1. The facts leading to this petition under Article 226 of the Constitution are as follows : M/s. Vijay Dal Mill, the petitioner in this petition, is a dealer in pulses. The petitioner is a partnership concern and is a registered dealer under the M. P. General Sales Tax Act, 1958, as also under the Central Sales Tax Act, 1956. For the period from 12th November, 1977, to 31st October, 1978, the petitioner was assessed to sales tax on inter-State sales under the Central Act at 2 per cent under Section 8(2) read with notification dated 1st April, 1966, issued under Section 8(5). The assessment order was passed on 31st March, 1979. As the petitioner had paid excess tax, refund was ordered to the extent of Rs. 16,126.30. By notification dated 1st April, 1966, the State Government had directed that the rate of tax in respect of inter-State sales of all kinds of grains, cereals and pulses shall be calculated at the rate of 2 per cent. By notification dated 1st April, 1978, issued under Section 8(5), the notification dated 1st April, 1966, was cancelled with effect from 1st April, 1978. Another notification was then issued by the State Government on 6th July, 1979. By this notification, the notification dated 1st April, 1978, was amended and the cancellation of the notification dated 1st April, 1966, was made effective from 21st May, 1975. A second notification was issued on 6th July, 1979, by which the rate of tax on inter-State sales of pulses with effect from 21st May, 1975, to 31st August, 1976, was specified at 4 per cent. A third notification was issued on the same date by which the rate of tax on inter-State sales of pulses was specified at 4 per cent for the period from 1st September, 1976, to 31st March, 1978. All these notifications were issued under Section 8(5) of the Central Act. A notice dated 3rd August, 1979, was then issued to the petitioner for reassessment on the basis of the aforesaid notifications. The petitioner then filed this petition.
2. The argument of the learned counsel for the petitioner is that the notification dated 1st April, 1978, withdrawing the concession granted under the notification dated 1st April, 1966, could not be given retrospective effect from 21st May, 1975, by the notification issued on 6th July, 1979. In our opinion, this contention must be accepted. Section 8(5) of the Central Act reads as follows:
(5) Notwithstanding anything contained in this Section, the State Government may, if it is satisfied that it is necessary so to do in the public interest, by notification in the Official Gazette and subject to such conditions as may be specified therein, direct,-
(a) that no tax under this Act shall be payable by any dealer having his place of business in the State in respect of the sales by him, in the course of inter-State trade or commerce, from any such place of business of any such goods or classes of goods as may be specified in the notification, or that the tax on such sales shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2) as may be mentioned in the notification;
(b) that in respect of all sales of goods or sales of such classes of goods as may be specified in the notification, which are made, in the course of interState trade or commerce, by any dealer having his place of business in the State or by any class of such dealers as may be specified in the notification to any person or to such class of persons as may be specified in the notification, no tax under this Act shall be payable or the tax on such sales shall be calculated at such lower rates than those specified in Sub-section (1) or Sub-section (2) as may be mentioned in the notification.
3. The first notification granting concession to the dealers dealing in pulses was issued on 1st April, 1966. Under that notification the rate of tax was fixed at 2 per cent. This notification was withdrawn on 1st April, 1978, by a notification issued on that date. There is no difficulty so far. The difficulty arises because of the notifications issued on 6th July, 1979, by which the notification dated 1st April, 1978, was given retrospective effect from 21st May, 1975 and the rate of tax was enhanced to 4 per cent. The State Government may grant retrospective exemption or concession to a dealer by notifications issued under Section 8(5). The question is not before us. But we are clear that Section 8(5) does not authorise the State Government to withdraw an exemption or concession retrospectively so as to increase the rate of tax retrospectively. The effect of the notifications issued on 6th July, 1979, was that the rate of tax on inter-State sales of pulses which was 2 per cent up to 1st April, 1978, was enhanced to 4 per cent from 21st May, 1975. The retrospective enhancement of rate and withdrawal of concession to the dealers, in our opinion, was unauthorised. The result is that the petitioner would be liable to pay tax at 2 per cent under the notification dated 1st April, 1966, up to 1st April, 1978 and from 1st April, 1978, the rate of tax would be 4 per cent. The first and second notifications dated 6th July, 1979 (annexure-I), will not have the effect of increasing the rate of tax to 4 per cent for the period from 21st May, 1975, to 1st April, 1978. To that extent the petition will have to be allowed.
4. The petition is partly allowed. We direct that the first and second notifications dated 6th July, 1979 (annexure-I), will not be given effect to so as to enhance the tax for the period from 21st May, 1975, to 1st April, 1978. The rate of tax for this period of inter-State sales of pulses would be 2 per cent in accordance with the notification dated 1st April, 1966. There will be no order as to costs. Security amount be refunded to the petitioners.
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