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of <h1>Retrospective tax exemption withdrawal deemed invalid, petitioner's rights protected.</h1> The Tribunal held that the retrospective withdrawal of the tax exemption by G.O. P. No. 645 dated June 30, 1986, was invalid as it affected the ... - Issues Involved:1. Validity of retrospective withdrawal of tax exemption.2. Application of the doctrine of promissory estoppel.3. Interpretation of Section 17 of the Tamil Nadu General Sales Tax Act.Detailed Analysis:1. Validity of Retrospective Withdrawal of Tax Exemption:The petitioner, a firm manufacturing boilers, was initially exempted from sales tax under a notification dated May 26, 1984, which included high-efficiency boilers. This exemption was later withdrawn retrospectively from April 1, 1984, by G.O. P. No. 645 dated June 30, 1986. The petitioner challenged this retrospective withdrawal, arguing it was invalid. The Tribunal examined Section 17 of the Tamil Nadu General Sales Tax Act, which allows the government to issue exemptions and reductions of tax prospectively or retrospectively. However, the Tribunal emphasized that while Section 17(3) permits cancellation or variation of notifications, it must not be exercised arbitrarily or unreasonably, depriving vested rights.2. Application of the Doctrine of Promissory Estoppel:The Tribunal considered the principle of promissory estoppel, which prevents the government from withdrawing a concession if it would be unfair to the party relying on it. The Tribunal cited various judgments, including the Supreme Court's decision in Shri Bakul Oil Industries v. State of Gujarat, which held that the government could withdraw exemptions if it did not violate the rule of promissory estoppel. The Tribunal concluded that the retrospective withdrawal of the exemption in this case was arbitrary and unreasonable, as it affected the petitioner's vested rights and was done without any valid reason.3. Interpretation of Section 17 of the Tamil Nadu General Sales Tax Act:The Tribunal analyzed Section 17(1) and 17(3) of the Tamil Nadu General Sales Tax Act. Section 17(1) allows the government to issue exemptions prospectively or retrospectively, and Section 17(3) permits cancellation or variation of such notifications. The Tribunal noted that while these sections provide the government with broad powers, these powers must be exercised fairly and not arbitrarily. The Tribunal referenced the Madras High Court's decision in G. Packirisamy & Co. v. State of Tamil Nadu, which held that the power to cancel or vary notifications under Section 17(3) should not be exercised retrospectively unless explicitly stated.Conclusion:The Tribunal concluded that the retrospective withdrawal of the tax exemption by G.O. P. No. 645 dated June 30, 1986, was invalid. The withdrawal was deemed arbitrary and unreasonable, as it affected the petitioner's vested rights without any valid reason. The Tribunal held that the government could not give retrospective effect to the withdrawal and directed the respondent to withdraw any tax demands based on the retrospective operation of the notification. The writ petition was allowed, and no costs were ordered.
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