2012 (2) TMI 453 - HC - VAT and Sales Tax

Exemption in respect of inter-State sales granted by a notification dated February 19, 1991 - whether the petitioner was entitled to continue to avail of the exemption even after the amendment of 2002 without furnishing form C? Held that - There is no good ground for questioning the legislative competence to prescribe conditions subject to which the exemption can be availed for future transactions. The contention of the learned counsel for the petitioner that the amendment by section 152 of the Finance Act, 2002 has been applied with retrospective effective is not correct. The said Finance Act 2002 casts an obligation of production of form C in respect of transactions which take place subsequent to that amendment. If a person availed of that exemption without production of form C in respect of transactions after the 2002 Amendment, he is liable for such action as may be permissible by law which includes section 28(1) of the Act. W.P. dismissed

Issues:
1. Interpretation of section 8(5) of the Central Sales Tax Act, 1956 and the exemption granted under it.
2. Impact of the 2002 amendment to section 8(5) on the exemption conditions.
3. Legal rights and obligations post-amendment regarding the production of form C for inter-State sales.
4. Application of promissory estoppel in the context of exemption revocation.
5. Legislative competence to prescribe conditions for availing exemptions.
6. Retrospective effect of the 2002 amendment and its implications.
7. Relevance of General Clauses Act 1897 in the context of legislative amendments.
8. Comparison with a conflicting judgment from the Allahabad High Court.

Analysis:
1. The judgment dealt with the interpretation of section 8(5) of the Central Sales Tax Act, 1956, focusing on an exemption granted by the Government for inter-State sales to certain industries subject to specific conditions, excluding the production of form C as a requirement for availing the exemption.

2. Following the 2002 amendment to section 8(5) through the Finance Act No. 20 of 2002, the exemption conditions were altered to include compliance with section 8(4), which mandated the production of form C for certain inter-State sales. This change posed a challenge for entities previously availing the exemption without fulfilling the new condition.

3. The petitioner in the case contended that once an exemption is granted, it becomes a vested right and cannot be revoked, allowing them to continue availing the exemption post-amendment without producing form C. The argument drew support from legal precedents emphasizing the permanence of accrued rights unless altered by statute.

4. The principle of promissory estoppel was examined, highlighting that exemption revocation is typically limited to executive action and subject to statutory provisions, with the Supreme Court emphasizing that accrued rights can only be taken away by statute.

5. The judgment affirmed the legislative competence to prescribe conditions for future exemption availing, dismissing challenges to the validity of imposing new requirements post-amendment.

6. The retrospective effect of the 2002 amendment was clarified, indicating that the obligation to produce form C applied to transactions post-amendment, making non-compliant entities liable for legal action under section 28(1) of the Act.

7. The applicability of the General Clauses Act 1897 was discussed in light of the legislative amendment, highlighting that the 2002 change did not repeal existing provisions but introduced additional requirements for transactions post-amendment.

8. A conflicting judgment from the Allahabad High Court was addressed, emphasizing the distinction between the applicability of new conditions post-amendment and the survival of pre-existing limits, which was not relevant to the case at hand. The dismissal of the writ petitions was based on the lack of merit in the contentions presented.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues addressed and the reasoning behind the court's decision.

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