2008 (12) TMI 702 - HC - VAT and Sales Tax

Notification No. 698/XXVII (8) Commercial Tax (VAT)/ 2007, dated November 14, 2007 - whether is illegal, ultra vires and void? Held that - There is no illegality in issuing the impugned notification dated November 14, 2007, rescinding the earlier notification dated January 9, 2006. The present case does not relate to any issue relating to Central excise or income-tax. Apart from this, what is most important in this case is that in pursuance of the industrial policy of 2003, the petitioner had already complied and got allotted the plots in industrial area of State in the year 2005 to set up its factory, while notification dated January 9, 2006, relating to exemption in Central sales tax, was issued in the year 2006. After the factory has been established, the petitioner cannot say that he was allured in setting up the industry only for the reason that the Government had promised reduced rate of Central sales tax, notification in respect of which was in fact issued subsequent to the establishment of the factory. The cases referred to on behalf of the petitioners do not relate to industries, which were set up before the promise was given relating to the exemption in the tax. Therefore, in the opinion of this court, on the facts and circumstances of the case there is no question of violation of doctrine of legitimate expectation, nor is the Government in the present case bound by principle of promissory estoppel, as the impugned notification was issued only consequent to the amendment in section 8 of the Central Sales Tax Act, 1956, vide Tax Laws (Amendment) Act, 2007. Appeal dismissed.

Issues Involved:

1. Legality and validity of Notification No. 698/XXVII (8) Commercial Tax (VAT)/2007, dated November 14, 2007.
2. Quashing of provisional assessment orders and penalty order.
3. Doctrine of promissory estoppel and principle of legitimate expectation.
4. Interpretation of amendments in Section 8 of the Central Sales Tax Act, 1956.

Issue-wise Detailed Analysis:

1. Legality and Validity of Notification No. 698/XXVII (8) Commercial Tax (VAT)/2007:

The petitioner challenged the notification dated November 14, 2007, which rescinded an earlier notification granting tax concessions. The court examined the comparative legal provisions before and after the amendment to Section 8 of the Central Sales Tax Act, 1956. The pre-amendment provisions allowed concessional tax rates for sales to the Government, which were removed post-amendment. The court found that the amendment necessitated the rescission of the earlier notification. The court concluded that the notification dated November 14, 2007, was not illegal as it aligned with the amended law.

2. Quashing of Provisional Assessment Orders and Penalty Order:

The petitioner sought to quash the provisional assessment orders and the penalty order issued by the Deputy Commissioner (Tax Assessment) IV, Commercial Tax, Dehradun. The court did not find any illegality in the issuance of these orders, as they were based on the valid notification dated November 14, 2007, which rescinded the earlier tax concession. Therefore, the court did not quash these orders.

3. Doctrine of Promissory Estoppel and Principle of Legitimate Expectation:

The petitioner argued that the withdrawal of the tax concession violated the doctrine of promissory estoppel and the principle of legitimate expectation. The court referred to various case laws, including Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P. and others, to analyze these doctrines. The court found that the petitioner had already established its factory before the issuance of the notification granting the tax concession. Therefore, the petitioner could not claim that they were allured by the promise of a tax concession. The court held that the doctrines of promissory estoppel and legitimate expectation did not apply in this case, as the tax concession was withdrawn due to a statutory amendment.

4. Interpretation of Amendments in Section 8 of the Central Sales Tax Act, 1956:

The court analyzed the amendments made to Section 8 of the Central Sales Tax Act, 1956, by the Taxation Laws (Amendment) Act, 2007. The amendment deleted the provisions allowing concessional tax rates for sales to the Government. The court concluded that the State Government was no longer empowered to grant tax concessions for sales to the Government. The rescission of the earlier notification was a direct consequence of this amendment. The court found that the petitioner's argument that the amendment did not require the withdrawal of the concession was untenable.

Conclusion:

The court dismissed the writ petition, finding no merit in the petitioner's arguments. The notification dated November 14, 2007, was held to be valid and in accordance with the amended law. The doctrines of promissory estoppel and legitimate expectation were found inapplicable, and the provisional assessment orders and penalty order were upheld. The interim order dated June 23, 2008, was automatically vacated.

← Previous Next →