Prospective rescission of exemption notification required; retrospective cancellation of sales tax exemption could not stand.

Under section 12(2) of the M.P. General Sales Tax Act, 1958, a rescinding notification may withdraw an exemption, but the statute requires the rescission to operate prospectively only. The HC held that fixing an earlier cancellation date for an exemption notification was inconsistent with that mandate and could not be sustained. The exemption, being a concession, could validly be withdrawn from the date of the rescinding notification itself, but not retrospectively. The retrospective cancellation from 1 October 1978 was therefore invalid, while the rescission was upheld only from 7 January 1981.

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Issues: Whether a notification rescinding an earlier exemption notification under section 12(2) of the M.P. General Sales Tax Act, 1958 could validly operate retrospectively so as to cancel the exemption from an earlier date.

Analysis: The statutory language of section 12(2) permits rescission of a notification, but expressly provides that a notification rescinding an earlier notification shall have prospective effect. The exemption notification issued in 1967 could therefore be withdrawn, but not by fixing an anterior date for cancellation. The retrospective cancellation from 1st October, 1978 was inconsistent with the governing provision and could not be sustained. The cancellation would, however, operate validly from the date of the rescinding notification itself, because the grant of exemption is a concession that may be withdrawn prospectively by the authority granting it.

Conclusion: The retrospective cancellation was invalid and was quashed, while the rescission was upheld only prospectively from 7th January, 1981.

Ratio Decidendi: A rescinding notification under section 12(2) of the M.P. General Sales Tax Act, 1958 cannot operate retrospectively where the statute mandates prospective effect.

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