TaxTMI 
TaxTMI 
2006 (7) TMI 642
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....rst sale of goods from the company's unit was made on May 18, 1999. At the time of setting up of the industrial unit and production therein blending of tea was included within the definition of "manufacture" in section 2(17) of the 1994 Act. As blending of tea was regarded as manufacture under the 1994 Act, company's small-scale unit became entitled to tax holiday for the prescribed period as it was manufacturing blended tea in prescribed area as provided in section 39 of the 1994 Act. On July 29, 1999 the company was granted a certificate of eligibility for seven years from the date of first sale of the manufactured product, i.e., May 18, 1999. On the basis of the said eligibility certificate the company was exempted from payment of tax on sale of goods manufactured in its industrial unit to the extent permitted under section 39 and its different sub-sections. Eligibility certificate was valid up to May 17, 2006. Definition of "manufacture" in section 2(17) of the 1994 Act was amended by West Bengal Finance Act, 2001 and the words "includes blending tea" were omitted with effect from August 1, 2001. Thus "blending tea" ceased to be ....
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....tly held that blending of tea is not manufacturing vide Brook Bond India Ltd. v. Commissioner of Income-tax, Calcutta reported in [2004] 269 ITR 232; [2005] 182 ELT 452 and such judgment is binding on this Tribunal. He, however, seeks to keep the said issue alive so that it can be argued before the Division Bench of the Calcutta High Court or in the Supreme Court, if necessary. Mr. Bajoria has mentioned that several other High Courts have treated tea blending as "manufacture". Mr. Bajoria has concentrated his argument on the first issue. According to him once eligibility certificate was issued conferring on the petitioner right to get exemption from tax for a specified period in accordance with law, such right is in the nature of "vested right" which cannot be taken away even by amendment of law before expiry of the full period for which such right has been granted. Mr. Bajoria has relied upon the judgment of this Tribunal in Pacific Health Care Pvt. Ltd. v. State of West Bengal reported in [2001] 123 STC 305, the decision of the Calcutta High Court in Prasad Forms Pvt. Ltd. v. Assistant Commissioner, Commercial Special Cell reported in [2005] 140 STC 11, an u....
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....r. Bajoria the amendment has caused retrospective affectation as it seeks to take away a right which accrued prior to the date of the amendment. The unreported judgment of the Division Bench of the Calcutta High Court in State of West Bengal v. N.S. Text Prints Pvt. Ltd. (APOT 260 of 2005)See [2009] 20 VST 952 (Cal) [App]. decided on September 23, 2005 upheld the judgment of the learned single judge. The facts of the said case are not clearly mentioned in the aforesaid judgment of the Division Bench but the facts can be gathered from the judgment of the learned single judge, a copy of which has been placed before us. In the said case the petitioner was granted an eligibility certificate to get exemption from payment of sales tax on all sales made in course of inter-State trade or commerce for a period of five years, i.e., till July 1, 2004. By a notification dated August 2, 2002 the earlier notification dated April 28, 1995 under which the petitioner got the benefit of exemption, was amended restricting the benefit of exemption only to sales to a registered dealer or to the Government. In other words, the benefit of exemption on sales made to unregistered dealers in course of inte....
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.... On the date of its application Health Guard Laboratories being a unit located within Calcutta Metropolitan Planning Area (CMP Area) was entitled to tax exemption for a period of three years under rule 99 of the West Bengal Sales Tax Rules, 1995 (in short, "the 1995 Rules"). While such application for exemption was pending rule 99 was amended and period of exemption was increased to five years for eligible industries located in CMP Area. Health Guard Laboratories claimed that it was entitled to get exemption for five years as its application was disposed of after amendment of rule 99. Such claim having been refused Health Guard Laboratories approached this Tribunal. The Tribunal dismissed the application. Being aggrieved, Health Guard Laboratories moved the High Court but could not succeed. In the said factual context the High Court made the above quoted observations. The observation that "once that right had vested it could neither be taken away nor affected by any subsequent amendment of the legislation appears to be a passing generalised statement without considering supremacy of sovereign legislative power. Such passing generalised observation does not amount to ....
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....e basis of the amendment in rule 98 was challenged. In the said context this Tribunal held that the small-scale industries which were granted eligibility certificates for a specific period got a vested right to enjoy the exemption or concession for the said specific period and such vested right could not be taken away by subsequent amendment of the rule. We have carefully read the judgment. Firstly we are unable to agree that Pacific Health Care's case [2001] 123 STC 305 (WBTT) was a case of retrospective operation. The new clause therein had prospective operation affecting the continuing rights with effect from the date of notification. Benefit already enjoyed was not taken away by giving retrospective effect. It was a case of taking away an existing continuing right on the basis of the amended rule from the date amendment came into effect. We also like to point out that the judgments of the Supreme Court relied on or referred to in the judgment of Pacific Health Care [2001] 123 STC 305 (WBTT) were not decided on the principle of vested right but all those cases were decided upon application of the principle of promissory estoppel. In Civil Asbestos v. State of Gujarat [19....
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.... of the Supreme Court therein against retrospectivity was in respect of subordinate legislation and we fail to appreciate how such observations can be used against well-settled power of the Legislature to enact laws with retrospective effect. In Pournami Oil Mills [1987] 65 STC 1, however, the Supreme Court applied the principles of promissory estoppel and held that the subsequent notification restricting the scope of tax exemption would not be applicable to industries set up in response to the earlier notification granting a wider exemption and those industries would continue to avail of the exemption for the full period mentioned in the first notification. Pournami Oil Mills case [1987] 65 STC 1 (SC) was decided on the basis of the principles of promissory estoppel and was not based upon the concept of vested legal right. It should be borne in mind that in Pournami Oil Mills [1987] 65 STC 1 (SC) the benefit was both given and withdrawn by administrative notifications and the power of the Legislature to withdraw existing rights by legislative amendment was not in question. Question of retrospective withdrawal of exemption came up for consideration of the Supreme Court in State o....
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....terest' is a matter of policy and the courts would not bind the Government to its policy decisions for all times to come, irrespective of the satisfaction of the Government that a change in the policy was necessary in the 'public interest'. The courts, do not interfere with the fiscal policy where the Government acts in 'public interest' and neither any fraud or lack of bona fides is alleged much less established. The Government has to be left free to determine the priorities in the matter of utilisation of finances and to act in the public interest while issuing or modifying or withdrawing an exemption notification under section 25(1) of the Act. It needs no emphasis that the power of exemption under section 25(1) of the Act has been granted to the Government by the Legislature with a view to enabling it to regulate, control and promote the industries and industrial productions in the country. Where the Government on the basis of the material available before it, bona fide, is satisfied that the 'public interest' would be served by either granting exemption or by withdrawing, modifying or rescinding an exemption already granted, it should be allowed a f....
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.... If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn, except by means of legislation, having regard to the fact that promissory estoppel cannot be claimed against a statute..." In State of Rajasthan v. Mahaveer Oil Industries [1999] 115 STC 29 (SC); AIR 1999 SC 2302 the Supreme Court again reiterated its view that even when a party has acted on the promise, the benefit can be withdrawn or the scheme can be modified if any supervening public interest so requires. In Mohd. Rasid Ahamad v. State of U.P. reported in AIR 1979 SC 592 the Supreme Court held: "...It is obviously competent for the Legislature, in its wisdom, to make the provisions of an Act of Parliament retrospective..." In the said case of Mohd. Rasid Ahamad AIR 1979 SC 592 there was a conflict between earlier notification fixing March 31, 1967 as fictional date of absorption of certain employees and a subsequent notification shifting the date of absorp....
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....t is in the nature of concession and can be withdrawn at any point of time. As an exemption granted by the Legislature or by the executive is in the nature of concession or an exception to the obligation to pay tax, it is also subject to the right of the Legislature to withdraw such concession by appropriate statutory amendments. Thus such exemptions cannot amount to an irrevocable vested right since exemptions are liable to be withdrawn or modified at any point of time. Meaning and legal implication of vested right are well-known. It is a kind of full and completed right without any reservation or qualification. This concept of unalterable and irrevocable vested right is usually available in private sphere and also against administrative actions of the Executive of the State. But such concept/doctrine of unalterable or untouchable vested right is not available against sovereign legislative actions so long as such legislations do not offend any constitutional right or safeguard. In fact, no right derived from any statutory provision can be said to be vested right in the strict sense of the term inasmuch as it is always open to the Legislature to amend or delete or repeal an existi....
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....he State Government gives rise to a vested right. The Supreme Court therein expressed the view that such exemption was a kind of concession and a concession can be withdrawn at any time and "no time-limit can be insisted upon before concession is withdrawn". The Supreme Court in Bannari Amman Sugars Ltd. v. Commercial Tax Officer reported in [2005] 139 STC 86 has categorically stated (page 94): "No vested right as to tax holding is acquired by a person who is granted concession. If any concession has been given it can be withdrawn at any time and no time-limit should be insisted upon before it was withdrawn..." Upon consideration of various decisions of the Supreme Court this Tribunal in Alaxendra Jute Mills Pvt. Ltd. v. State of West Bengal [2009] 20 VST 910 (WBTT); [2005] 45 STA 59 declined to apply doctrine of "vested right" to withdrawal of exemption before expiry of the full period in public interest. We have noticed that in some of the decisions expression "vested right" has been used and some observations apparently lend support to applicability of the doctrine of vested interest in cases involving administrative decision or subor....
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....ommissioner of Commercial Taxes [1991] 83 STC 234. After amendment of section 2(17) the petitioners do not fall within the scope of the exemption clause in section 39 and they cannot continue to enjoy such exemption. It is correct that in the affidavit-in-opposition the respondents have not disclosed any specific overriding public interest but still the amendment of section 2(17) of the Act of 1994 does not leave any scope of making any exception and treating tea blending as manufacture unless the said amendment is struck down on the ground of violation of any constitutional provision. When Legislature passes any Act presumption is that they have acted in public interest. Legislature in its wisdom thought that blending of tea which is not a "manufacturing activity" in reality, should no longer be artificially treated as "manufacture" on the basis of the inclusive definition. The constitutionality of the amendment has not been argued before us and Mr. Bajoria, learned counsel has reserved the petitioners' right to question the vires of the disputed amendment if his submission on inviolable vested right is not accepted. While appreciating the learned argu....