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TMI Blog2006 (7) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... t and production therein blending of tea was included within the definition of manufacture in section 2(17) of the 1994 Act. As blending of tea was regarded as manufacture under the 1994 Act, company's small-scale unit became entitled to tax holiday for the prescribed period as it was manufacturing blended tea in prescribed area as provided in section 39 of the 1994 Act. On July 29, 1999 the company was granted a certificate of eligibility for seven years from the date of first sale of the manufactured product, i.e., May 18, 1999. On the basis of the said eligibility certificate the company was exempted from payment of tax on sale of goods manufactured in its industrial unit to the extent permitted under section 39 and its different sub-sections. Eligibility certificate was valid up to May 17, 2006. Definition of manufacture in section 2(17) of the 1994 Act was amended by West Bengal Finance Act, 2001 and the words includes blending tea were omitted with effect from August 1, 2001. Thus blending tea ceased to be a manufacturing process from August 1, 2001. The commercial tax authorities took the stand that after said amendment company was not engaged in any manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [2005] 182 ELT 452 and such judgment is binding on this Tribunal. He, however, seeks to keep the said issue alive so that it can be argued before the Division Bench of the Calcutta High Court or in the Supreme Court, if necessary. Mr. Bajoria has mentioned that several other High Courts have treated tea blending as manufacture . Mr. Bajoria has concentrated his argument on the first issue. According to him once eligibility certificate was issued conferring on the petitioner right to get exemption from tax for a specified period in accordance with law, such right is in the nature of vested right which cannot be taken away even by amendment of law before expiry of the full period for which such right has been granted. Mr. Bajoria has relied upon the judgment of this Tribunal in Pacific Health Care Pvt. Ltd. v. State of West Bengal reported in [2001] 123 STC 305, the decision of the Calcutta High Court in Prasad Forms Pvt. Ltd. v. Assistant Commissioner, Commercial Special Cell reported in [2005] 140 STC 11, an unreported decision of the Division Bench of the Calcutta High Court in State of West Bengal v. N.S. Text Prints Pvt. Ltd. (APOT No. 260 of 2005) delivered on Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Division Bench of the Calcutta High Court in State of West Bengal v. N.S. Text Prints Pvt. Ltd. (APOT 260 of 2005)See [2009] 20 VST 952 (Cal) [App]. decided on September 23, 2005 upheld the judgment of the learned single judge. The facts of the said case are not clearly mentioned in the aforesaid judgment of the Division Bench but the facts can be gathered from the judgment of the learned single judge, a copy of which has been placed before us. In the said case the petitioner was granted an eligibility certificate to get exemption from payment of sales tax on all sales made in course of inter-State trade or commerce for a period of five years, i.e., till July 1, 2004. By a notification dated August 2, 2002 the earlier notification dated April 28, 1995 under which the petitioner got the benefit of exemption, was amended restricting the benefit of exemption only to sales to a registered dealer or to the Government. In other words, the benefit of exemption on sales made to unregistered dealers in course of inter-State trade or commerce was taken away by the said notification dated August 2, 2002. Relying on the judgments of the Supreme Court in Pournami Oil Mills v. State of Kerala ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e years under rule 99 of the West Bengal Sales Tax Rules, 1995 (in short, the 1995 Rules ). While such application for exemption was pending rule 99 was amended and period of exemption was increased to five years for eligible industries located in CMP Area. Health Guard Laboratories claimed that it was entitled to get exemption for five years as its application was disposed of after amendment of rule 99. Such claim having been refused Health Guard Laboratories approached this Tribunal. The Tribunal dismissed the application. Being aggrieved, Health Guard Laboratories moved the High Court but could not succeed. In the said factual context the High Court made the above quoted observations. The observation that once that right had vested it could neither be taken away nor affected by any subsequent amendment of the legislation appears to be a passing generalised statement without considering supremacy of sovereign legislative power. Such passing generalised observation does not amount to a considered binding exposition of law particularly when all aspects of the question were neither placed before nor considered by the court. Mr. Bajoria has also relied upon the judgment of a si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enjoy the exemption or concession for the said specific period and such vested right could not be taken away by subsequent amendment of the rule. We have carefully read the judgment. Firstly we are unable to agree that Pacific Health Care's case [2001] 123 STC 305 (WBTT) was a case of retrospective operation. The new clause therein had prospective operation affecting the continuing rights with effect from the date of notification. Benefit already enjoyed was not taken away by giving retrospective effect. It was a case of taking away an existing continuing right on the basis of the amended rule from the date amendment came into effect. We also like to point out that the judgments of the Supreme Court relied on or referred to in the judgment of Pacific Health Care [2001] 123 STC 305 (WBTT) were not decided on the principle of vested right but all those cases were decided upon application of the principle of promissory estoppel. In Civil Asbestos v. State of Gujarat [1995] 96 STC 154 a Division Bench of the Gujarat High Court has relied upon Pournami Oil Mills [1987] 65 STC 1 (SC) and has made a similar observation that vested right cannot be taken away. It appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to enact laws with retrospective effect. In Pournami Oil Mills [1987] 65 STC 1, however, the Supreme Court applied the principles of promissory estoppel and held that the subsequent notification restricting the scope of tax exemption would not be applicable to industries set up in response to the earlier notification granting a wider exemption and those industries would continue to avail of the exemption for the full period mentioned in the first notification. Pournami Oil Mills case [1987] 65 STC 1 (SC) was decided on the basis of the principles of promissory estoppel and was not based upon the concept of vested legal right. It should be borne in mind that in Pournami Oil Mills [1987] 65 STC 1 (SC) the benefit was both given and withdrawn by administrative notifications and the power of the Legislature to withdraw existing rights by legislative amendment was not in question. Question of retrospective withdrawal of exemption came up for consideration of the Supreme Court in State of Punjab v. Nestle India Ltd. reported in [2004] 136 STC 35 (SC); [2004] 6 SCC 465. In the said case the Supreme Court applied the principles of promissory estoppel and upheld the judgment of the Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olicy was necessary in the 'public interest'. The courts, do not interfere with the fiscal policy where the Government acts in 'public interest' and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification under section 25(1) of the Act. It needs no emphasis that the power of exemption under section 25(1) of the Act has been granted to the Government by the Legislature with a view to enabling it to regulate, control and promote the industries and industrial productions in the country. Where the Government on the basis of the material available before it, bona fide, is satisfied that the 'public interest' would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should be allowed a free hand to do so. We are unable to agree with the learned counsel for the appellants that Notification No. 66 of 1979 could not be withdrawn before March 31, 1981. First, because the exemption notif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew industry can legitimately raise a grievance that the exemption could not be withdrawn, except by means of legislation, having regard to the fact that promissory estoppel cannot be claimed against a statute... In State of Rajasthan v. Mahaveer Oil Industries [1999] 115 STC 29 (SC); AIR 1999 SC 2302 the Supreme Court again reiterated its view that even when a party has acted on the promise, the benefit can be withdrawn or the scheme can be modified if any supervening public interest so requires. In Mohd. Rasid Ahamad v. State of U.P. reported in AIR 1979 SC 592 the Supreme Court held: ...It is obviously competent for the Legislature, in its wisdom, to make the provisions of an Act of Parliament retrospective... In the said case of Mohd. Rasid Ahamad AIR 1979 SC 592 there was a conflict between earlier notification fixing March 31, 1967 as fictional date of absorption of certain employees and a subsequent notification shifting the date of absorption to a new fictional date, August 31, 1967. After the earlier fictional date of absorption and before the notification fixing a new fictional date appellants' services were terminated. The appellants contended that they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to the right of the Legislature to withdraw such concession by appropriate statutory amendments. Thus such exemptions cannot amount to an irrevocable vested right since exemptions are liable to be withdrawn or modified at any point of time. Meaning and legal implication of vested right are well-known. It is a kind of full and completed right without any reservation or qualification. This concept of unalterable and irrevocable vested right is usually available in private sphere and also against administrative actions of the Executive of the State. But such concept/doctrine of unalterable or untouchable vested right is not available against sovereign legislative actions so long as such legislations do not offend any constitutional right or safeguard. In fact, no right derived from any statutory provision can be said to be vested right in the strict sense of the term inasmuch as it is always open to the Legislature to amend or delete or repeal an existing law having the effect of taking away or affecting a statutory right or privilege. No statutory right can be said to be permanent and it can be modified, withdrawn or rescinded by appropriate enactment. A legal right derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore concession is withdrawn . The Supreme Court in Bannari Amman Sugars Ltd. v. Commercial Tax Officer reported in [2005] 139 STC 86 has categorically stated (page 94): No vested right as to tax holding is acquired by a person who is granted concession. If any concession has been given it can be withdrawn at any time and no time-limit should be insisted upon before it was withdrawn... Upon consideration of various decisions of the Supreme Court this Tribunal in Alaxendra Jute Mills Pvt. Ltd. v. State of West Bengal [2009] 20 VST 910 (WBTT); [2005] 45 STA 59 declined to apply doctrine of vested right to withdrawal of exemption before expiry of the full period in public interest. We have noticed that in some of the decisions expression vested right has been used and some observations apparently lend support to applicability of the doctrine of vested interest in cases involving administrative decision or subordinate legislation. It appears to us that even in those cases the expression vested right has been used in a general way to mean existing right only. In the decisions relied upon by the petitioner the expression vested right has been used in a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific overriding public interest but still the amendment of section 2(17) of the Act of 1994 does not leave any scope of making any exception and treating tea blending as manufacture unless the said amendment is struck down on the ground of violation of any constitutional provision. When Legislature passes any Act presumption is that they have acted in public interest. Legislature in its wisdom thought that blending of tea which is not a manufacturing activity in reality, should no longer be artificially treated as manufacture on the basis of the inclusive definition. The constitutionality of the amendment has not been argued before us and Mr. Bajoria, learned counsel has reserved the petitioners' right to question the vires of the disputed amendment if his submission on inviolable vested right is not accepted. While appreciating the learned arguments placed before us by Mr. Bajoria, learned Senior Advocate and the learned State Representatives we are unable to accept the submission that inspite of amendment of the definition of manufacture the petitioners are entitled to continue to enjoy the benefit of tax-holiday for the entire period for which eligibility certifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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