Madhya Pradesh High Court
M/S Maihar Cement vs The State Of Madhya Pradesh on 7 February, 2012
1
WP No. 11427/08, W. P. No.11428/08 and
W. P. No.18567/10
7.2.2012.
Under section 8(5) section 8(5) of the Central Sales Tax Act 1956, an exemption in respect of inter-state sales was granted by the Government by a notification dated 19.2.1991.
The exemption was in respect of certain industries and was available subject to certain conditions eg. holding of eligibility certificate.
The production of form-C was not one of the conditions for availing that exemption.
The petitioner before us was granted that exemption and the eligibility certificate requisite for the same and started availing the exemption.
In the year 2002 by Section 152 of the Finance Act No. 20 of 2002, Section 8(5) of the Central Sales Act was amended and the exemption was made subject to compliance of the conditions given in Section 8(4). Production of Form-C for certain type of inter-state sales was one of the conditions of Section 8(4).
The petitioner continued to avail of the exemption after 2002, apparently without production of the form-C. By the impugned order dated 10.6.2008 it has been directed that the cases where exemption has been claimed without furnishing form-C after the amendment of 2002 should be scrutinized and if necessary, reopened U/s 28(1). Being aggrieved by that order of scrutiny and 2 reopening if necessary the petitioner has filed this writ petition.
The contention of the petitioner is that once exemption was granted to the petitioner, it became a vested right and could not have been taken away; and therefore the petitioner was entitled to continue to avail the exemption even after the amendment of 2002 without furnishing Form-C. Reliance has been placed upon paragraph no. 100 of the decision of the Supreme Court in the case Southern Petrochemical Industries Co. Ltd. V. Electricity Inspector & Etio and others reported in (2007) 5 SCC 447, and also upon paragraph 18 of the decision of the Supreme Court in the case of MRF Limited V. Assistant Commissioner(Assessment) Sales Tax and Ors. reported in (2006) 8 SCC 702. These two paragraphs of the two law reports are being quoted below for ready reference :-
"100. We are also unable to agree with Mrs. Andhyarujina that exemption from tax is a mere concession defeasible by the Government and does not confer any accrued right to the recipient. Right of exemption with a valid notification issued gives rise to an accrued right. It is a vested right. Such right had been granted to them permanently. "Permanence" would mean unless altered by statute. Thus, when a right is accrued or vested, the same can be taken away only by reason of a statute and not otherwise. Thus, a notification which was duly issued would continue to govern unless the same is repealed."3
"18. According to him, so far as SRO No.1092/99 is concerned, it did not confer any new right. If only preserved the existing right. By the said order what the government did was to change the industrial policy and do away with exemption which were otherwise being given to new/existing industrial units, which were taken away w.e.f. 1.1.2000. At the same time, the units which had been set up pursuant to the incentives granted by the earlier notification had to be protected and accordingly, it was provided that such units will continue to enjoy the incentives for their full term."
(emphasis ours) The principle of promissory estoppel to the effect that exemption once granted cannot be revoked if the person availing of the exemption has altered his legal position relying upon promise to that exemption is confined to revocation by executive action.
The principle being merely of promissory estoppel will be subject to the law that no estoppel can operate against the legislature or against statute.
In fact in paragraph no. 100 of the decision in 2007 (5) SCC 447 it has been expressly stated by the Supreme Court that "when a right is accrued or vested, the same can be taken away only by reason of a statute and not otherwise."
In the case of MRF (Supra) it was a case of revocation by change of industrial policy and not by a statute, therefore, both the decisions do not apply.
4There 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.
Petitioner then relied upon clause 6 of the General Clauses Act 1897. That section enumerates effect of repeal of a legislation, in respect of actions taken under the repealed enactment. Obviously it has no application to this case in view of what has already been discussed above. The amendment of 2002 has not repealed anything, it has merely prescribed additional requirement in respect of transactions done after that amendment. It is not altering the situation in respect of the transactions done under the un-amended section. The reliance placed upon paragraph 23 of the decision of the Supreme Court in the case of Parle Biscuits (P) Ltd V. State of Bihar and others (2005) 9 SCC 669 for the proposition that generally there is 5 no real distinction between repeal and an amendment, is therefore of no relevance.
It was then pointed out by the learned counsel for the petitioners that in the case of Yamaha Motor Escorts Ltd. Vs. State of U.P. reported in (2010) 17 STJ 741 (All) a Division Bench of the Allahabad High Court has held contrary to what we have held above. After examining the said decision we are unable to agree with the learned counsel's understanding of the said decision of the Allahabad High Court. In fact on the question of applicability of the new condition to the post-2002 amendment transactions was conceded in favour of the State. The only question which survived and was decided by the Allahabad High Court was about whether the monetory limit given under the original exemption survived, and if so whether the tax liability under the enhanced rate (occasioned due to non-production of form-C) was liable to be set off against that limit. That question does not arise at this stage before us.
No other contention has been pressed. In view of what has been stated above, we do not find any merit in these writ petitions. All the three writ petitions are accordingly dismissed. No costs.
(Sushil Harkauli) (T.K. Kaushal) Acting Chief Justice Judge