2005 (8) TMI 630 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of rule 4(3) of the M.P. Vanijyik Kar Niyam, 1995.
2. Retrospective application of rule 4(3).
3. Termination of N.C. Jain's appointment.
4. Allegation of political motive in appointment termination.
5. Eligibility of the third respondent for appointment as Member of the Appellate Board.

Detailed Analysis:

1. Validity of Rule 4(3) of the M.P. Vanijyik Kar Niyam, 1995:
The petitioner contended that the amended rule 4(3) prescribing the tenure of Members of the Appellate Board is unreasonable and violative of articles 14 and 16 of the Constitution. The court held that a subordinate legislation can be challenged only on specific grounds such as lack of legislative competence, violation of constitutional provisions, contradiction to the statute under which it is made, or manifest arbitrariness. The court found that rule 4(3) did not exhibit any arbitrariness or unreasonableness. It merely stipulated that the tenure cannot extend beyond 62 years for Members, which is within the State's authority to determine. The court concluded that rule 4(3) did not suffer from any constitutional or other infirmity.

2. Retrospective Application of Rule 4(3):
The petitioner argued that the rule had a retrospective effect, affecting his vested right to continue in office. The court clarified that a rule which operates on future rights of existing employees is not retrospective but prospective in nature. The court cited precedents to support that a rule affecting future rights without altering benefits already accrued is not retrospective. The court held that rule 4(3) was prospective and validly applicable to existing Members from the date of its effect, i.e., July 7, 2004.

3. Termination of N.C. Jain's Appointment:
The petitioner claimed a right to continue until 70 years of age based on his initial appointment terms. The court noted that government service terms can be unilaterally altered by the State, and the petitioner's appointment under the old rule 4 conferred a status, not a contractual right. The court held that the State was justified in terminating the petitioner's service based on the new rule 4(3), effective from July 7, 2004, and that such termination did not require an opportunity to show cause as it was not stigmatic.

4. Allegation of Political Motive in Appointment Termination:
The petitioner alleged that his termination was politically motivated to accommodate the third respondent. The court found no supporting material for this claim. The termination was a direct consequence of the new rule 4(3) and not due to any ulterior motive. The court concluded that the appointment of the third respondent was a necessary administrative action following the petitioner's tenure end.

5. Eligibility of the Third Respondent for Appointment as Member of the Appellate Board:
The petitioner contended that the third respondent did not meet the required ten years of practice in taxation. The court examined the qualifications and found that the third respondent was enrolled as an advocate on August 2, 1994, and thus did not have the requisite ten years of practice by July 9, 2004. The court also noted discrepancies in the identity card issued by the State Bar Council and concluded that the third respondent was ineligible for the appointment. Consequently, the court quashed the appointment of the third respondent as a Member of the Appellate Board.

Conclusion:
The court upheld the validity of rule 4(3) and rejected the challenge to the termination of N.C. Jain's appointment. However, it quashed the appointment of the third respondent due to ineligibility and ordered costs to be paid to the petitioner in W.P. No. 3197 of 2004. The writ petitions were allowed in part.

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