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Deepak Verma, J.
KITCHEN AID
Versus
STATE OF M.P. AND OTHERS.
W.P. No. 990 of 1996
Decided On: Decided On : 15-12-1997
SALES TAX - Cancellation of eligibility certificate - Retrospective effect - Not permissible - Petitioner entitled to exemption from payment of sales tax on the basis of the eligibility certificate issued by the District Level Committee.
Fact of the Case:
Petitioner was granted an eligibility certificate for exemption from payment of sales tax for a certain period. The certificate was later cancelled by the State Level Committee with retrospective effect. Petitioner challenged the cancellation order.
Finding of the Court:
The court held that the cancellation of the eligibility certificate with retrospective effect was not permissible. The court also held that the petitioner was entitled to exemption from payment of sales tax on the basis of the eligibility certificate issued by the District Level Committee.
Issues: Whether the cancellation of the eligibility certificate with retrospective effect was permissible.
Ratio Decidendi: The court relied on the judgment of the Division Bench in K. P. Enterprises [1996] 102 STC 483 (MP), which held that the eligibility certificate cannot be cancelled with retrospective effect. The court also held that the petitioner had acted on the eligibility certificate and carried on its business on the basis of the said certificate, and it would be too harsh to ask for the payment of tax for that period.
Final Decision: The court quashed the order cancelling the eligibility certificate and held that the petitioner was entitled to exemption from payment of sales tax on the basis of the eligibility certificate issued by the District Level Committee.
DEEPAK VERMA, J. - By filing this petition under article 226 of the Constitution, petitioner is praying for quashment of the order dated February 2, 1996 (annexure P1), passed by State Level Committee, cancelling the petitioner's eligibility certificate with retrospective effect.
2. Brief facts, material for deciding the said petition are mentioned hereinbelow :
Petitioner was granted an eligibility certificate which entitled it to enjoy the benefit of exemption from payment of sales tax for the period commencing from April 27, 1987 to April 26, 1990. The said certificate was issued in favour of the petitioner by District Level Committee, constituted under notification dated October 16, 1986, issued by State Government. Petitioner has actually enjoyed the said benefit for the period stated in the eligibility certificate, The said eligibility certificate was cancelled by State Level Committee with retrospective effect vide its order dated April 27, 1989.
3. The said order of cancellation of petitioner's eligibility certificate by State Level Committee, was, subject-matter of challenge in W.P. No. 719 of 1989. The said petition has now been disposed of with certain directions. The judgment of petitioner's earlier petition is reported in [1996] 102 STC 233 (Kitchen Aid v. General Manager, District Industries Centre). The petition was disposed with the following directions :
"In view of the aforesaid position of facts and law I find that the order, annexure P8, is not sustainable in law. Accordingly I find it improper to go into the merits of the matter. Instead I direct the concerning authority to hear the petitioner in this regard and pass appropriate orders with reasons by February 28, 1995. Till fresh order, the interim order passed by this Court earlier, shall remain operative.
This petition is thus disposed of finally in terms indicated above, but without any order as to costs."
4. Pursuant to the said order, passed by learned single Judge of this Court (Kitchen Aid v. General Manager, District Industries Centre [1996] 102 STC 233), petitioner was given an opportunity of hearing by the State Level Committee, but, the matter was not disposed of before the stipulated date. The final order by State Level Committee has been passed by the impugned order on February 2, 1996 (annexure P1), wherein, the petitioner's eligibility certificate has been cancelled once again, with retrospective effect and the earlier order, passed by State Level Committee in this regard, has been maintained. It is this order, which is, subject-matter of challenge in this petition.
5. Show cause notice against admission was issued to the respondents. Respondents have filed their reply in oppugnation. They have submitted, that State Level Committee has been constituted to supervise and, if there is any irregularity, or, breach of the rule, or, regulation, the committee is competent and empowered to set aside and quash the order passed by District Level Committee. Their contention is, that looking to the nature of business, carried on by the petitioner, the District Industries Centre should not have granted the eligibility certificate to the petitioner, as, it is not engaged in manufacturing process. They have also made a mention with regard to an opinion sought by State Government from the law department.
6. The delay in passing the order has been attributed to delaying and protraction attitude of the petitioner. According to the respondents, as per earlier order, passed by this Court, petitioner had been granted an opportunity of hearing and only, thereafter, this order has been passed, which now calls for interference.
7. I have heard the counsel for parties, perused the record.
8. Shri Chowdhary, appearing for petitioner, submitted, that the eligibility certificate was granted to the petitioner by District Level Committee, after holding an enquiry and due scrutiny of the nature of business which is being carried on by the petitioner. It has also be
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