Rescission of a sales tax notification may lapse when the original notification is later upheld and the rescission's basis disappears.

A rescinding notification issued under section 8(5) of the Central Sales Tax Act may lose effect where it was made only because earlier judicial decisions had invalidated the original exemption notification, and that original notification is later upheld as intra vires. In that situation, the surrounding circumstances and governmental intention may show that the rescission was contingent on the overturned premise, so the earlier notification continues to operate. The doctrine of eclipse was considered but was not treated as a complete explanation because the original notification had been displaced by rescission rather than merely shadowed. The result was that tax demands based on the contrary position could not be sustained.

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Issues: Whether the State Government's rescission of the notification issued under section 8(5) of the Central Sales Tax Act, 1956, rendered the earlier notification unenforceable, or whether the earlier notification revived after the Full Bench decision upholding its validity, so that the tax demands raised against the dealer could not be realised.

Analysis: The notification dated 8 December 1966 had been issued in public interest to avoid double taxation on declared goods. It was later rescinded in 1976 because earlier Division Bench decisions had held it invalid. When the Full Bench subsequently held that the 1966 notification was intra vires and enforceable, the basis for the rescinding notification disappeared. On the totality of circumstances, the rescission was treated as having been forced by the earlier adverse judgments and, once that foundation was removed, the 1976 rescinding notification lost its force. The Court also held that the doctrine of eclipse did not fully explain the result because the 1966 notification had not merely been shadowed but had been obliterated by the rescinding notification; even so, the revival of the earlier notification followed from the context and intention of the rescission. The challenge based on delay was not accepted in view of the merits of the case.

Conclusion: The earlier notification dated 8 December 1966 remained enforceable, and the demand notices founded on the contrary position could not be sustained.

Final Conclusion: The dealer succeeded in having the impugned tax demands treated as ineffective, and the petition was allowed.

Ratio Decidendi: Where a rescinding notification is issued solely because earlier judicial decisions have invalidated the original notification, and the original notification is later upheld as valid, the rescission may become ineffective and the original notification may continue to operate if the surrounding circumstances and governmental intention show that the rescission was contingent on the overturned premise.

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