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TMI Blog1998 (3) TMI 668X X X X Extracts X X X X X X X X Extracts X X X X ..... chased before March 17, 1986. 4.. (i) The exemption so claimed was based upon the Notification No. II(1)/ CTRE/50/82, (G.O. P. No. 311), dated 13th March, 1982 (published in the Tamil Nadu Government Gazette dated March 24, 1982, Part II, Section 1 at page 24). The said notification reads as under: "In exercise of the powers conferred by sub-section (5) of section 8 of the Central Sales Tax Act, 1956 (Central Act 74 of 1956), the Governor of Tamil Nadu having been satisfied that it is necessary so to do in the public interest, hereby makes an exemption in respect of tax payable under the said Act in the course of inter-State trade or commerce in respect of the end-products coming under item 4 of the Second Schedule to the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) manufactured by the steel re-rolling mills in Tamil Nadu subject to the conditions that the raw materials specified in item 4 of the said Schedule to the said Act out of which the end-products are manufactured have suffered tax under the Tamil Nadu General Sales Tax Act, 1959 (Tamil Nadu Act 1 of 1959) and that the dealers do not collect tax either directly or indirectly or make provision in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14th day of December, 1989. 9. The assessee-dealers made a further appeal in C.T.A. No. 219 of 1990 before the Tamil Nadu Sales Tax Appellate Tribunal, Coimbatore-18 (for short, "Tribunal") and the Tribunal, in turn, allowed the appeal in toto, in the sense of setting aside both the assessments as well as penalty levied, as had been done by the assessing officer and laterly confirmed by AAAC, giving rise to the present action-Tax Case (Revision) No. 164 of 1994, by the Revenue. 10. From the pith and submissions of Mr. K. Ravi Raja Pandian, learned Special Government Pleader (Taxes) representing the Revenue and Mr. C. Natarajan, learned Senior Counsel representing the assessee-dealers, the point that crops up for consideration in this action is as toWhether the order of the Tribunal, on the facts and circumstances of the case, is sustainable in law? 11. The earlier exemption notification had admittedly been issued, in exercise of the powers conferred by sub-section (5) of section 8 of CSTA. There is no need for us to reproduce the said notification here, in view of the virtual reproduction of the same in the process of summation of the facts of the case. The said notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, if at all, would be prospective on and from 25th April, 1986, the date on which the same had been published. He would alternatively state that under the earlier exemption notification, a right of exemption had accrued to the assessee-dealers in respect of end-products they had manufactured, inasmuch as all vestitive facts, as contemplated by the said notification had been completed, culminating in the right of exemption. 15.. We shall now enter into the arena of discussion on the tenability or otherwise of the rival submissions of either counsel. 16.. Sub-section (5) of section 8 of the CSTA, on which the earlier notification had been issued, runs as under: "8. Rates of tax on sales in the course of inter-State trade or commerce.- ...................... (5) Notwithstanding anything contained in this section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the official Gazette, and subject to such conditions as may be specified therein, direct,- (a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amend, vary or rescind any notifications, orders, rules or bye-laws so issued." 19.. It is thus crystal clear that though the power to rescind the earlier exemption notification is not traceable to sub-section (5) of section 8 of the CSTA, yet the power inheres in favour of the State Government, pursuant to the salient provisions adumbrated under section 21 of GCA. 20.. The moot question that arises for consideration is as to whether the State Government is having the necessary and requisite power to rescind the earlier exemption notification with retrospectivity. Axiomatic a proposition of law it is that a competent Legislature may make a law, even on matters relating to taxation, with retrospective effect. The question, however, is whether the Government-a delegate-is having the requisite and necessary power to give retrospectivity in a cancellation notification, as had been done in the instant case, in the absence of such a power having been engrafted in its favour under subsection (5) of section 8 of CSTA. 21.. It is not as if such a question did never arise for consideration, before superior courts of jurisdiction and the plain fact is that such an issue came to be ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited before us. We are of the opinion that in the absence of express power granted by the Legislature to act retrospectively it is not open to a subordinate legislative body like the State Government to issue a notification either taking away vested rights or imposing obligations with retrospective effect." We are in complete agreement with the view expressed by Their Lordships of the Karnataka High Court. 22.. In this context, we may also usefully refer to the decision of the Supreme Court in the case of Cannanore Spinning and Weaving Mills Ltd. v. Collector of Customs and Central Excise AIR 1970 SC 1950. What Their Lordships of the Supreme Court, namely, J.C. Shah and K.S. Hegde, JJ., said in that decision in paragraph 6 (at page 1953) is relevant and it reads as under: "..............The rule-making authority had not been vested with the power under the Central Excises and Salt Act to make rules with retrospective effect. Therefore the retrospective effect purported to be given under exhibit P12 was beyond the power of the rule-making authority." 23.. In view of the ratio or dictum laid down by the superior courts of jurisdiction, as referred to above, it goes without sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee-dealers. Such being the case, we are of the view that the assessee-dealers were not entitled to exemption in respect of the end-products remaining in their possession as stock beyond the targeted date, 25th April, 1986. 27.. We may now advert to the order of the Tribunal relatable to the deletion of the penalty levied by the assessing officer and laterly confirmed by AAAC. It is not as if the turnover had been suppressed by the assessee-dealers. The turnover had actually been reflected in the accounts. The assessee-dealers bona fide believed that the said turnover was exempt from tax. In such state of affairs, it cannot at all be stated that the assessee-dealers had refracted or violated section 10(2) of TNGSTA read with section 9(2-A) of CSTA. We are therefore of the view that the order of the Tribunal in deleting the penalty cannot at all be stated to be not sustainable in law. 28.. The resultant product of the discussion as above, leads to the following conclusions: (i) The retrospectivity given by the subsequent inter-State sale-exemptioncancellation notification is not sustainable in law; (ii) The end-products of the assessee-dealers sold up to 25th April, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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