2003 (12) TMI 664 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Availability of exemption benefits under the second Notification of December.
2. Retrospective nature of the impugned Notifications.
3. Legality of the seizure of records.

Issue-wise Detailed Analysis:

1. Availability of exemption benefits under the second Notification of December:
The petitioners argued that they were entitled to continue availing the exemption benefits under the second Notification of December, as they were successors of Sharda Industries, which was entitled to such benefits. The entry No. 68 of the Second Schedule provided an exemption to Small Scale Industries in Daman and Diu from paying sales tax on goods manufactured, processed, or assembled by them. The entry did not restrict the exemption to specific products but required registration under the Daman and Diu Sales Tax Act for the goods manufactured. The court noted that the exemption was applicable only to goods manufactured as per the registration certificate before 31-12-1999. Since Sharda Industries amended their registration and commenced production of new goods after this date, they were not entitled to the exemption. Consequently, the petitioners, as successors, could not claim the benefit for the amended products.

2. Retrospective nature of the impugned Notifications:
The petitioners contended that the impugned Notifications were retrospective and thus invalid. However, the court held that the notifications were merely clarificatory, specifying that the exemption benefits were only available for products manufactured as per the registration certificate before 31-12-1999. The impugned Notifications did not retrospectively withdraw exemptions but clarified the scope of the existing exemption, ensuring that industries which had changed their product lines after the specified date could not claim the benefit. The court concluded that the notifications were not retrospective and were valid.

3. Legality of the seizure of records:
The petitioners challenged the seizure of records, claiming it violated legal provisions and Article 300A of the Constitution of India. The court found that the seizure was justified, as it was conducted to investigate the eligibility for tax exemption. The action was within the legal framework, considering the facts and circumstances of the case.

Conclusion:
The court dismissed the petition, holding that the exemption benefits were only applicable to products registered and manufactured before 31-12-1999, and the impugned Notifications were clarificatory, not retrospective. The seizure of records was deemed lawful.