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TMI Blog1993 (4) TMI 282X X X X Extracts X X X X X X X X Extracts X X X X ..... le to tax at 4 per cent at the point of last purchase. Similarly coconut oil and oil cake were entries 60 and 29, respectively in the First Schedule to the Act up to July 1, 1987, when they were liable to tax at 4 per cent up to September 16, 1980 and thereafter at 5 per cent on the first sale within the State. The First Schedule was recast with effect from July 1, 1987, by which coconut oil and oil-cake became entries 50 and 51 therein with the rate of tax and point of levy remaining the same at 5 per cent, and the first sale within the State. There was an explanation to these entries which stated that where tax had been levied in respect of copra or coconut, the tax leviable on the coconut oil and oil-cake produced out of such coconut or copra shall be reduced by the amount of tax levied on such coconut or copra. In other words, the position was that the oil miller selling coconut oil and oil-cake got a reduction, from the tax payable by him on such sales, of the amount of tax paid by him on the purchase of the coconut or copra out of which the coconut oil and oil-cake were produced. This was the position under the Act after July 1, 1987. 3.. Purchase of coconut and copra, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned above, from payment of any tax, inasmuch as they got a reduction, from the tax payable on such sales, of the amount of tax which they had paid on the purchases of coconut and copra at 2 per cent of the purchase value. 6.. These three notifications were consolidated by the Government, apparently in the light of the explanation to entries 50 and 51 by S.R.O. No. 781 of 1989 dated May 18, 1989, referred to earlier. This notification supersedes the three Notifications S.R.O. Nos. 137169, 854/74 and 388/79. The notification then makes a reduction in the rate of tax payable for coconut, copra, coconut oil and oil-cake in the manner mentioned below. The tax payable by an oil miller on the purchase of coconut and copra, used by him for production of coconut oil and oil-cake, in his mill within the State, for sale, was reduced to 2 per cent, where tax was levied on the coconut oil and oil-cake produced out of such coconut or copra, either under the Act, or under the Central Sales Tax Act, 1956; and to 3 per cent, in cases where tax was not levied on the coconut oil and oil-cake concerned under either of these enactments. The tax payable by an oil miller in the State on the sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it substantially incorporates the benefit given to them under the earlier notifications. What they are aggrieved by is the condition that the explanation to entries 50 to 51 shall not apply to such sales; and that forms the subject-matter of the challenge in these petitions. Petitioners contend that the imposition of this condition retrospectively withdraws the exemption which they were enjoying till May 18, 1989, by the combined operation of the three notifications and the explanation. This is incompetent and not permitted by section 10 of the Act. They also submit that they have not collected any tax on their sales of coconut oil and oil-cake, acting on the combined effect of the earlier notifications and the explanation and, therefore, they are entitled to be relieved of the levy imposed by S.R.O. No. 781/89, under the doctrine of promissory estoppel. 9.. There was also a subsidiary contention raised by Smt. S.K. Devi that the operation of the earlier notifications together with the explanation should be continued, even after May 18, 1989 and cannot be whittled down in any manner. I find no substance in this plea meriting any elaborate consideration. I reject it. 10.. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake from the levy of tax, in the form of a rebate under the explanation. It may also be true that the Government did not have the intention to give up the tax on the sales of coconut oil and oil-cake and that they came to grips with, the real situation after July 1, 1987, only afterwards when they issued S.R.O. No. 781/89 on May 18, 1989. But that is no reason to hold that the three notifications issued under section 10 could not stand in the light of the subsequent amendment to the law. In fact all such exemptions or reductions are really inconsistent with the provisions of the Act, but they are issued in public interest by virtue of a power conferred by the Legislature itself. The anomalous result mentioned by the Government Pleader does not therefore appeal to me as a ground for holding that the notifications ceased to be effective on July 1, 1987. In fact, the Government itself did not understand it that way, as evident from the express supersession of these notifications in S.R.O. No. 781/89. 13.. I have noted earlier that the notification S.R.O. No. 781/89 has the effect of withdrawing an exemption which was available to the oil millers up to May 18, 1989, in the guise of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a power. Equally, the Government has also no power to levy a tax with retrospective effect. The retrospective cancellation/withdrawal of an exemption or a reduction in rate tantamounts to levy of a tax, or tax at a higher rate from' a date in the past, for which the Government has no power under sub-section (3). It has therefore to be held that the Government had no power to impose the condition about the non-applicability of the explanation for the purpose of availing the reduction in rate of tax on the sales of coconut oil and oil-cake for the period from July 1, 1987 to May 17, 1989 and that the condition will take effect only on and after May 18, 1989. I shall briefly refer to a few decided cases on the point. 14.. In Sales Tax Officer v. Timber Fuel Corporation [1973] 31 STC 585, the Supreme Court was dealing with a case where the Madhya Pradesh Government had, by a notification issued on June 1, 1963, retrospectively exempted the Forest Department from the levy of tax on timber which was taxable at the first sale within the State, during the period April 1, 1959 to November 2, 1962. The consequence was that the assessees, purchasers of the timber from the Forest Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Andhra Pradesh High Court in Prakash Enterprises v. Commercial Tax Officer [1988] 70 STC 245, in which the withdrawal of an exemption granted on sales of tyres and tubes of cycles with retrospective effect was under challenge. The High Court followed the dictum in Yemmiganur Spinning Mills Limited [1976] 37 STC 314 (AP) and quashed the retrospective operation of the notification withdrawing the exemption. 16.. The Madhya Pradesh High Court had occasion to deal with an analogous situation, as in this case in Vijay Dal Mill v. State of Madhya Pradesh [1982] 51 STC 242, where the question related to the retrospective withdrawal of a reduction in the rate of tax. The Madhya Pradesh Government had issued a notification on April 1, 1966, under section 8(5) of the Central Sales Tax Act, 1956, reducing the rate of tax payable on inter-State sales of pulses to 2 per cent. A notification was subsequently issued on July 6, 1979, withdrawing the reduction in the rate of tax with effect from May 21, 1975. The retrospective withdrawal was challenged. The court stated that section 8(5) of the Central Act did not authorise the State Government to withdraw an exemption or concession retrospective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss conferment of power in that behalf. It should therefore be all the more so, to take away a concession or exemption validly granted earlier. 21.. I shall close the discussion with a reference to the recent decision of the Supreme Court in State of Madhya Pradesh v. G.S. Dall and Flour Mills [1991] 80 STC 138 where the Supreme Court observed while dealing with a notification issued by the Madhya Pradesh Government in 1987, rescinding a 1981 notification of exemption that while a notification granting exemption could be either prospective or retrospective, only prospective operation could be given to a notification rescinding an exemption granted earlier. Such a notification cannot take away an exemption conferred by an earlier notification. This dictum of the Supreme Court squarely applies to the facts of this case. 22.. The position that emanates therefore is that a delegated authority like the Government could frame a rule or issue a notification only prospectively unless a power to frame a rule or issue a notification retrospectively is conferred on it either expressly or by necessary implication. Therefore, while section 10(1) of the Act enables the Government to grant an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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