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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether reassessment under Section 21(2) of the U.P. Trade Tax Act, 1948 could be sustained on the basis of the Government Order dated 30.09.2004, and whether that order operated retrospectively so as to deny exemption on the sale of rice for the assessment years 2002-03 and 2003-04.
Analysis: The exemption granted to units of the Khadi Gram Udyog Board was traced to the earlier Government Orders dated 31.01.1985 and 27.02.1997, which covered processing and marketing of cereals. The later Government Order dated 30.09.2004 specifically excluded rice and by-products manufactured from paddy. The exclusion of a commodity from the notification indicated that the commodity had previously been within the ambit of the exemption, and such an exclusion could not be treated as a mere clarification. A notification introducing an exclusion was therefore held to be prospective in operation and not retrospective.
Conclusion: The reassessment proceedings based on the 30.09.2004 notification were illegal for the assessment years in question, and the exemption granted earlier could not be withdrawn retrospectively. The writ petition was allowed and the impugned reassessment order and notice were quashed.
Ratio Decidendi: An exemption notification that for the first time excludes a commodity operates prospectively, and cannot be used retrospectively to reopen completed assessments for earlier years.
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