Madhya Pradesh High Court
M/S Farseen Rubber Industries,A ... vs State Of M.P. on 27 January, 2025
Author: Milind Ramesh Phadke
Bench: Milind Ramesh Phadke
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IN THE HIGH COURT OF MADHYA PRADESH
AT GWALIOR
BEFORE
HON'BLE SHRI JUSTICE MILIND RAMESH PHADKE
ON THE 27th OF JANUARY, 2025
WRIT PETITION No. 4624 of 2011
M/S FARSEEN RUBBER INDUSTRIES,A COMPANY REGD. UNDER
COMPANIES ACT
Versus
STATE OF M.P. AND OTHERS
Appearance:
Shri Prashant Sharma - Advocate for the petitioner.
Shri Anil Sharma - Advocate for the respondents No.2 and 3
ORDER
This petition under Article 226 of the Constitution of India has been
preferred by the petitioner seeking following reliefs:-
"(i) The orders impugned Annexure P/1, P/2 and P/2-A may
kindly be quashed.
(ii) The order impugned i.e. Annexure P/2-B and Annexure P/2-C
may kindly be quashed.
(iii) The respondents act of imposing the interest at 24% be
quashed in the interest of justice.
Any other relief which this Hon'ble Court deems fit in the facts
and circumstances of the case same may kindly be granted to the
petitioner. "
2. Though by filing this petition, the petitioner has challenged various
orders, but at the time of hearing of petition, learned counsel for the
petitioner has confined his arguments to the extent of challenging the circular
dated 17.07.1997 issued by respondent No.1 and submitted that the petitioner
was duly allotted the plot bearing No.A-1 situated at A-1, Banmore
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Industrial Area vide lease-deed dated 25.02.1997. After execution of lease-
deed, the petitioner had established Rubber Industry which is continuously
running. The respondents had specifically provided under the lease-deed that
since the industry falls under Thrust Sector, therefore, rebate of 25% of the
premium amount of Rs.2,98,200/- is allowed being a Thrust Sector Unit.
Thereafter, on 02.05.1997, a letter was issued to the petitioner that rebate
granted earlier has been withdrawn in the light of circular dated 17.07.1997
issued by the Commerce and Industrial Department and the petitioner was
directed to deposit Rs. 6,64,008/- (Rs.2,98,200/- premium amount +
Rs.3,21,871/- remaining premium with interest + Rs.25,937 lease rent and
maintenance expenses with interest).
3. It is further submitted that the rebate granted earlier by virtue of a
circular dated 09.01.1989 issued by the Commerce and Industrial Department
cannot be withdrawn in the light of a subsequent circular dated 17.07.1997.
How the thrust sector has been withdrawn, has not been clarified, and
whether the benefit granted earlier can be withdrawn which had been
extended for the purpose of establishment of industry is not clear. On
18.11.2024, this Court had directed the learned counsel for the respondents
No.2 and 3 to place before this Court the policy of 1994 issued by the State
Government. The copy of 1994 policy was filed by the counsel for the
respondent No.2 and 3 along with the list of documents dated
09.01.2025 which was incomplete. Subsequently, complete 1994 policy was
filed by the petitioner on 24.01.2025 and in the said policy, in clause 5.14, it
is mentioned that the scope of "Thrust Sector" has been extended, previously
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in the year 1987 to only automobile industry which in the year 1994, was
extended to automobile components also, therefore, the contention of the
respondent that the benefits derived from 1987 policy were withdrawn from
1994 policy is completely misinterpretation of clause 5.14 of the 1994
policy. In the lease deed also, it is mentioned that being Thurst Sector Unit, a
rebate of 25% of premium i.e. Rs.2,98,200/-; is allowed to the petitioner.
Hence, the circular dated 17.07.1997 whereby the concession has been
withdrawn by the respondents, is illegal and contrary to law, thus, it is prayed
that the circular dated 17.07.1997 be set-aside.
4. Per contra, learned counsel for the respondents No.2 and 3 submits
that since the petitioner had to avail loan from the bank and as long as lease
agreement is not executed, the loan could not have been availed by the
petitioner, therefore, an undertaking dated 24.02.1997 was given by the
petitioner that it shall arrange for a Bank Guarantee of Rs.2,98,200/-
equivalent to 25% of the premium of plot for fulfilling the conditions for
availing the benefits of thrust sector. Since the bank limits would be released
only after execution of lease deed, it shall submit the same in the next three
months of execution of the lease deed. On the basis of this undertaking and
in the interest of petitioner, lease agreement was executed, but after
execution of lease agreement, the petitioner did not make payment. In
pursuance to the circular dated 17.07.1997 issued by the State, a letter dated
19.08.1997 was issued by Madhya Pradesh Industrial Development
Corporation stating that the concession granted earlier had been withdrawn
and the amount of concession granted earlier had to be recovered. Thus, the
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present petition being bereft of merits, deserves to be dismissed.
5. Heard counsel for the parties and pursued the record.
6. The uncontroverted facts which are not disputed by counsel for the
respondents No.2 and 3 are that the petitioner was duly allotted the plot
bearing No.A-1 situated at A-1, Banmore Industrial Area vide lease-deed
dated 25.02.1997. After execution of lease-deed, the petitioner had
established Rubber Industry. The respondents had specifically provided
under the lease-deed that since the industry falls under Thrust Sector,
therefore, in the light of circular dated 09.01.1989 rebate of 25% of the
premium amount of Rs.2,98,200/- is allowed being a Thrust Sector Unit.
Thereafter in the light of a circular dated 17.07.1997 issued by the State
Government, a letter dated 19.08.1997 was issued by the Madhya Pradesh
State Industrial Development Corporation Ltd. by which the concession
granted in the light of circular dated 09.01.1989 was withdrawn and the
concession amount was directed to be recovered and in pursuance thereto the
petitioner was directed to deposit the premium amount.
7. The question arises in the present case whether by circular dated
17.07.1997, the exemption granted to petitioner could be withdrawn and the
concession amount could be directed to be recovered from the petitioner.
8. The circular dated 17.07.1997 is not applicable in petitioner's case,
since the unit in question had already commenced prior to the issuance of the
circular dated 17.07.1997, the petitioner's right would be governed by the
earlier circular dated 09.01.1989. The introduction of subsequent notification
dated 17.07.1997 cannot affect petitioner's right which had already accrued
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under parent notification dated 09.01.1989. No retrospective withdrawal or
recovery of exemption is permissible under the law. Accordingly, the circular
dated 17.07.1997 to the extent it retrospectively withdraws the benefits of
exemption and directs to recover the exemption granted earlier in cases like
petitioner is contrary to law.
9. The Hon'ble Apex Court in the case of State of M.P. Vs. G.S. Dall
& Flour Mills reported in 1991 AIR 77 2, has held that while a notification
can be prospective or retrospective, only a prospective operation can be
given to a notification rescinding an exemption granted earlier.
Paragraph No.21 of the aforesaid judgment reads as under:-
"A reference has now to be made to the notification of 3/7/87
amending the 1981 notification with retrospective effect so as to
exclude what may be described in brief as `traditional industries'
though, like rule 14 of the deferment rules, the exclusion extends
even to certain other non-traditional units operating in certain
situations. Though this notification purports to be retrospective, it
cannot be given such effect for a simple reason. We have held that
the 1981 notification clearly envisages no exclusion of any
industry which fulfills the terms of the notification from availing
of the exemption granted under it. In view of this interpretation,
the 1987 amendment has the effect of rescinding the exemption
granted by the 1981 notification in respect of the industries
mentioned by it. S. 12 is clear that, while a notification under it
can be prospective or retrospective, only prospective operation can
be given to a notification rescinding an exemption granted earlier.
In the interpretation we have placed on the notification, the 3/7/87
notification cannot be treated as one merely clarifying an
ambiguity in the earlier one and hence capable of being
retrospective: it enacts the rescission of the earlier exemption and,
hence, can operate only prospectively. It cannot take away the
exemption conferred by the earlier notification."
10. A Division Bench of this Court in the case of Sayaji Hotels Ltd.
Vs. State of M. P. & Others reported in 2015 SCC Online MP 4853 in
paragraphs No.14, 15, 22, 23 and 24 has held as under:-
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"14. The apex court in the case of Mahabir Vegetable Oils Pvt.
Ltd. v. State of Haryana reported a [2006] 145 STC 350 (SC);
[2006] 8 STJ 689 (SC) had held that there lies a distinction
between vested rights and accrued rights. VATLaws (Readable
Version) - Monday, October 10, 2016 This copy was printed from
VATLaws licensed to: Rsgoyal By delegated legislation, a vested
right cannot be taken away. Thus, amend ments carried out in
1996, cannot take away the rights of dealer with retrospective
effect. He also placed reliance on the decision of the apex court in
the case of State of Haryana v. Anil Pesticides Ltd. reported as
[2011] 19 STJ 11 (SC), Ruchi Fabrics Ltd. v. State of M. P.
reported as [2000] 117 STC 273 (SC); [1993] 32 VKN 449, State
of Madhya Pradesh v. G. S. Dall and Flour Mills reported as
[1991] 80 STC 138 (SC); [1991] 187 ITR 478 (SC); 24 VKN 224
and the Division Bench decision of the M. P. High Court in the
case of Ambika Refinery v. State of M. P. reported as [2012] 53
VST 146 (MP); [2012] 20 STJ 563 and submitted that the
amendment could not be given retrospective effect and could not
have taken away the rights of the petitioner with retrospective
effect and prayed for its quashment.
15. It is clear from the specific provisions contained in the
notification dated March 31, 2006 that dealers who are continuing
to avail of facility of exemption, which availed of the facility over
the unexpired period of eligibility certificate shall also be eligible
to first adjust balance of input-tax rebate if any, against any other
tax liability of self and to transfer remaining balance for
adjustment against tax liability of any other registered dealer, if
desired. Therefore, the dealer who was continuing with the facility
of exemption under the eligibility certificate earlier issued has not
been said to any adverse consequence and rather, sufficient liberty
is granted to such dealers for making necessary adjustment of
rebate or claiming rebates or exemption. The petitioner who is
continuing with the facility of exemption as on April 1, 2006 will
continue to collect tax from its customers, and to compute his tax
liability by taking input tax rebates from the tax collected on sales.
Further, he will be eligible to retain tax collected, which is in
excess of its input-tax rebate and the amount so, retained shall be
included in computation of cumulative quantum of tax benefits.
22. It is a fundamental rule of law that no statute shall be
construed to have a retrospective operation unless such a
construction appears very clearly in the terms of the Act, or arises
by necessary and distinct implication.
23. The honourable Supreme Court held that a subordinate
legislation can be given a retrospective effect, if any power is
contained in this behalf in the main Act. Rule-making power is a
species of delegated legislation. A delegatee therefor can make
rules only within the four-corners thereof. No statute can be
construed to have a retrospective operation unless such a
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construction appears very clearly in terms of the Act--by a
delegated legislation the right accrued to the petitioner cannot be
taken away. Thus, the Supreme Court held that the amendments
carried out could not take away the rights of the petitioner with the
retrospective effect. In the case in hand, the exemption, which was
granted already earlier notification was available to the petitioner
up to November 4, 2006, but vide notification dated September
15, 2006, it was restricted up to March 31, 2006, meaning thereby,
for a period of near about six months, the petitioner has been liable
for payment of tax for which there was no power with the State
Government to withdraw such exemption with retrospective
effect. The aforesaid exemption could not have been withdrawn by
the State Government vide notification dated September 15, 2006
with retrospective effect.
24. In the result, this petition is allowed in part notification dated
March 31, 2006 and September 15, 2006, insofar as it relates to
the petitioner only, restricting the withdrawal of exemption
retrospectively with effect from March 31, 2006 is not sustainable
under the law. The petitioner who was extended the benefit of
exemption from payment of tax shall be entitled to get the
aforesaid exemption till September 15, 2006. The impugned
orders are quashed to the extent as indicated herein above."
11. In view of above, it can be safely gathered that the subsequent
circular cannot be construed to have a retrospective operation. A right which
has already accrued in favour of the petitioner cannot be extinguished by a
subsequent circular especially when on the basis of first circular dated
09.01.1989 the exemption has been granted to the petitioner which is
mentioned in the lease deed dated 25.02.1997 executed in favour of the
petitioner.
12. Consequently, this petition is allowed in part, letter dated
19.08.1997 issued by the Madhya Pradesh State Industrial Development
Corporation Ltd., insofar as it relates to the petitioner only, withdrawing the
exemption retrospectively and recovering the exemption granted earlier is
not sustainable under the law. Resultantly, the letter dated 19.08.1997 shall
not be applicable in the case of petitioner.
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13. With the aforesaid observations, this petition stands disposed of.
(MILIND RAMESH PHADKE)
JUDGE
ojha
