Judgement of the Supreme Court of India regarding revoking of a notification providing for a rebate to units using fly ash, Uttar Pradesh, 20/11/2019
Judgement of the Supreme Court of India in the matter of State of Uttar Pradesh Vs M/s. Birla Corporation Limited dated 20/11/2019.
The main issue involved in the appeals is about the power of the state of Uttar Pradesh through a notification of 2004 to rescind the notification providing for rebate in respect of tax payable under the Uttar Pradesh Trade Tax Act, 1948. This meant the withdrawing the facility even in respect of industrial units, which had commenced production and had complied with the conditions for grant of such rebate in terms of notification dated 27th February, 1998.
The SC in its judgement said that there is no justification for the application of the notification dated 14th October, 2004, on industrial units already set up which had commenced commercial production of the specified goods in the designated areas before 14th October, 2004.
The rebate was for goods having fly ash contents of 10% or more by weight to be notified goods for the purpose of Section 5 of the 1948 Act and a 25% rebate in respect of the goods having fly ash contents between 10 to 30% by weight and a rebate of 50% in respect of the goods having fly ash contents exceeding 30% by weight on the tax levied under the Act in the districts notified thereunder. But the 2004 notification called for repeal of notifications issued under section 5 of the Trade Tax Act related to rebate applicable to industries based on the fly ash should be repealed.
The SC said that the 2004 notification has "no application to the settled enforceable right accrued to industrial units who fulfill all other conditions specified in the notification dated 27th February, 1998, having commenced commercial production of the specified goods before 14th October, 2004."
Further, the generation of fly ash in thermal power stations in Uttar Pradesh has continued unabated causing serious health hazards in the neighbourhood, turning fertile lands into barren lands. Notably, the new industry set up in the designated areas after 27th February, 1998 and before 14th October, 2004 is using the fly ash generated in thermal power stations in Uttar Pradesh.
"In such a situation, it is incomprehensible as to how the principle of supervening public interest could be invoked by the State much less of such magnitude that it would be impossible for the State to hold or be bound by the promise made by it in notification dated 27th February, 1998," the judgement added.
Thus, the respondents and similarly placed persons would be entitled to rebate for the relevant period prescribed in the notification dated 27th February, 1998 which would continue to remain in vogue until the expiry of the specified period, namely, ten years.
The amount of rebate, however, would depend on the verification of their refund claim pending before the concerned authorities and would be subject to just exceptions including the principle of unjust enrichment. The respondents should be able to substantiate that the amount claimed by them has not been passed on to their consumers. Only then, they would be entitled for refund.