2005 (8) TMI 641 - HC - VAT and Sales Tax

Summary

Issues:
Challenging of exhibit P8 notification recalling earlier sales tax exemption on mineral water and packaged drinking water by small-scale industrial units.

Analysis:
The petitioner contested the exhibit P8 notification by the Government revoking a previous notification granting retrospective sales tax exemption on the sales turnover of mineral water and packaged drinking water by small-scale industrial units. The contention was based on the claim that bottled water should be considered a manufactured product, thus qualifying for exemption. However, the court found that the sale of bottled potable water did not involve any manufacturing process, leading to the rejection of the exemption claim. This decision was upheld by both the Division Bench and the Supreme Court. Despite this, the Government, upon a representation from the association of dealers, granted retrospective exemption through a subsequent notification. Subsequently, the Government reevaluated the situation and concluded that granting sales tax exemption retrospectively was not in the public interest. Therefore, the Government withdrew the retrospective exemption through the impugned notification, exhibit P8, which was the subject of the writ petition.

In response to the inconsistent actions of the Government, the court sought separate affidavits from the two secretaries responsible for the issuance of the two conflicting notifications. Both secretaries affirmed in their affidavits that the decisions were made based on Cabinet decisions. The current secretary to the Government stated in the affidavit that the initial decision to grant exemption was based on incorrect data and misplaced sympathy for the small-scale industrial units. The secretary acknowledged the error and clarified that the revocation of the exemption was necessary to correct this mistake, which was supported by a Cabinet decision. The court examined the file presented by the Special Government Pleader, revealing that the opposition leader's letter prompted the Finance Minister to recommend the reconsideration of the irregular exemption granted under SRO No. 731 of 2004. Given the Government's authority to cancel notifications and the acknowledgment that the original notification was issued to counter judgments of the High Court and the Supreme Court, the court found no illegality in revoking the notification that did not serve any public interest. Consequently, the challenge against the impugned notification was deemed meritless, leading to the dismissal of the writ petition.