Retrospective withdrawal of tax exemption is invalid absent express authority; exemption conditions may operate only prospectively.

Section 10(3) of the Kerala General Sales Tax Act, 1963 was construed as conferring power to cancel or vary an exemption notification only prospectively, because it contains no express or implied authority for retrospective operation. A delegate cannot retrospectively withdraw a vested tax concession or increase tax liability unless the statute clearly permits it. On that basis, the condition in S.R.O. No. 781/89, insofar as it nullified the earlier rebate for the period before 18 May 1989, was outside delegated power and invalid to that extent. The concession could therefore operate against affected sales only from 18 May 1989 onwards.

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Issues: Whether the Government could, under section 10(3) of the Kerala General Sales Tax Act, 1963, retrospectively withdraw the earlier tax reduction and make the condition that the explanation to entries 50 and 51 of the First Schedule shall not apply to such sales operate from 1 July 1987.

Analysis: Section 10(1) authorises the Government to grant an exemption or reduction in rate prospectively or retrospectively, but section 10(3), which empowers cancellation or variation of such a notification, contains no express or implied authority to operate retrospectively. A delegate cannot impose a tax, enhance tax liability, or take away a vested exemption with retrospective effect unless such power is specifically conferred. The impugned condition in S.R.O. No. 781/89, to the extent it nullified the earlier rebate for the period from 1 July 1987 to 17 May 1989, therefore exceeded the delegated power.

Conclusion: The retrospective operation of the impugned condition was invalid, and it could take effect only from 18 May 1989.

Final Conclusion: The petitioners were entitled to have the disputed condition applied only prospectively, and any assessments for the period prior to 18 May 1989 were required to be adjusted accordingly.

Ratio Decidendi: In the absence of express statutory authority, a delegated power to cancel or vary an exemption notification can be exercised only prospectively and cannot be used to retrospectively withdraw a concession or impose enhanced tax liability.

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