1999 (10) TMI 714 - AT - VAT and Sales Tax

Summary

Issues:
Validity of retrospectivity of the order dated June 3, 1999 cancelling the eligibility certificate (EC) granted under section 41 of the West Bengal Sales Tax Act, 1994 for remission of tax.

Analysis:

1. The applicant, a company manufacturing goods in West Bengal, applied for an eligibility certificate (EC) for remission of tax under the West Bengal Sales Tax Act, 1994. The EC was granted on February 5, 1999, but later cancelled ab initio by an order dated June 3, 1999. The applicant argued that the EC could only be cancelled prospectively from the date of cancellation, not retroactively. The Tribunal examined the nature of the order and found it to be a review order, not a revisional order as mentioned by the authority. The power of review under section 83 of the Act was validly invoked by the authority, as the EC was granted in contravention of the rules. The Tribunal held that the cancellation by review was a formality, as the EC was void ab initio due to lack of jurisdiction and authority.

2. The Tribunal further analyzed the rule permitting discontinuation of the benefit of remission of tax, noting that retrospective cancellation was allowed in cases of review under section 83. The date of contravention was considered to be the date of the application for EC, as it violated Rule 128(2). The Tribunal emphasized that even if the applicant acted on the EC, the retrospective cancellation was necessary to prevent misuse and tax evasion. The authority's ignorance of the rule did not validate the void EC, and the applicant was held responsible for the situation.

3. The Tribunal clarified that principles of promissory estoppel did not apply in this case, as they cannot protect illegal acts against the law. The concept of "review" was explained, highlighting that when a power of review is exercised, the original order can be modified or substituted by a different order, rendering the original order non est. The Tribunal dismissed the applicant's challenge to the retrospective cancellation of the EC, emphasizing the need to prevent tax evasion and uphold the law.

4. Ultimately, the Tribunal dismissed the application, agreeing that the retrospective cancellation of the EC was valid and necessary to maintain the integrity of the tax system. No costs were awarded in the judgment.

This detailed analysis of the judgment highlights the legal reasoning behind the decision to dismiss the application challenging the retrospective cancellation of the eligibility certificate for remission of tax under the West Bengal Sales Tax Act, 1994.