2009 (12) TMI 899 - HC - VAT and Sales Tax

Whether for facilitating the implementation of Scheme of 2002 the State Government framed rules known as the Madhya Pradesh Bakaya Rashi Saral Samadhan Yojana, 2002 whereunder rule 2(1)(h) defines amount of arrear and the said definition nowhere categorises that the assessee, enjoying the benefit of payment of instalments, will not be covered? Held that - In the case at hand, admittedly prior to the circular dated February 8, 2002 the Scheme of 2002 do not categorise that the assessee, availing of the benefit of instalments, will be excluded from consideration under the Scheme of 2002. Further clarification circulated vide annexure P2 does include the class of assessee, who are being given the benefit of instalments and otherwise covered by the Scheme and it was only by letter dated February 8, 2002 that the Commissioner, Commercial Tax, has instructed its subordinate staff not to accept the applications and not to issue form No. 2 under the Scheme of 2002 to such class of persons. In the considered opinion of this court, since the petitioner had filed an application on January 24, 2002 and had deposited the amount, as sought for under the Scheme of 2002, i.e., much before the issuance of letter dated February 8, 2002, it was incumbent upon the respondents to have accepted the same and have issued the form No. 2. Petition is allowed. The respondents are directed to accept the application preferred by the petitioner in pursuance of Scheme of 2002 and decide the same on its own merit.

Summary

Issues:
1. Entitlement to benefit under the Madhya Pradesh Bakaya Rashi Saral Samadhan Yojana, 2002.
2. Rejection of application for settlement under the scheme.
3. Dispute over the retrospective effect of subsequent instructions.
4. Validity of rejection based on internal circular dated February 8, 2002.

Entitlement to benefit under the Madhya Pradesh Bakaya Rashi Saral Samadhan Yojana, 2002:
The petitioner, a registered dealer, sought direction to grant benefits under the Scheme of 2002. The petitioner applied for settlement of arrears under the scheme, following its notification on January 5, 2002. However, the application was rejected based on a subsequent policy decision not to accept cases where instalments had been granted. The petitioner argued that the scheme and its rules did not exclude cases with instalment benefits. The court noted that the petitioner had applied before the policy decision was issued, and the rejection was based on a subsequent internal circular, which lacked retrospective effect. Citing legal precedents, the court ruled in favor of the petitioner, directing the respondents to accept and decide the application under the scheme.

Rejection of application for settlement under the scheme:
The petitioner's application for settlement under the Scheme of 2002 was rejected based on a policy decision communicated through an internal circular dated February 8, 2002. The respondents contended that the petitioner was not entitled to benefit under the scheme as per the policy decision. However, the court observed that the rejection was based on a subsequent instruction, which contradicted the earlier clarification allowing cases with instalment benefits. The court emphasized that the petitioner had applied and deposited the required amount before the policy decision, thus ruling in favor of the petitioner and directing acceptance of the application.

Dispute over the retrospective effect of subsequent instructions:
The main contention revolved around the retrospective effect of the internal circular dated February 8, 2002, which led to the rejection of the petitioner's application. The court highlighted that the circular lacked retrospective application and should not impact applications filed prior to its issuance. By analyzing legal principles, the court emphasized that subordinate legislative functions cannot have retrospective effect unless authorized by the relevant legislation. As the petitioner had applied before the circular, the rejection based on subsequent instructions was deemed invalid.

Validity of rejection based on internal circular dated February 8, 2002:
The rejection of the petitioner's application under the Scheme of 2002 was primarily based on the internal circular dated February 8, 2002, which directed not to accept cases where instalments had been granted. The court noted that the circular contradicted the earlier clarification and was not published in the gazette. Emphasizing that the petitioner had applied before the circular's issuance, the court deemed the rejection invalid and directed the respondents to accept and decide the application on its merits. The court highlighted the lack of retrospective effect in the circular's application, ensuring the petitioner's entitlement to benefit under the scheme.