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2004(4) Supreme 210
SUPREME COURT OF INDIA
(From Bombay High Court)
Rajendra Babu, CJI and P. Venkatarama Reddi, J.
Tata Motors Ltd. -Appellant
versus
State of Maharashtra & Ors. -Respondents
Civil Appeal No. 1153 of 1998
With
C.A. No. 3014 of 2004
(Arising out of SLP (C) No. 5260/1999)
Decided on 6-5-2004
Counsel for the Parties :
For the Appearing Parties : T.R. Andhyarujina, R.F. Nariman, Sr. Advocates, S. Sukumaran, Ms. Kavita Dahiya, Ms. Sushma Sharma, Ms. Puja Sharma, Rajan Narain, A.S. Bhasme, Advocate (NP), Mukesh K. Giri, Advocates.
Held : The reason for withdrawal of the benefit retrospectively for a limited period is not forthcoming. It is no doubt true that the State has enormous powers in the matter of legislation and in enacting fiscal laws. Great leverage is allowed in the matter of taxation laws because several fiscal adjustments have to be made by the Government depending upon the needs of the Revenue and the economic circumstances prevailing in the State. Even so an action taken by the State cannot be so irrational and so arbitrary so as to introduce one set of rules for one period and another set of rules for another period by amending the laws in such a manner as to withdraw the benefit that had been given earlier resulting in higher burdens so far as the assessee is concerned without any reason. Retrospective withdrawal of the benefit of set-off only for a particular period should be justified on some tangible and rational ground, when challenged on the ground of unconstitutionality. Unfortunately, the State could not succeed in doing so. The view of the High Court that the impugned amendment of Rule 41-E was of clarificatory nature to remove the doubts in interpretation cannot be upheld. In fact, the High Court did not elaborate as to how the impugned legislation is merely clarificatory. In that view of the matter, although we recognise the fact that the State has enormous powers in the matter of legislation both prospectively and retrospectively and can evolve its own policy, we do not think that in the present cases any material has been placed before the Court as to why the amendments were confined only to a period of eight years and not either before or subsequently and, therefore, we are of the view that the impugned provision, namely, Section 26 deserves to be quashed by striking down the words "not being waste goods or scrap goods or by products" occurring in the said Section 26 of the Maharashtra Act IX of 1989 and the authorities concerned shall rework assessments as if that law had not been passed and give appropriate benefits according to law to the parties concerned. (Para 15)
JUDGMENT
Rajendra Babu, CJI.-
Civil Appeal No. 1153 of 1998
The assessees are engaged in the manufacture of motor vehicle chassis and spare parts. The assessees claimed certain set off in respect of sales tax payable by them for the period from 1st April 1982 to 31st March 1983 invoking the benefit available under rules 41D and 41E framed under the Bombay Sales Tax, 1959 [for short the Act ]. The set off claimed by the assessees was in terms of Rule 41D and 41E read with Rule 44D framed under Section 42 of the Act which enables a draw back, set-off or refund of the whole or any part of the tax in such circumstances and subject to such conditions as may be specified in respect of tax paid or levied or leviable in respect of any earlier sale or purchase of goods under the Act or any earlier law to be granted to the purchasing dealer. Rule 41D enables draw back, set-off or refund of tax paid by the manufacturers in respect of certain purchases made by claimant dealer. It lays down that in assessing the tax payable in respect of any period by a registered dealer who manufactures taxable goods for sale or export, the Commissioner shall, in respect of purchases made by such dealer on or after the notified day of any goods specified in Part II of Schedule C and used by him within the State in the manufacture of taxable goods for sale or in the packing of goods manufactured, grant him a draw-back, set-off or, as the case may be, a refund of the aggregate of the sums determined in accordance with Rule 44D. The concept of export is defined to include dispatches made by the claimant to his own place of business or to his agent outside the State where the claimant dealer produces certificate in Form 31C issued declaring that the goods would in fact be sold by him or would be used by him in the manufacture of goods which would in fact be sold by him and that he, his manager or, as the case may be, his agent is registered under the Central Sales Tax Act in respect of that place of business. The aggregate of the sum referred to in sub-rule (1) shall be reduced by 5 per cent of the purchase price representing the sums in respect of the goods which are dispatched in the manner referred to in clause (iii) of sub-rule (2), provided that the aggregate of such sum shall be reduced by certain percentage of such purchase price. Rule 41E provides that in assessing the amount of tax payable in respect of any period by a registered dealer the Commissioner shall in respect of the purchases made by the claimant dealer on or after the notified day of goods specified in any entry of Schedule B which were used by him in the manufacture of goods specified in the same entry of Schedule B for sale or export, grant him a draw-back, set off or, as the case may be, a refund of the aggregate of the sums determined in accordance with the provisions of Rule 44D.
2. By Section 26 of the Maharashtra Sales Tax Laws [Levy, Amendment and Repeal] Act, 1989 during the period from 1st July 1981 to 31st March, 1984 Rule 41-E as it existed before 1.4.1984 was deemed to have been re-enacted in the same form as it then existed but with certain modifications. The amended version of Rule 41E by the 1989 Act reads as follows :
"41E. Draw-back, set-off etc. of tax paid by a manufacture of goods specified in Schedule B.-In assessing the amount of tax payable in respect of any period of any registered dealer [hereinafter in this Rule referred to as the `claimant dealer ] the Commissioner shall, in respect of the purchases made by the claimant dealer on or after the notified day, of goods specified in any entry of Schedule B which were used by him in the manufacture of goods [not being waste goods or scrap goods or by products] specified in the same entry of Schedule B, for sale or export, grant him a draw back, set off or, as the case may be, a refund of the aggregate of the sums determined in accordance with the provisions of Rule 44D."
3. Section 27 of the said amendment Act of 1989 fur
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