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2001 DIGILAW 706 (MP)

Steel Tubes of India Limited v. State of M. P.

2001-09-27

A.M.SAPRE

body2001
Judgment ( 1. ) HAVING heard the learned counsel for the parties and having perused the record of the case I am of the considered view that the issue involved in this writ is covered in favour of petitioner by the decision of the Supreme Court rendered in the case of Birla Jute and Industries Ltd. v. State of M. P. reported in [2000] 119 STC 14 and also another decision of this Court main seat in the case of K. P. Enterprises v. Divisional Deputy Commissioner of Sales Tax, Raipur [1996] 102 STC 483 (MP) affirmed by the Supreme Court as the SLP filed by State was dismissed and then affirmed by the Supreme Court in Birla Jute case [2000] 119 STC 14. ( 2. ) IN substance the ratio of aforesaid two decisions is that once the eligibility certificate is issued for availability of exemption from payment of tax for a particular period, then long after expiry of the sale exemption period, the State authorities cannot, retrospectively cancel the eligibility certificate. ( 3. ) THE facts that led to filing of this writ in brief need mention to appreciate the point involved and urged. ( 4. ) THE petitioner, a limited company, is engaged in the business of manufacturing of steel tubes, having their unit at Dewas. According to the petitioner it was set up in 1975. ( 5. ) ON May 14, 1979, annexure P/4, the petitioner was granted eligibility certificate by the State Industries Development exempting the petitioner from payment of entry tax under the provisions of the M. P. Sthaniya Kshetra Me Mal Ke Pravesh Par Kar Adhiniyam, 1976 (for short "the Entry Tax Act") on the goods specified in the said certificate for the period May 1, 1976 to April 30, 1981. It is not in dispute that on the strength of this certificate the petitioner did avail of exemption for the whole period, i. e. , from May 1, 1976 up to April 30, 1981 on the goods so specified therein and department also allowed the petitioner to enjoy the said benefit. As a consequence the certificate in question was fully implemented for the purpose for which it was issued. ( 6. As a consequence the certificate in question was fully implemented for the purpose for which it was issued. ( 6. ) ON April 27, 1984 (annexure P/5), i. e. , about five years of its issuance and four years of its expiry, the State all of a sudden cancelled the said certificate. This gave rise to filing of writ being M. P. No. 2690/86 by the petitioner. By order dated December 17, 1993 (annexure P/7), this Court allowed the writ and quashed the aforesaid cancellation on September 27, 1984 (annexure P/5 ). While allowing the writ, this Court observed that since no show cause was issued by the State before cancelling the certificate and hence the cancellation is bad in law. ( 7. ) ON June 9, 1994 (annexure P/8) the State then issued a show cause notice to the petitioner as to why the eligibility certificate granted to the petitioner on May 14, 1979 (annexure P/4) be not cancelled. The petitioner filed reply. By impugned order dated February 1, 1995 (annexure P/11) the State cancelled the certificate. It is against this order the petitioner has again come to this Court in the writ and sought quashing of the impugned order dated February 7, 1995 (annexure P/11) referred supra. ( 8. ) THE State has defended the impugned order. ( 9. ) HEARD Shri P. M. Choudhery, learned Counsel for the petitioner and Shri S. Mukati, Government Advocate, for the State-respondents. ( 10. ) AS observed supra, the cancellation of eligibility certificate granted on May 14, 1979 after the expiry of the period which ended on April 30, 1981 and that too after five years without issuing a show cause September 27, 1984 and that (after fifteen years after issuing a show cause, i. e. , February 1, 1995) retrospectively, is not sustainable in law. It is in conflict with the law laid down by the Supreme Court in Birla Jute case [2000] 119 STC 14 and in K. P. Enterprises case [1996] 102 STC 483 decided by this Court. In both these cases it was ruled if one reads their ratio that on the expiry of eligibility period, the State has no authority to cancel the certificate retrospectively. In the present case, the facts are almost identical to the one which were subject-matter of aforementioned two decided cases. ( 11. In both these cases it was ruled if one reads their ratio that on the expiry of eligibility period, the State has no authority to cancel the certificate retrospectively. In the present case, the facts are almost identical to the one which were subject-matter of aforementioned two decided cases. ( 11. ) WHEN the petitioner availed of the entire benefit of exemption for a period from September 1, 1976 to April 30, 1981 then the State had no authority in 1984 to cancel such certificate retrospectively. In view of law laid down in Birla Jute case [2000] 119 STC 14 by the Supreme Court, even if the State while currency of period had cancelled the certificate even then the cancellation would have been applicable for the period not availed of by the dealer. In other words, it would have its application prospectively, but not retrospectively. ( 12. ) IN view of aforesaid discussion, the petition succeeds and is allowed. Impugned order dated February 1, 1995 (annexure P/11) is hereby quashed by writ of certiorari. No costs.