2003 (8) TMI 488 - HC - VAT and Sales Tax

Issues Involved:
1. Constitutional validity of sub-section (4) of section 39 of the West Bengal Sales Tax Act, 1994.
2. Application of the doctrine of promissory estoppel.
3. Balance of convenience in granting interim relief.
4. Impact of the amendment on vested rights and the prospective or retrospective application of the law.

Detailed Analysis:

1. Constitutional Validity of Sub-section (4) of Section 39 of the West Bengal Sales Tax Act, 1994:
The petitioners challenged the constitutional validity of sub-section (4) of section 39 of the West Bengal Sales Tax Act, 1994, arguing that it is ultra vires and violative of articles 14, 19, and 301 of the Constitution of India. They contended that the amended provision curtails the benefits of tax exemption previously enjoyed by dealers, which had become a vested right. The court noted that the disputes raised regarding the constitutional validity of the provision must be decided on merits after a full hearing.

2. Application of the Doctrine of Promissory Estoppel:
The petitioners argued that the Government of West Bengal had promised various incentives to dealers to encourage the establishment of small-scale industries, and the subsequent notification curtailing these benefits was against the doctrine of promissory estoppel. The State's counsel countered that the legislature is competent to withdraw fiscal benefits and that public interest should prevail over vested rights. The court acknowledged the argument but emphasized that the principle of promissory estoppel cannot be pressed against statutory provisions, especially when public interest is involved.

3. Balance of Convenience in Granting Interim Relief:
The court examined whether any inconvenience or injury would be caused to the petitioner if the interim order was refused and considered the inconvenience to the revenue if an interim order was granted. The court concluded that granting an interim order would not cause loss to the state since dues could be realized with interest or penalty if the provision was ultimately upheld. Conversely, if the provision was found to be ultra vires, complications regarding the refund of taxes would arise. The court thus granted an interim order restraining the respondents from giving effect to the provision of sub-section (4) of section 39 until the disposal of the application.

4. Impact of the Amendment on Vested Rights and Prospective or Retrospective Application of the Law:
The State's counsel argued that the amendment applies prospectively and does not impair any rights accrued before its enforcement. The court examined the amendment and found that it applies prospectively, stating that no vested rights were taken away. The court also considered various judgments supporting the view that the government can withdraw exemptions before the period mentioned in the original legislation if public interest demands it. The court held that the Tribunal did not properly exercise its discretion in granting a stay of the impugned amendment and set aside the Tribunal's order of stay.

Conclusion:
The court allowed the writ application, set aside the Tribunal's order of stay, and directed the Tribunal to hear the main matter on the scheduled date. The court emphasized that the Tribunal should examine the legality of the questions involved without being influenced by the observations made in this order. The writ application was allowed without any order as to costs.

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