the clarification did not provide for any specified period for the concession. The impugned notification issued by the government under Section 10 superseded the Commissioner's clarification. The court held that the contention on promissory estoppel was not applicable since the government had declared a new policy on tax concessions, which was constitutionally valid. Therefore, the estoppel argument failed.

Conclusion:
The original petitions were allowed to the extent of declaring that the impugned notification S.R.O. No. 7/2002 does not have retrospective operation. Parties were directed to pursue individual cases based on this declaration. The court dismissed the order on C.M.P. No. 4271 of 2002 in O.P. No. 2371 of 2002-G. Petitions allowed.