1997 (10) TMI 360 - SC - VAT and Sales Tax

Supreme Court upholds withdrawal of Central Sales Tax Act exemption notification.

State of Tamil Nadu and Another Versus Sun Paper Mills and Another

The Supreme Court held that the withdrawal of the exemption notification under the Central Sales Tax Act, 1956 was valid. The Court reversed the High ... Whether or not it was in the public interest to withdraw the exemption notification? Held that:- Appeal allowed. The High Court should not have permitted or upheld the argument of non-application of mind in the absence of the relative pleading. The only plea in the written arguments, which the High Court permitted, was that public interest to withdraw the exemption notification was not disclosed and that was satisfactorily met by the disclosure in the appellants’ affidavit before the divisional Bench of the proceedings of the Board of Revenue. At this point the argument should have been closed. Thus the judgment under appeal is erroneous and must be reversed. Issues:1. Validity of withdrawal of exemption notification under Central Sales Tax Act, 1956.2. Application of Section 21 of the General Clauses Act, 1897.3. Consideration of public interest in withdrawal of exemption notification.Analysis:1. The case involved the appellants issuing a notification under section 8(5) of the Central Sales Tax Act, 1956, granting an exemption on the sales tax rate for white printing paper sold to newspaper concerns in inter-State trade. Subsequently, another notification was issued on March 20, 1967, withdrawing the exemption. The respondents challenged the reassessment notices issued based on the withdrawal of the exemption, leading to a writ petition and an appeal before the Division Bench of the High Court.2. The Division Bench of the High Court held that the power to withdraw an exemption should be exercised in a manner similar to granting the exemption. The Court considered whether the withdrawal notification complied with the legal requirements, particularly under Section 21 of the General Clauses Act, 1897. It was noted that the withdrawal notification, although lacking detail, fulfilled the basic legal requirements of publication.3. The respondents argued that the withdrawal notification did not demonstrate consideration of public interest, especially regarding the significance of newsprint. However, the Supreme Court found that this argument was raised belatedly during the appeal, and the High Court should not have entertained it without proper pleading. The Court emphasized that the appellants had provided relevant proceedings of the Board of Revenue to justify the withdrawal, satisfying the conditions for exercising the power.4. Ultimately, the Supreme Court held that the High Court's judgment was erroneous and reversed it. The appeal was allowed, setting aside the previous judgment and restoring the decision of the learned single Judge. No costs were awarded in the case. The Court concluded that the withdrawal of the exemption notification was valid and in compliance with the law, dismissing the arguments regarding public interest considerations.