Retrospective withdrawal of entry tax exemption is invalid where a continuing exemption had already governed the earlier period.

A retrospective notification cannot withdraw or curtail a continuing entry tax exemption so as to impose past liability on a dealer who arranged affairs on the basis of the exemption. The text explains that the exemption for crude edible oil/raw material used in manufacture of vegetable and edible oil had been extended continuously, and although the State could grant exemptions prospectively or retrospectively under the Entry Tax Act, a later notification could not validly restrict the benefit to an earlier cut-off date and thereby increase tax burden for an already exempt period. The exemption remained available up to 31 March 2007.

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Issues: Whether the State could restrict, by a subsequent notification, the exemption from entry tax already granted to crude edible oil with retrospective effect so as to make the petitioner liable for tax for the earlier period.

Analysis: The exemption notification granted relief on raw material used in the manufacture of vegetable and edible oil, and that benefit had been continued by subsequent extension. Section 10 of the Entry Tax Act empowered the State Government to grant exemption prospectively or retrospectively, but the Court held that where continuous exemption had been granted and the dealer had arranged its affairs on that basis, the exemption could not be withdrawn or curtailed retrospectively so as to increase the tax burden for a past period. The later notification restricting the exemption to an earlier cut-off date effectively imposed liability for a period during which the exemption was in force.

Conclusion: The retrospective restriction of the exemption was invalid and unsustainable in law, and the petitioner remained entitled to the exemption up to 31 March 2007.

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