Prospective effect of tax exemption rescission: enhanced sales tax rate cannot operate retrospectively without express statutory authority.

A sales tax exemption or rate-reduction notification under the Andhra Pradesh General Sales Tax Act could not be given retrospective effect unless the statute expressly authorised it. The court reasoned that the power to alter the Schedules did not include retrospective operation, and that rescission of an exemption under the General Clauses Act took effect only from publication. Accordingly, the earlier exemption remained effective until the later notification was published, so the enhanced tax rate could operate only prospectively. The notifications stating that the change applied "with effect from August 1, 1993" were treated as invalid to that extent, and the assessee succeeded.

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Issues: Whether the State Government could validly give retrospective effect to the cancellation of the earlier exemption and the corresponding enhancement of the rate of tax on electronic goods under the Andhra Pradesh General Sales Tax Act, 1957.

Analysis: The power under section 40 of the Andhra Pradesh General Sales Tax Act, 1957 to alter the Schedules did not include any express authority to operate retrospectively. The exemption or reduction notification issued under section 9 of the Act could be rescinded by virtue of section 15 of the Andhra Pradesh General Clauses Act, 1891, but such rescission could take effect only from the date of publication and not from an earlier date. Once the earlier exemption continued to operate until publication, the modified rate under the later notification could not be enforced from an antecedent date, because the cancellation of the exemption and the commencement of the revised rate had to coincide.

Conclusion: The words "with effect from August 1, 1993" in the notifications were invalid and the enhanced rate of tax became operative only from the date of publication in the Gazette; the writ petition was therefore allowed in favour of the assessee.

Ratio Decidendi: A notification rescinding an exemption or altering the tax rate under the sales tax enactment cannot be given retrospective effect unless the statute expressly authorises it; in the absence of such power, the rescission and the revised levy operate only prospectively from publication.

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