High Court · 2011

10. The appellant herein is a small scale private limited company, registere d under the Companies Act, 1956, and engaged in the manufacture, sale and supply of PVC pipes and plastic tanks, having its principal place of business at Naran gi, Guwahati, Assam. The company, apart from being registered as a dealer under the Central Sales Tax Act, 1956, was also registered as a ’dealer’ under the AG ST Act, 1993, and, later on, it came to be registered as a ’dealer’ under the Va lue Added Tax Act, 2003 (in short, ’the VAT Act, 2003).

11. Notwithstanding the fact that a notification, under the 2nd proviso to S ection 9(3), cannot exceed a period of three years from the date of its issue an d the notification, dated 03.01.2003, aforementioned had claimed to have come in to force on 01.05.2001, the appellant herein claimed and was given by the assess ing authority the benefit of the notification, in question, for the assessment y ear 2004-05, inasmuch as the appellant was allowed to pay tax at the reduced rat e of interest, even for the assessment year 2004-2005, against supply of PVC pip es, manufactured by it, to various Government Departments in Assam. To be precis e, for the assessment year 2004-05, the Superintendent of Taxes completed assess ment, on 04.04.2007, by allowing payment of tax by the appellant at a concession al rate of 4%.

12. However, the problem for the appellant started, when a notice was issued , on 06.11.2008, to the appellant by respondent no 4 herein, namely, Superintend ent of Taxes, contending therein, inter alia, that the appellant had been wrongl y allowed payment of tax at the concessional rate of 4%, on its turnover, for th e assessment year 2004-05, against supply of PVC pipes to various Government dep artments of the State Government on the strength of the notification, dated 03.0 1.2003, aforementioned inasmuch as the notification, being effective from 01.05. 2001, could not have continued to remain in force beyond a period of three years and the notification had, thus, stood elapsed on 30.04.2004. The appellant was , therefore, directed to show cause as to why the appellant should not be made t o pay the balance amount of tax @ 8.8% [13.2% - 4.4%] and also the interest accr ued thereon.

13. Responding to the notice of show cause, dated 06.11.2008, the appellant furnished its reply, on 21.11.2008, to respondent No. 4, namely, Superintendent of Taxes, contending therein, inter alia, that the notification, in question, ha ving been issued on 03.01.2003, the appellant could have availed exemption for a period of three years with effect from 03.01.2003 inasmuch as a notification, i ssued under Section 9(3), remains in force for a period of three years with effe ct from the date of its issuance. As the notification was issued on 03.01.2003, the notification remained, according to the appellant, in force till 02.01.2006. The appellant contended that since the assessment, in question, was in respect of the assessment year 2004-05 and the notification was effective, during the as sessment year 2004-2005, the appellant had rightly claimed and was legally allo wed to avail the benefit of concesssional rate of tax, while making payment of t ax for the year 2004-2005.

14. As regards the contention of the respondent No. 4 in its letter, dated 0 6.11.2008, aforementioned, that the notification, in question, was effective fro m 01.05.2001, and, therefore, on completion of three years, elapsed, by efflux o f time, on 30.04.2004, the appellant contended that the notification, in questio n, was a piece of subordinate legislation and since a subordinate legislation ca nnot go against the parent legislation, the notification, in question, must be t reated to have remained valid for three years from the ’date of its issue’, i.e. , 03.01.2003.

15. On receipt of the appellant’s reply to the show cause notice, dated 06.1 1.2008, aforementioned, respondent No. 4 herein sought for, vide its letter, dat ed 05.12.2008, a clarification from respondent No. 3, namely, Commissioner of Ta xes, Assam, as to whether the notification, in question, should be treated to ha ve remained in force till 30.04.2004 or shall the notification be treated to hav e lapsed by counting the validity of the notification with effect from 01.05.200 1.

16. Reacting to the clarification, which the respondent No. 4 had so sought for by his letter, dated 05.12.2004, respondent No. 3, namely, Commissioner of T axes, Assam, issued a clarification, on 19.02.2009, conveying to the respondent No. 4 to the effect that though the notification, in question, had been issued o n 03.01.03, yet since the notification was brought into force with effect from 0 1.05.2001, the notification ought to be treated to have remained in force from 0 1.05.2001 to 30.04.2004. The clarification, so issued by respondent No.3, on 19 .02.2009, being relevant to the present appeal, is reproduced below: (cid:28)Sub - Clarification Ref - Your letter No.6356 dated 05.12.2008. With reference to your letter seeking clarification in respect of Govt. Notification issued vide FTX-189/93/pt/268, dt 03.01.2003, giving effect from 01 .05.2001, it is stated that the notification was issued under Section 9(3) of th e Assam General Sales Tax Act, 1993, since repealed. As per proviso to Section 9 (3) (ii) the validity of notification issued under said section shall not exceed a period of 3 years from the date of its issue. However, since the notification was brought into force from 01.05.2001, therefore, the notification was in forc e w.e.f. 01.05.2001 to 30.04.2004. (Sd/- Sanjay Lohiya) Commissioner of Taxes, Assam Dispur, Guwahati. (cid:29)

17. Following the clarification, dated 19.02.2009, so issued by respondent N o. 3 and acting upon the same, respondent No. 4 passed an order, on 06.03.2009, to the effect that the appellant had been wrongly allowed to pay tax at the conc essional rate of 4.4% for the assessment year 2004-2005 inasmuch the notificatio n, in question, had remained in force with effect from 01.05.2001 to 30.04.2004 and could not have, therefore, entitled the appellant to claim benefit of reduce d rate of tax. With the reason, so assigned, respondent No. 4 reopened the asses sment of the taxable liability of the appellant, made assessment afresh, and dir ected the appellant to pay the balance amount of tax @ 8.8%, with interest, whic h had accrued thereon.

18. Aggrieved by the reopening of the assessment and the reassessment of its taxable liability, the appellant filed a revision before the respondent No. 3, namely, Commissioner of Taxes, Assam. By order, dated 30.09.2009, the responden t No. 3 dismissed the revision by observing to the effect, inter alia, that thou gh the date of notification was 03.01.2003, the same having been brought into fo rce with effect from 01.05.2001, the notification had remained in force from 01. 05.2001 to 30.04.2004 and, hence, the notification, having elapsed, on 30.04.200 4, by efflux of time, the concessional rate, which the appellant had enjoyed dur ing the assessment year 2004-2005, was illegal. In order to strengthen his conc lusion that the appellant was not entitled to claim concesssional rate of tax, t he respondent No. 3 further pointed out, in its order, dated 30.09.2009, aforeme ntioned, that the appellant had already enjoyed concessional rate of tax during the period from August, 2001, to January, 2003, and that by its act of having en joyed the benefit of concessional rate between August 2001 and January 2003, the appellant had shown its clear understanding that the notification was retrospec tive in nature and, hence, the appellant, after having enjoyed the benefit, with retrospective effect, cannot make contrary claim and derive benefit of the noti fication by contending that the notification was effective from the date of its issue, i.e., 03.01.2003, and shall be treated to have remained valid till 02.01. 2006. The revision, filed by the appellant, was accordingly dismissed on the pr emises aforementioned.

19. It is, thus, clear that the appellant was denied the benefit of the noti fication aforementioned on two grounds, namely, that the notification having men tioned that it had come into force on 01.05.2001, the notification could not hav e been treated to have remained in force beyond 30.04.2004, and, secondly, equit y estopped the appellant from claiming the benefit of the notification, because the appellant had already availed the benefit for a maximum period of three year s covering thereby the period, when (according to the appellant itself), the not ification could not have been, in law, effective.

20. Aggrieved by the dismissal of the revision, the appellant filed a writ p etition under Article 226 of the Constitution of India, which gave rise to WP(C) No. 4859/2009, seeking issuance of appropriate writ(s) setting aside and quashi ng not only the reopening of the assessment, but also the revisional order. In the writ petition, a learned Single Judge of this Court took the view that in th e facts and circumstances of the case, the expression, ’date of its issue’, appe aring in the 2nd proviso to Section 9(3), has to be understood within the ceilin g of three years, which is allowable for seeking the benefit of reduced rate of tax. The learned Single Judge also took the view that as the appellant had alre ady availed consessional rate of tax for the period from 01.05.2001 to 30.04.200 4 by drawing strength from the said notification, the appellant cannot, having e njoyed the benefit of the notification, turn back and claim further right to con tinue to receive the benefit of concessional rate of tax.

21. In effect, the learned Single Judge too took the view that the appellant was estopped from claiming the benefit of the notification, because of equitabl e consideration inasmuch as it had already availed the benefit, for the maximum period of three years, by drawing strength from the said notification and the ap pellant could not have, having enjoyed such benefit, turn back and claim further exemption for the assessment year 2004-2005. In order to buttress this conclusi on, the learned Single Judge took the view (as already indicated hereinabove) th at the expression, ’date of its issue’, appearing in the 2nd proviso to Section 9(3), has to be understood within the ceiling of three years, which is allowable for obtaining exemption from payment of tax or the benefit of payment of tax at a reduced rate. Because of the conclusions so reached, the writ petition was di smissed on 06.09.2010. The appellant is, therefore, before us. 22. We have heard Mr. N. Dutta, learned Senior counsel, appearing on behalf of the appellant, and Mr. D. Saikia, learned counsel, appearing on behalf of the respondents.

23. Appearing on behalf of the appellant, Mr. N. Dutta, learned Senior couns el, submits that a bare reading of Section 9 of the AGST Act, 1993, clearly show s that the benefit of reduced rate of tax can be granted by the State Government by issuing appropriate notification, in this regard, but, under the 2nd proviso to Section 9(3), the validity of such a notification is three years from the da te of its issue. Thus, the notification, as envisaged by the 2nd proviso is, ac cording to Mr. Dutta, prospective in nature. When the parent legislation, i.e., AGST Act, 1993, makes the exemption prospective in nature, the subordinate legi slation, i.e., the notification, in question, could not have been made retrospec tive and cannot be read in law as retrospective. So contends Mr. Dutta. In supp ort of this submission, Mr. Dutta places reliance on Bakul Cashew Co. and Others vs. Sales Tax Officer, Quilon and another, reported in (1986) 2 SCC 365.

24. Elaborating his submission, as noted above, Mr. Dutta points out that th e 2nd proviso to Section 9(3) makes it clear that the validity of the notificati on, which is issued under Section 9(3), shall not remain valid for more than thr ee years from the ’date of its issue’. Since the proviso uses the expression, ’ from the date of its issue’, Mr. Dutta contends that the date of issue of the no tification, in the present case, being 03.01.2003, the notification ought to hav e been held to have remained valid for a period of three years commencing from 0 1.03.2003 and, in such circumstances, the notification could not have been treat ed, contrary to the parent legislation, to have come into force on a date prior to the date of its issuance, i.e., 03.01.2003; whereas, the respondents have bee n insisting that though the notification had been issued on 03.01.2003, it was g iven effect to, or had been brought into force, on 01.05.2001, and, therefore, t he notification could not have remained in force beyond 30.04.2004. Such a cons truction of the notification by the respondents is, according to Mr. Dutta, whol ly untenable in law.

25. Referring to the decision, in Mangalam Timber Products Ltd. v. State of Orissa, reported in (2008) 18 VST 1 (Orissa), Mr. Dutta submits that in similar circumstances, Orissa High Court has decided that the notification could not be retrospective, when the legislation is prospective in nature and the notificatio n must, therefore, be read to be effective from the date of notification and not from any date prior thereto.

26. Mr. Dutta points out that since the statutory authorities, namely, respo ndent No. 4 and also respondent No. 3 failed to hold that the notification, havi ng been issued on 03.01.2003, must be taken to have been remained in force for a period of three years, i.e., till 02.01.2006, and, hence, the assessment year 2 004-2005 was well within the validity period of the notification, in question, t he appellant was left with no alternative, but to approach this Court. The lear ned Single Judge, however, contends Mr. Dutta, fell in serious error in ignoring the fact that the parent legislation being prospective in nature, the notificat ion, which is a piece of subordinate legislation, could not have been given retr ospective effect and ought to have, therefore, been treated to be prospective ef fect. Moreover, as there was no outer limit fixed in respect of the validity of the notification, the notification, according to Mr. Dutta, ought to be treated to have remained valid till 02.01.2006.

27. Mr. Dutta further points out that the respondent No. 4 is a statutory au thority and, while deciding the question as to whether the assessment, which had already been made, needed to be reopened and reassessed, the authority function ed as a quasi-judicial body and such an authority cannot be made to act at the d ictates of its superior authority nor can its decision be controlled and/or guid ed by any superior authority, for, such a conduct of being guided and controlled by superior authority would amount to abdication of authority by the authority, which has to exercise quasi-judicial power in determining the question as to wh ether it shall or shall not reopen the assessment.

28. In the present case, submits Mr. Dutta, in order to reach a decision as to whether the assessment, already made, needed to be reopened or not, responden t No. 4 looked to his superior, namely, the respondent No. 3 for guidance as to whether the notification, in question, should be treated to have come into force on 03.01.2003, which was the date of issuance of the notification, or should it be read retrospectively with effect from the date on which the notification sta ted to have come into force. Responding to the clarification, which the respond ent No.4 had so sought for, respondent No.3, points out Mr. Dutta, gave his ’cla rification’ and it is this ’clarification’, which the respondent No. 4 treated a s his guidance and reopened the assessment. There was, thus, contends Mr. Dutta , no independent application of mind by the respondent No. 4, which was nothing but complete abdication of authority by respondent No. 4. The impugned order, t herefore, submits Mr. Dutta, reopening the assessment and making the assessment afresh was wholly illegal.

29. Mr. Dutta submits that aggrieved by the wrong construction of the notifi cation and the conduct of the respondents, when the appellant approached this Co urt by way of writ petition, the learned Single Judge too misconstrued the notif ication inasmuch as the learned Single Judge was of the view that a notification , issued under Section 9(3), cannot exceed a period of three years and, since th e notification mentioned that it had come into force on 01.05.2001, it ought to be treated to have elapsed on 30.04.2004. The language of the 2nd proviso to Se ction 9(3), submits Mr. Dutta, clearly indicates as to what the legislative inte nt was inasmuch as the second proviso to Section 9(3) clearly conveys the legisl ative intent, the legislative intent being that a notification, issued under Sec tion 9(3), has to be effective from the date of its issuance and not on any date prior thereto, which the learned Single Judge failed to take note of. Thus, th e subordinate legislation, according to Mr. Dutta, having gone contrary to the p arent legislation, the learned Single Judge ought to have set aside the order of reassessment and also the revisional order.

30. It is, contends Mr. Dutta, the error in correctly construing the notifi cation that has led to the dismissal of the writ petition and has thereby denied to the appellant the right, which the statute had, otherwise, given to the appe llant. The dismissal of the writ petition is, therefore, contends Mr. Dutta, il legal and this appeal may, therefore, be allowed.

31. Resisting the appeal, Mr. D. Saikia, learned counsel, submits that the n otification did not mention the total period and/or the outer limit of its valid ity and, hence, the appellant cannot contend that the notification must be treat ed to have come into force for a period of three years. This apart, points out Mr. Saikia, the notification was made effective on 01.05.2001 and the appellant, acting upon the said notification, had already enjoyed the benefit of concessio nal rate of tax with effect from 01.05.2001. In such circumstances, having alre ady availed the concessional rate of tax for a period of three years by virtue o f the notification, in question, the appellant could not have turned back and co ntended that the notification must be treated to have remained in force for thre e years with effect from 03.01.2003, for, such continuation of validity, if perm itted, would make the notification valid for five years.

32. Moreover, according to Mr. Saikia, as the appellant had already availed the benefit of concessional rate of tax for a period of three years on the stren gth of the notification, the appellant, could not have claimed and cannot, now, once again, claim the benefit of concessional rate of tax under the same notific ation by asking the authorities concerned, or the High Court, to treat the notif ication as prospective in nature. In effect, Mr. Saikia points out, in this reg ard, that the provisions of exemption from payment of tax, or payment of tax at a concessional rate, has to be construed strictly and, on the basis of this prin ciple, the appellant must be denied, and has been rightly denied, its claim to r eceive benefit for longer than three years. For the purpose of sustaining his c ontention, that a notification, granting exemption, has to be construed strictl y, Mr. Saikia has referred to, and relied upon, the decision in Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal and Others, reported in (2001 ) 1 SCC 236.

33. Mr. Saikia further points out that, in the writ petition, there was no c hallenge to the validity of the notification and, without challenging the notifi cation, the appellant cannot claim that the notification must be read to have co me into force on the date of its issuance, i.e., 03.01.2003, and not on 01.05.20 01, as had been mentioned in the notification. In the absence of any such chall enge being posed to the notification, the appellant, according to Mr. Saikia, is not entitled to receive benefit of the notification by construing the notificat ion in the manner as has been contended by the appellant. In support of his sub mission, that in the absence of any challenge, posed to the legality of the said notification, the appellant cannot seek any relief, Mr. Saikia relies on the de cisions, in K. Vasudevan v. Mohan N. Mali and Others, reported in (2002) 10 SCC 117, Andhra Pradesh Public Service Commission v. Baloji Badhavath and Others, re ported in (2009) 5 SCC 1, Secretary to the Govt. and another v. M. Senthil Kumar , reported in (2005) 3 SCC 451, Nagar Palika Nigam v. Krishi Upaj Mandi Samiti a nd others, reported in (2008) 12 SCC 364, Central Government of India and Others v. Krishnajo Parvetesh Kulkarni, reported in (2006) 4 SCC 275, and Jitendra Kal ita and Others v. State of Assam and Others, reported in 2006 (2) GLT 654 (FB).

34. Mr. Saikia, learned counsel, reiterates that since the appellant had alr eady enjoyed concessional rate of tax with effect from 01.05.2001, the writ peti tion has been correctly rejected, because, the benefit, which the appellant had enjoyed, has become, by efflux of time, non-recoverable and the appellant, there fore, cannot be allowed to receive benefit once again.

35. Repelling the submissions made, on behalf of the respondents, Mr. Dutta, learned Senior counsel, points out, once again, that neither the statutory auth orities concerned nor the learned Single Judge of this Court determined as to wh en a notification, issued under Section 9(3), comes into effect. Instead of det ermining the statutory position, the statutory authorities as well as the learne d Single Judge were prevailed upon by the fact that the notification mentions th at it had come into force on 01.05.2001 and the notification should, therefore, be construed to have remained in force for three years with effect from 01.05.20 01.

36. Continuing his submissions, Mr. Dutta points out that what the appellant wanted before the statutory authorities, as well as before the learned Single J udge, was determination of the question as to what the statutory date of coming into force of a notification, issued under Section 9, is; but, without deciding this crucial question, the statutory authorities rejected the claim of the appel lant and the learned Single Judge fell into error in not interfering with the sa me. As the appellant was seeking benefit under the notification, there was, acc ording to Mr. Dutta, no question of challenging the notification. Mr. Dutta rei terates that what the appellant had been asking the statutory authorities and th e High Court was to give a legal and correct interpretation of the notification in respect of the validity period of a notification irrespective of the fact as to whether the appellant had or had not legally or justifiably enjoyed the benef it as regards the rate of tax payable by the appellant. The correct interpretat ion of statutory provisions cannot, submits Mr. Dutta, depend on the fact as to whether the appellant has already availed the benefit of concessional rate of ta x in the past or not. The decision, therefore, reached by the statutory author ities and non-interference therewith by the learned Single Judge, in the writ pe tition, are, therefore, according to Mr. Dutta, contrary to law and may, therefo re, be interfered with in this appeal.

37. As already indicated above, the answer to the questions, which have aris en for determination, depend on the basic question as to whether a notification, issued under Section 9(3), can be given retrospective effect, it is imperative that the provisions of Section 9 be taken note of. Section 9 is, therefore, repr oduced below: (cid:28)9.(1) - Subject to the conditions and exceptions, if any, set out in Schedule I , the sales of goods specified herein shall be exempted from the tax under this Act. The State Government may by notification in the Official Gazette, and to (2) , amend or otherwise modify, the said Schedule and thereupon, the said Schedule shall be deemed to have been amended accordingly. (3) The State Government may by notification in the Official Gazette make an exemption or reduction in rate in respect of any tax or interest payable under this Act on the sale or purchase of any class of goods specified therein - (i) a t all or any specified point or points of sale in a series of sales by successiv e dealers; or (ii) by any specified class of persons in regard to the whole or a ny part of their turnover: Provided that any exemption or reduction may extend to the whole of the State or to any specified area or areas therein and be subjected to such restrictions an d conditions as may be specified in the notification: Provided further that validity of any notification issued under this sub-section shall not exceed a period of three years from the date of its issue. (4) The State Government may from time to time, by notification in the Official Gazette, frame one or more schemes for the grant of relief to any class of indus tries within the State or within any specified part of the State on or after suc h date as may be specified in such scheme and producing such goods as may be spe cified therein by way of full or partial exemption of any tax payable under this Act on the raw materials or other input purchased by them within the State or o n the manufactured goods sold by them within the State or in the course of inter -State trade or commerce for such period or periods as may be specified or by wa y of deferment of the tax payable by them under this Act for such period as may be specified and subject to such other restrictions and conditions as may be pro vided in such scheme or schemes. Provided that the State Government may withdraw any such exemption granted under any scheme at any time as it may think fit and proper. (cid:29) A microscopic reading of the provisions of Section 9, as a whole, and, i 38. n particular, the proviso to Section 9(3) clearly shows that the validity of a n otification, issued under Section 9, shall not exceed beyond a period of three y ears from the date of its issue.

39. The expression, date of its issue, would, without doubt, mean the date o n which the notification is issued and it is from the date of issuance of the no tification that the validity period of the notification would start running. The notification, as contemplated by the second proviso to Section 9(3), has to be, therefore, prospective in effect.

40. There can be no doubt, and it could not be disputed, on behalf of the re spondents, that a notification, issued under Section 9, would, ordinarily, remai n, in the light of the language appearing in the second proviso to Section 9(3) for a period of three years from the date of its issue unless withdrawn earlier or indicated otherwise by the notification. Hence, the commencement of validity of such a notification has to be, ordinarily, from the date of issuance of the n otification and not from any date prior thereto.

41. It is trite that an authority, which has the power to make a subordinate legislation, cannot make the subordinate legislation with retrospective effect unless it is so authorized by the legislature, while conferring on the authority concerned, the power to make the subordinate legislation. In the absence of an y power given to a subordinate authority to make a subordinate legislation with retrospective effect, a subordinate legislation has to be treated, and must be a llowed to operate prospectively and not retrospectively; more so, when the paren t legislation is prospective in nature. To put it a little differently, if the p arent legislation is prospective, the subordinate legislation, in the absence, t herefore, of any indication in the legislation itself to the contrary, cannot be made with retrospective effect. Laws are normally prospective. Legislature is, however, competent to make unless, otherwise, contrary to the Constitution, a le gislation having retrospective effect. Though the legislature may have the power to make a legislation retrospectively unless denied by the Constitution in any given case, a subordinate legislation cannot be retrospective unless the parent legislation authorizes the authority concerned to make the legislation with retr ospective effect. The prospectivity of a legislation being normal and retrospect ive legislation being an exception, a clear indication must be discernible from the legislation that a given piece of legislation is retrospective in effect, pa rticularly, when the legislation concerns fiscal matters.

42. Dealing with almost similar fiscal statute, as the one at hand, and refe rring to Section 7 of the Orissa Sales Tax Act, 1947 (which was the subject-matt er of discussion in Mangalam Timber Products Ltd. Vs. State of Orissa, reported in (2008) 18 VST 1 (Orissa), it was pointed out by a Division Bench that when Se ction 7 is prospective, it is obvious that the notification, issued in exercise of power under Section 7, cannot become retrospective. The Court, therefore, in Mangalam Timber Products Ltd. (supra), read the notification, in question, as o perative from the date of the notification and not from any date prior thereto m aking it clear that any attempt to read the notification, with effect from the d ate on which the notification had not stood issued, would not be sustainable in law. The concern of the revenue, (same as the case at hand), was that it would r equire the revenue to make adjustment of benefits, which the assessee might have , in the meanwhile, received. The Court, in Mangalam Timber Products Ltd. (supra ), pointed out, in this regard, that if the effect of reading of the notificatio n prospectively would require making of some adjustments to be made with regard to the benefits, which the petitioner might have derived as a result of the not ification, it is not for the Court to make the calculation. The Court, however, made it clear, in Mangalam Timber Products Ltd. (supra), that if adjustment is required to be made, the same should be made at the level of the revenue author ity keeping in view the fact that the notification is prospective in nature. Spe aking for the Court, in Mangalam Timber Products Ltd. (supra), A.K. Ganguly, J., (as his Lordship, then, was) observed: (cid:28)It is clear on a plain reading that the said section 7 that it is prospective i n operation. It is rather settled that laws are normally made prospectively but it can be mad e retrospectively also. If a law is to be made retrospectively, the Legislature must give clear indication to that effect in the law itself. In the absence of s uch clear indication, law is to operate prospectively. (See Keshavan Madhava Men on Vs. State of Bombay, AIR 1951 SC 128). This is particularly so in the field o f statues dealing with fiscal matter involving revenue, as section 7. (See Colle ctor of Central Excise, Ahmedabad Vs. Ashoka Mills Ltd, AIR 1990 SC 33 at page 3 9). Since section 7 of the Act is prospective, it is obvious that the notification i ssued in exercise of power under section 7 of the Act cannot become retrospectiv e. Both the notifications at annexures 1 and 3 suffer from the aforesaid vice, i .e., they purport to operate retrospectively even though issued in exercise of p ower under section 7 of the Act, which is prospective. (cid:29) (Emphasis is added) 43. We fully agree with the position of law as stated in Mangalam Timber Pro ducts Ltd. (supra) that when statutory provisions are prospective in nature, sub ordinate legislation cannot be retrospective unless a contrary indication is dis cernible from the legislation itself.

44. In fact the principle of law that an authority, which has the power to m ake subordinate legislation cannot make it with retrospective effect unless it i s so authorized by the legislature, which has conferred that power on the author ity concerned, has been summed up succinctly in ITO vs. M.C. Ponnoose, reported in (1969) 2 SCC 351, wherein the Court observed: (cid:28)Now it is open to a sovereign legislature to enact laws which have retrospectiv e operation. Even when Parliament enacts retrospective laws such laws are - in t he words of Willes, J. in Phillips v. Eyre (cid:28)no doubt prima facie of questionable policy, and contrary to the general principle that legislation by which the con duct of mankind is to be regulated ought, when introduced for the first time, to deal with future acts, and ought not to change the character of past transactio ns carried on upon the faith of the then existing law (cid:29). The courts will not, the refore, ascribe retrospectively to new laws affecting rights unless by express w ords or necessary implication it appears that such was the intention of the legi slature. Parliament can delegate its legislative power within the recognised lim its. Where any rule or regulation is made by any person or authority to whom suc h powers have been delegated by the legislature it may or may not be possible to make the same so as to give retrospective operation. It will depend on the lang uage employed in the statutory provision which may in express terms or by necess ary implication empower the authority concerned to make a rule or regulation wit h retrospective effect. But where no such language is to be found it has been he ld by the courts that the person or authority exercising subordinate legislative functions cannot make a rule, regulation or by-law which can operate with retro spective effect; (see Subba Rao, J., in Dr Indramani Pyarelal Gupta v. W.R. Nath u) - the majority not having expressed any different opinion on the point; Modi Food Products Ltd. v. CST; India Sugars and Refineries Ltd. v. State of Mysore a nd S. Shiv Dev Singh v. State of Punjab. (cid:29) (Emphasis is add ed) 45. Mr. Dutta is, therefore, not incorrect, when he refers to the case of Ba kul Cashew Co. and others Vs. Sales Tax Officer, Quilon and another, reported in (1986) 2 SCC 365, wherein the Court, having referred to the position of law as indicated in M.C. Ponnoose (supra), observed and held as under: (cid:28)8 & & & &..The power of exemption in the instant case was exercised through a retro spective notification which was a piece of subordinate legislation. It has been held by this Court that an authority which has the power to make subordinate leg islation cannot make it with retrospective effect unless it is so authorised by the legislature which has conferred that power on it. (cid:29) (Emphasis is a dded) 46. In the backdrop of the law as discussed above, there can be no escape fr om the conclusion that the notification, in question, having been issued on 03.0 1.2003, must be given retrospective effect, particularly, when the power to make subordinate legislation, conferred on the State Government, by Section 9(3), is prospective in nature. Consequently, notwithstanding the fact that the notifica tion, in question, was issued on 03.01.2003, making it effective from 01.05.2001 , the fact of the matter remains that the parent legislation i.e. the AGST Act, 1993, being prospective in nature, no retrospective effect could have been given to the said notification by the State Government as a delegatee under the AGST Act, 1993; more so, when the validity of the notification is to be counted with effect from the date of its issue and not from any date prior thereto.

47. As regards the submissions made on behalf of the State that an exemption notification has to be construed strictly, there can be really no dispute. Howe ver, reliance placed by Mr. Saikia, in support of such a proposition, on the cas e of Hari Chand Shri Gopal and others (supra), is not incorrect inasmuch as the decision in Hari Chand Shri Gopal and others (supra), has no application to the facts of the present case. When construed strictly, there remains no escape from the conclusion that the validity of a notification, issued under Section 9(3), commences from the ’date of its issue’ and can remain in force, at the most, for a period of three years from the ’date of its issue’. We, now, come to Mr. Saikia’s argument that the appellant, as a writ pe 48. titioner, had not impugned the notification and the appellant may, therefore, be held debarred from receiving the benefit from the notification inasmuch as the notification, in question, (in the absence of any challenge as to its validity) has to be considered as it is or not at all. There is a noticeable fallacy in th is argument. In the case at hand, the assessment of tax, payable for the assessm ent year 2004-2005, had already been done. However, on the completion of the ass essment, it was pointed out by the respondent No.4, while seeking to reopen the assessment, that a notification, issued under Section 9(3), cannot, in the light of the second proviso thereto, remain in force for a period longer than three y ears. This apart, since the notification had mentioned that it (notification) sh all be treated to have come into force on 01.05.2001, the notification, accordin g to respondent No.4, ought to be held to have enured, by efflux of time, on 30. 4.2004. Consequently, respondent No.4 took the view that the assessee was not en titled to the exemption, which he had availed in respect of the assessment year 2004-2005. The notice of show cause was accordingly issued by the respondent No. 4 to the appellant and, on receiving the notice, the appellant contended, in no uncertain words, that under the second proviso to Section 9(3), the notification remains, and ought to be treated to have remained, in the present case, valid f or a period of three years from ’the date of its issue’, i.e., 03.01.2003. Confronted with the bold stand, so taken by the appellant, respondent No 49. .4 looked towards respondent No.3 for a clarification and sought for accordingly a clarification, in this regard, from the respondent No.3, who, in turn, clarif ied that the notification, having been brought with effect from 01.05.2001, must be treated to have come into effect from 01.05.2001 and could not have remained , and must not be treated to have remained, beyond 30.04.2004. It is basically t his clarification issued by the respondent No.3, which became the foundation for the decision of the respondent No.4 to reopen the assessment and make assessmen t anew as has been done. The conduct of the respondent No.4 clearly shows that though, as a statutory authority, it (respondent No.4) was exercising quasi judi cial jurisdiction in the present case, it abdicated his authority to decide as t o whether the notification, in the light of the clear language employed by Secti on 9(3), ought or not, to be read prospectively with effect from 03.01.2003, and not retrospectively, i.e., 01.05.2001. Sadly enough, respondent No.4 did not ap ply his own mind to the facts of the given case and, thus, abdicating his author ity and the duty to decide himself, look to his superior authority and merely ca rried into execution the views of his superior authority as had been expressed i n the said ’clarification’. This, in itself, was sufficient to warrant interfere nce, with the impugned order of assessment, in the revision.

50. Coupled with the above, the clarification, which the respondent No.3 had issued, was, it is clear, wholly contrary to law inasmuch as no subordinate leg islation can run counter to the parent legislation and when the parent legislati on, in the present case, was prospective in nature, the subordinate legislation , i.e., the notification, dated 03.01.2003, could not have been given retrospec tive effect. If this fundamental aspect of law had been borne in mind by the res pondent No.3, there could not have been any controversy as to the date on which the notification shall be treated to have come into force. The notification, su ch as the one at hand, must be read subservient to the parent legislation and wh en the parent legislation states that the notification, issued under Section 9(3 ), shall be valid from the date of its issue, respondent No.3 ought to have clar ified - if he was required to clarify at all - that the notification has to be read in tune with the parent legislation and when the parent legislation makes t he notification, issued under Section 9(3), prospective in nature, the notificat ion has to be given prospective effect.

51. In fact, respondent No.4, who has reopened the assessment and made the i mpugned re-assessment, did not even decide as to what the expression, ’date of i ts issue’, in Section 9(3), means. What he decided was as to what is the date on which the notification came into force; whereas the plain language of the law r equired him to really determine the date of issuance of the notification and sta rt counting the period of validity with effect from the date of issuance of the notification. Respondent No.4 abdicated his authority to decide this basic issue raised and without deciding the issue, so raised, had reopened the assessment b y holding that the notification, in question, having come into force on 03.01.20 03, must be read to have come into force on 01.05.2001. Turning to the order passed in the revision, it needs to be noted that e 52. ven the respondent No.3, when confronted with the impugned order of re-assessmen t, did not answer the question raised by the appellant, namely, as to whether th e parent legislation being prospective in effect, a notification, issued under S ection 9(3), could have been given retrospective effect. Though raised before th e respondent No.3, respondent No.3 too did not answer the question as to when a notification, issued under Section 9(3), comes into force. Without answering th is question of law, respondent No.3 merely observed to the effect that since the notification had mentioned that it was retrospective, it had to be given retros pective effect. Respondent No.3, thus, shirked his responsibility to determine w hat the law had warranted him to determine.

53. Yet another reason, which respondent No.3 has assigned for his non-inter ference with the order of re-assessment, is that the appellant had already avail ed concessional rate of tax for a period of three years. Respondent No.3, theref ore, took the view that since the appellant had already enjoyed the benefit of c oncessional rate in terms of the notification, the notification has to be constr ued retrospectively so far as, at least, the case of the appellant was concerned . This was a completely incorrect approach by the respondent No.3 inasmuch as no tax can be imposed on a person unless permitted by law. So guarantees Article 3 66. In the name of equity, therefore, the right not to pay tax cannot be denied to an assessee by the State. This is the basis of each fiscal legislation. No ta x can be made payable by a person unless the law requires him to do so. When the law does not require him to pay tax, tax cannot be realized. Even if, therefore , the appellant had, in the present case, incorrectly or illegally, enriched him self by taking the benefit of concessional rate of tax relying on the notificati on aforementioned, this could not have denied, in the name of equity, the appell ant’s right to ask the respondents to decide, as a matter of law, as to when the notification shall be taken to have come into effect. An interpretation of a le gislation has to be neutral. A decision, in a given case, may take its colour fr om the facts of the given case; but, while deciding the question of law, the fac t cannot colourise the decision. When interpretated with neutrality, the notific ation, under the second proviso to Section 9(3), has to be treated to have come into effect on the date of its issue and not with effect from any date prior the reto. This primary position, as regards the notification, appears to have escape d the attention of the learned Single Judge. The learned Single Judge has, there fore, observed, at para 19, while dealing with the notification, as under. (cid:28)19. The notification dated 1.3.2003 is conspicuous by its language to be effect ive from 1.5.2001. The period of exemption/reduction is limited by the Act to be for a period of three years. In the comprehension of this Court though section 9(3) does not as such in express words permit the State Government to issue a no tification with a back date, the words ’date of issue’ is in uncertain terms int ended to be the starting point of the period of three years to avail the exempti on or reduction in the rate of tax. By issuing this notification as is apparent in the contextual facts, the State Government desired a continuity in the exempt ion/reduction on and from 1.5.2001 and not 1.3.2002. The date of issue i.e. 1.3. 2003, if construed to be the starting point of the grant of the exemption/reduct ion, it will not only be obviously against the apparent objective conveyed there by but also lead to unwarranted anomalies and complications vis-à-vis the past t ransactions closed and finalized during 1.5.2001 to 28.02.2003. Admittedly the p etitioner and others participating in such transactions have availed the benefit of such exemption/reduction in tax rate and thus if the notification as has bee n done is construed to have been effective from 1.5.2001, the same would not in any manner prejudicially affect any of its vested rights. (cid:29)

54. The learned Single Judge, it can be clearly seen, did not decide the que stion as to when a notification, issued under Section 9(3), comes into force. Wi thout answering this legal question, the writ petition could not have been decid ed. The learned Single Judge appears to have been influenced by the fact that th e Government had intended to give continuity to its earlier notification of exem ption and, that is why, the notification had been brought into force with effect from 01.05.2001. Based on this interpretation, which we find, with great respec t, impossible to agree to, denied to the appellant his right to receive the bene fit of notification in accordance with what the parent legislation contemplated. In fact, the learned Single Judge too fell into serious error of law in allowin g equity to prevail over the law, in the case, while interpreting the fiscal sta tute inasmuch as the learned Single Judge pointed out that the petitioner i.e. t he appellant herein, having availed the benefit of reduced rate of tax, cannot c laim prospective enforcement of the notification. Reminds the Supreme Court, in Polestar Electronic (P) Ltd. Vs. Addl. Commissioner, Sales Tax, Delhi, reported in (1978) 1 SCC 636, that in construing a taxing statute, one must have regard t o the strict letter of the law and not merely to the spirit of the statute or su bstance of the law. There is no equity about a tax nor can there be any presumpt ion as to the tax inasmuch as one must look fairly at the language used in the s tatute and the Act. In fact, in Polestar Electronic (P) Ltd. (supra), the Suprem e Court has further pointed out that it is a firmly established rule that the wo rds of a taxing Act must never be stretched against a tax-payer. If the legislat ure has failed to clarify its meaning by use of appropriate language, the benefi t must go to the tax-payer and if there is any doubt as to the interpretation, i t must be resolved in favour of the subject. Because of what have been discussed and pointed out above, it becomes cl 55. ear that the notification, dated 03.01.2003, which mentions to have come into fo rce on 01.05.2001, must be treated, and ought to have been treated, to have come into force on the date of its issue, i.e., with effect from 03.01.2003 and cann ot be, and could not have been, treated to have come into force retrospectively with effect from 01.05.2001. With this fundamental issue of law being clear, it necessarily follows, as a logical conclusion, that the appellant had rightly enj oyed the benefit of the notification for the assessment year 2004-2005 and the b enefit, if any, which he had received, or had availed of, during the period, whe n the notification was not in force, (and cannot, now, be legally construed to h ave been in force), the remedy of the State lies in recovering the same in accor dance with law provided the State’s right, if any, in this regard, does not, oth erwise, stand extinguished by law. 56. Because of what have been pointed out and discussed above, this appeal s tands allowed. The impugned judgment and order, dated 06.09.2010, passed by the learned Single Judge, shall stand set aside. The impugned rectified order of ass essment, dated 06.03.2009, passed by the respondent No.4 as well as the revision al order, dated 24.09.2009, passed by the respondent No.3, shall also accordingl y stand set aside and quashed. 57. osed of. 58. With the above observations and directions, this appeal shall stand disp No costs.