HIGH COURT OF CHATTISGARH AT BILASPUR
STR NO 205 of 97
Commissioner of Sales Tax MP now Chhattisgarh
...Petitioners
Versus
Ms Betul Oil & Flours Pvt Ltd Ganjpara Raipur
...Respondents
! Miss Deepali Pandey Panel Lawyer for the State
^ Mr NK Vyas counsel for the non applicant assessee
CORAM : HONBLE SHRI IM QUDDUSI & HONBLE SHRI NK AGARWAL JJ
Dated : 4//8/2010
: Judgement
ORAL ORDER
(Passed on 4th August, 2010)
I.M. Quddusi, J;
1. Heard.
2. The Board has referred the following questions of law
under Section 44 of the Chhattisgarh General Sales Tax Act,
1958 (in short “the State Act”) for our opinion:
“1. Whether under the facts &
circumstances of the case, the Tribunal was
justified in deciding that the holder of
eligibility certificate is totally exempted
on all the goods, whereas the eligibility
certificate is issued with reference to
specified goods for specific quantity.
2.Whether under the facts & circumstances of
the case, the Tribunal was justified to
hold that under Notification No.422-6596-V.-
ST dated 9.2.1977 the holder of eligibility
certificate is exempted in respect of goods
other than raw material.
3.Whether under the facts & circumstances of
the case and in view of the restrictions &
conditions specified in Col. No.3 of
Notification No. 422-6596-V.-ST dated
9.2.77 the Tribunal was justified in
holding that the dealer is eligible for
exemption of goods which are not specified
as raw material in his registration
certificate issued under M.P.G.S.T. Act.
4. Whether under the facts & circumstances of
the case the Tribunal was justified in
holding that exemption limited in
eligibility certificate by way of
specification of goods and its quantity is
not in confirmation with the law.”
3. Brief facts of the cases are that the non-applicant is
a new industrial unit eligible for Eligibility Certificate
(in short “EC”) for exemption from the State Tax, Entry Tax
and the Central Tax. The non-applicant was granted EC on
3.7.1985 under the State Act valid from 21.8.1982 to
20.7.1989. In the EC, the packing materials were not
specified. On the application made by the non-applicant,
packing materials like Bardana, drums and tins were
specified in the EC. The non-applicant manufactured oil and
oil-cakes, packed them either in the drums, tins or gunny
bags and sold them either within the State or in the course
of inter-State trade or commerce. The original assessment
orders were completed during the validity of the EC. The
last of such assessment order was passed on 15.5.1989 in
respect of the year 1986-87. After the expiry of EC, it was
amended on 25.9.1989 giving the amendment retrospective
effect. As a result of retrospective amendment, the original
assessments were reopened under Section 19 (1) of the State
Act and the sales tax authorities held that in view of the
amended EC, packing materials were never specified in the EC
and were liable to tax. The sales tax authorities also held
that the declarations issued by the non-applicant on the
strength of the EC were violative of the provisions of
Section 14-A of the State Act and accordingly, they were
reassessed and penalties were also imposed.
4. The non-applicant filed appeals against the appellate
orders of the Appellate Deputy Commissioner before the
Tribunal and the Tribunal set aside these appellate orders
and held that the EC could not be amended retrospectively
and reopening of the cases under Section 19(1) of the State
Act after amending the EC retrospectively after the expiry,
was illegal. The non-applicant belonged to the class of
dealers exempted from payment of tax under the State Act,
Central Act and under the Entry Tax Act and cannot be
assessed to tax under any of the three Acts during the
validity of the EC. The class of dealers, being exempted
from payment of tax, cannot be restricted to certain class
of goods. However, the instant reference has been made by
the Board on the application of the revenue.
5. Similar Sales Tax References on the similar questions
of law have been disposed of by the Division Bench of this
Court vide order dated 30.6.2010, leading case of which was
STR No.194/97. The Division Bench has held that “the
Notification has been withdrawn in the instant case and re-
assessment was done only because the Industries Department
vide Corrigendum dated 25.9.1989 retrospectively deleted
packing material from the EC. In our view, re-assessment on
the basis of retrospective amendment of the EC issued by the
Industries Commissioner after expiry of the period of
eligibility, is impermissible and the Tribunal was justified
in holding that exemption given to a dealer under EC under
the statutory notification, cannot be withdrawn by amending
the EC retrospectively after its expiry”.
6. The decision of the Division Bench is based on the
judgment of the Hon’ble Apex Court in the matter of State of
UP & others Vs. Deepak Fertilizers & Petrochemical
Corporation Ltd. reported in 2007 AIR SCW 3646 in which the
assessee was entitled for exemption from taxes on the sale
of potassium phosphatic fertilizers from 1.11.1994 to
31.3.1995 as per notification issued by the State of U.P.
dated 2.11.1994, but the same was withdrawn by the
notification dated 1.4.1995. The Hon’ble Apex Court,
considering Section 25 of the UP Trade Tax Act pari materia
to Section 12 of the State Act, held that the above
notification amounted to increasing the liability to tax of
the dealer with retrospective effect and the same cannot be
issued in view of the proviso to Section 25 of the Act and
denying exemption retrospectively is illegal and invalid.
7. In view of the above facts and circumstances, in our
opinion when the assessee was entitled for exemption from
payment of tax under the State Act for a period of seven
years as the assessee was the first industry established in
the specified area in the notification, the withdrawal of
notification with retrospective effect subsequently was
illegal and invalid and hence the tribunal was justified in
allowing the appeal of the non-applicant-assessee.
8. On the basis of above discussions, we answer the
questions of law referred to us in affirmative i.e. in
favour of the assessee and against the revenue.
9. The reference is answered and disposed of accordingly.
JUDGE JUDGE
