2010 (9) TMI 991 - HC - VAT and Sales Tax

Enhancement in lump sum rate of tax retrospectively - The learned counsel for the petitioner points out that there is no provision authorizing fixation of enhanced rate from a retrospective date in absence of which the impugned notification to the extent of retrospectivity is liable to be quashed and the petitioner is liable to pay tax at the old rate for the said period - Held that - matter is covered by the judgement in the case of Ranbir Singh Ram Gopal Versus State of Haryana and another 1996 (12) TMI 382 - PUNJAB AND HARYANA HIGH COURT where it was held that the amendment made in rule 39A of the Rules cannot be given retrospective effect. None of the provisions contained in the Act including section 64 read with section 26 empowers the State Government to frame or amend the Rules with retrospective effect. In the absence of such provision the State Government which acts as a delegate of the Legislature cannot enact a rule with retrospective effect nor can it amend the existing Rules with retrospective effect - petition allowed.

Summary

Issues:
Challenge to notification enhancing lump sum tax retrospectively.

Analysis:
The petitioner, a brick kiln owner, sought the quashing of a notification dated June 8, 2010, which retroactively increased the lump sum tax rate. The Haryana Value Added Tax Act, 2003, imposes tax on the sale of goods and allows for lump sum payment based on production capacity. Rule 49 of the Haryana Value Added Tax Rules, 2007, permits brick kiln owners to opt for a lump sum amount instead of tax based on turnover. The impugned notification substituted a higher lump sum tax rate for the period from October 1, 2009, to September 30, 2010, than the rate in force before June 8, 2010, thus affecting a retrospective change.

The petitioner argued that there was no provision allowing for the retrospective fixation of an enhanced rate, making the notification invalid in that regard. Citing a Division Bench judgment, it was contended that the State Government lacked the authority to frame or amend rules retrospectively in the absence of specific provisions enabling such actions. The court noted the absence of any response from the State despite being given the opportunity to do so.

Relying on the precedent set by the earlier judgment of the court, which emphasized the limitations on retrospective application of rules, the court allowed the petition. The petitioner was held liable to pay tax for the period preceding June 8, 2010, at the rate applicable before the impugned notification was issued on that date.