CITADEL FINE PHARMACEUTICALS Vs. STATE OF TAMIL NADU

JUDGEMENT

(1.) PETITION on being called today upon hearing both sides the Tribunal ordered as follows :

(2.) THE learned counsel appearing for the petitioner Mr. K. Venkata -subramaniam raised two points in these T.Ps. and they are (1) exemptions and reduction of tax notified under Section 17(1) of the Act can be withdrawn or taken away only by another notification under Section 17(3) of the Act. But the publication of errata cannot affect the concessions enjoyed by the assessee, as such errata on notifications cannot have any statutory effect, of taking away the benefits conferred under Section 17(1) of the Tamil Nadu General Sales Tax Act. The second contention is that the concession granted under Section 17(1) of the Act cannot be cancelled by any notification with retrospective effect.

(3.) THE second limb of argument is also worthy of consideration. It is pertinent to mention that the two erratas were issued after the assessment year 1989 -90 and the assessment order was passed on December 14, 1990. But the pre -revision notice was issued under Section 16 on September 2, 1992 by the Commercial Tax Officer suggesting the tax at 8 per cent on the ground that the derivatives of penicillin manufactured by the petitioner, did not find a place in the list of drugs as those drugs have been removed by the publication of the erratas. The petitioner filed objections to this notice on August 18, 1992, but the assessing officer did not give weight to his objection but passed the assessment order on October 7, 1992. The appeal before the Appellate Assistant Commissioner also was dismissed by observing that the errata issued by the CT&RE has taken away the concession granted in the original notification. Rather the view of the assessing authorities was that the errata published on July 25, 1990 and May 29, 1991 have the retrospective effect from May 9, 1988 and therefore the petitioner is liable to pay tax at 8 per cent for the assessment year 1989 -90 also. The learned counsel Mr. Venkatasubramaniam contended that Section 17(1) no doubt empowers the Government to issue notification giving either prospective or retrospective effect, that Section 17(1) refers to such notifications only for exemption or reduction in rate in respect of tax and therefore the retrospective effect can be given only to the concession given to the assessee, but similar power is not found in Section 17(3) to cancel such concessions with retrospective effect and therefore any cancellation of vested right will have only the prospective effect. In support of this argument the learned counsel cited a series of decisions. In M.M. Nagalingam Nadar Sons v. State of Kerala [1993] 91 STC 61, the Kerala High Court has held that when the Government acting under the power conferred on it, may issue notification granting exemptions, but in the absence of such a specified conferment of power, cannot issue notifications affecting the vested right or imposing an obligation to act retrospectively. The High Court of Rajasthan in Union of India v. State of Rajasthan [1993] 91 STC 284, has held that the State Government can issue notification granting exemption retrospectively with any condition it likes, but when the said section does not contemplate withdrawal of exemption retrospectively by putting any condition, the withdrawal of exemption with retrospective effect is illegal. Section 17(1) specifically mentions that an exemption or deduction in respect of tax can be notified by the Government with retrospective or prospective effect. But Section 17(3) of the Tamil Nadu General Sales Tax Act merely permits any notification cancelling or varying, the notification issued under Section 17(1). This sub -clause does not empower the State to give retrospective effect to take away the vested right. Therefore errata notified can have only the prospective effect even if it is taken that it has the effect of cancellation. In G. Packirisamy & Co. v. State of Tamil Nadu [1995] 99 STC 21, the Madras High Court has held that the languages employed under Section 17(3) of the Tamil Nadu General Sales Tax Act makes it clear that power is not given in its fold to cancel or vary any notification with retrospective effect and therefore this power under Section 17(3) can be exercised only prospectively. This Tribunal also considered this aspect in a recent decision in T.P. No. 413 of 1997, Chemi Boilers v. State of Tamil Nadu, dated November 13, 1998 (reported in [1999] 114 STC 381) and has taken the view that the executive authority cannot issue a notification retrospectively affecting the concession enjoyed by the assessee unless the power is specifically conferred on the authority.